Johannesburg, 19 November 2019: Further to various false media allegations made by PGC Group of Companies (PGC) former-CEO, Zwilenkosi (Zwi) (Reuben) Mdletshe, PGC and its trustees, wish to set the record straight once and for all to lay this matter to rest.
In December last year, the President of POPCRU, Mr Zizamele Cebekhulu approached Mr Mpho Dipela, the ex-Financial Director of PGC, for assistance to investigate matters of financial concern as raised by the trustees of PGC, based on feedback by some directors. The meeting with Dipela was attended by Cebekhulu, Mdletshe, and the former-Chairman Thulani Nsele.
Cebekhulu believed that Dipela was ideally placed to investigate the concerns as Dipela held the position of Financial Director at PGC for ten years and completely understands the business and its operations.
Mr Dipela cancelled his December holiday and on a voluntary basis, looked into some of the issues of concern. He identified some glaring problems and approached Cebekhulu, Mdletshe and Nsele about it, and advised them to urgently address the issues including that of cash flow and outsourcing millions of Rands to external consultants.
Following an informal investigation into alleged financial irregularities at PGC, Cebekhulu removed both the CEO, Mdletshe and the deputy financial director appointed by him, Ntombi Boikhutso, from their positions on 1 April 2019, to allow internal investigation to continue unobstructed.
When glaring financial problems were confirmed, the POPCRU Trust, the sole shareholder of PGC Group, initiated a formal forensic investigation in May 2019. Upon the conclusion of the investigation, the report was handed to the board of PGC in September 2019 to execute and implement corrective measures, hence Mdletshe’s suspension by the board on 24 October.
The PGC board sat last Wednesday, 13 November and took the decision to terminate Mdletshe’s services and that of certain executive and non-executive directors whose independence was compromised and/or were implicated in various issues of mismanagement, as highlighted in the forensic investigation report.
Mdletshe was dismissed for bringing the company’s good name into disrepute, for violating his suspension conditions, and for matters relating to his six suspension charges, including:
- Abuse of company resources
- Misrepresentation of his qualifications
- Alleged affairs with his employees.
Cebekhulu is adamant that had it not been for Dipela’s initial assistance with the investigation, PGC would have been unsuspecting and unaware of financial mismanagement within the company.
The accusation about financial mismanagement which Mdletshe has been alleging to the media is not only baseless, inaccurate and blatant defamation, but what Mdletshe lacked to communicate, was that he was the sole signatory that authorised the agreements that he is questioning and that he was also a director and CEO of PGC Group and a Director PGC Management Services until recently.
PGC subscribes to the key elements of the King IV code, which include sustainability, good corporate citizenship and good governance, which is essentially viewed as effective, ethical leadership.
As part of good governance, all PGC’s board members are appointed based on their independent ability to contribute competencies and experience appropriate to achieve the organisation’s objectives. All directors, board members, trustees and executives are expected to exercise their powers and perform their duties in good faith and for a proper purpose; in the best interest of the company; with a degree of care, skill and diligence; and having the general knowledge, skill and experience to execute their duties.
In addition to an independent and capable board, and as part of PGC’s commitment to transparent and ethical business dealings, it established various internal governance processes to report any suspected irregularities including an audit committee and an internal audit department.
As the CEO of PGC and a director of PGCMS, it was Mdletshe’s fiduciary responsibility to report any suspected financial mismanagement or suspected criminal elements. If Mdletshe had suspected financial mismanagement of the agreements which he personally approved on March 2007, as a responsible CEO who prescribes to the principles of good corporate governance, Mdletshe could have reported the matter to his own board, the group’s trustees, the union, and internal governance departments. Mdletshe further had the opportunity to raise any concerns at the Group AGM held on 23 February 2019, in which he presented the signed and approved financial statements by SNG Grant Thornton. Mdletshe confirmed that business was doing well and that he had no reason for concern.
Most importantly, had Mdletshe suspected any irregularities, he could have advised the police to investigate any potential matters of corruption so that it could be heard in a court of law.
As Mdletshe only stepped forward with the allegations after his recent suspension for financial mismanagement, and as he has not laid any formal charges against any executives within the group, PGC and its trustees will not address any further media enquiries about allegations made by Mdletshe.
Based on recent media articles and information revealed, PGC’s trustees and board will broaden its forensic investigations to scrutinise all accusations and claims.
While PGC and its trustees believe that honesty and transparency are tantamount to successful business and stakeholder relations, it will not manage its challenges in the public space or through the media. Based on legal prohibitions in divulging certain information, the decision has therefore been made that this serious matter will only be addressed through relevant internal and legal channels.