Black audit firms get R1.3bn deal

26 March 2013 - 04:12
Lindani Dhlamini, CEO of Sekela-Xabiso
Image: PICTURE: FINANCIAL MAIL Lindani Dhlamini, CEO of Sekela-Xabiso

Transformation remains high on Transnet's agenda: the state-owned company yesterday pulled two black-owned auditing firms into a massive multiyear contract.

After reviewing its internal auditing functions in 2005, Transnet has decided to outsource them.

The contract, jointly awarded to Sekela Xabiso, Nkonki and KPMG, is worth R1.3-billion over five years.

Transnet referred to the multibillion agreement as "arguably the biggest outsourcing contract of its nature".

Sekela Xabiso said the parastatal had one of the 10 biggest audit books in the world.

This latest deal is separate from the external auditing contract awarded last year to Sizwe Ntsaluba Gobodo, which was worth R450-million.

Transnet is flexing its muscles in empowering emerging companies but has so far first drawn them in as junior partners of large international firms.

"Both Sekela Xabiso and Sizwe Ntsaluba Gobodo are mergers formed while sub-contracting audit work [internal and external respectively] at Transnet.

"The consolidation gave the two firms the critical mass required to service an account of Transnet's size and complexity," Transnet spokesman Mboniso Sigonyela said yesterday.

Initially, the split will be KPMG 40%, Sekela Xabiso 40%, and Nkonki 20%. But the share of KPMG - one of four biggest auditing firms in the world - will be watered down to 31% over the life of the contract.

Deputy Public Enterprises Minister Bulelani Magwanishe waxed lyrical about the auditing deal yesterday.

"Transnet is the blueprint for transformation in South Africa," he said at a briefing in Johannesburg.

This massive auditing contract is part of a strategy by the department to use state-owned companies' buying power to boost black-owned businesses.

Public Enterprises Minister Malusi Gigaba announced last year that Eskom would raise the proportion of coal it buys from emerging black-owned mining companies.

Eskom expects to be sourcing more than a billion ton s of coal from emerging miners in the decades up to 2050.

Sekela Xabiso's public sector clients also include Eskom, the Passenger Rail Agency, and the departments of public works, correctional services, and arts and culture.

The company aims to extend its reach in both the public and private sectors.

Sekela Xabiso was formed last year after the merger of accounting and auditing firms Sekela Consulting and Xabiso Consulting.

Nkonki is a 100% black- and majority-women-owned company. It was founded in 1993.