The trustees of the newly reconstituted King David Schools Foundation (KDSF) made an early disclosure to both alumni and donors this week following what they termed an “abhorrent act” by what would seem a single staffer who had fraudulently misappropriated at least R2.7-mil of Foundation funds.
The eleven trustees who co-signed a letter sent out to donors and alumni on Monday 15 August reads like a who’s-who of SA bankers and financial administrators - Adrian Gore (chairman), David Frankel, Jonathan Hackner, Steven Joffe, Stephen Koseff, Brett Levy, Michael Mendelowitz, Rabbi Craig Kacev, Cecil Wulfsohn, Raelene Tradonsky and Elliot Wolf.
“It is with regret that we advise you of fraud that was committed in the KDSF by a member of its administrative staff whose services have now been terminated,” said the letter. “While early in the process, we felt it imperative to let you know the details of what has transpired.”
All credit to the trustees who, it would seem, took pro-active action to ensure good governance and it was that action that uncovered the theft.
FOUNDATION WAS RECONSTITUTED EARLIER THIS YEAR
“As you may be aware, earlier this year, the King David Schools’ Foundation was reconstituted with a group of experienced individuals as trustees together with the able leadership of Mrs. Raelene Tradonsky and Mr Elliot Wolf,” says the Trustees’ letter. “The rationale behind the Foundation’s re-launch was to pursue a more aggressive approach to fundraising, so that the Foundation could fulfil its role of assisting our school system to achieve and sustain excellence.”
The trustees say that their first priority had been “to ensure that the Foundation’s governance structures and financial controls were in order.”
As part of this process, the trustees engaged the South African Board of Jewish Education (SABJE – the de facto ‘owner of the KD schools), and the Board’s financial officials “to apply the financial rigour that has been established within the Board and at the schools, to make recommendations to us on the appropriate structures that would ensure the robustness of the Foundation.”
FRAUD DISCOVERED BY SABJE BEAN-COUNTERS
It was this pro-active exercise by the trustees that revealed that “there has been a misappropriation of funds by a particular member of the Foundation’s staff.”
Having discovered this fraud, say the trustees, they immediately brought in a forensic team from auditing firm PriceWaterhouseCoopers “to assist the trustees and SABJE’s financial executive in auditing and investigating every aspect of the fraud, so that the correct remedial action can be taken and the funds recovered,” said the trustees in their letter this week.
The trustees also advised alumni and donors that the “staff member’s employment has been terminated and the necessary legal process will now take its course.”
IT COULD STILL BE R2.7-MIL AND COUNTING
The letter says that the initial investigation had “revealed a fraud of approximately R2.7-million,” which the trustees qualify as “a figure subject to the final audit.”
It would seem that the shenanigans go back in time. The trustees “stress that this fraud has no bearing on the funds raised or committed since the re-launch of the Foundation. It has also been established that all donor funds to subsidize schools fees of children have also not been effected.”
The trustees advise that they intend “to send out a further communication once the investigation has been finalised,” and stress that “going forward, we will ensure that that Foundation’s governance structures and financial controls will be robust and in line with best practice. In the interim we will be making use of the effective structures that exist within the Board.”
The trustees also assure the community that they personally commit their “enthusiasm for and commitment to ensuring that the Foundation achieves its stated objectives. This abhorrent act will only serve to accelerate our pursuit of creating a Foundation of scale and integrity, and a Foundation that assists in ensuring that our schools are excellent and sustainable.”
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