Anomalies found in Daybreak Foods payments to law firm in South Africa
In South Africa, forensic accounting audits identified possible financial irregularities in payments made by poultry company Daybreak Foods to legal entities linked to lawyer Pule Malahlela. According to Daily Maverick, Malahlela Attorneys and related entities received approximately 123.9 million South African rand over two years.
A report by Nexus Forensic Services states that 39.9 million rand of this amount were not linked to any invoice, while 8.8 million rand may have been duplicate payments. The report also said that hourly rates exceeded approved limits and that supporting documentation was insufficient.
Call for an investigation
The opposition Democratic Alliance called for a formal investigation by South Africa's Special Investigating Unit (SIU), as well as a criminal investigation into Daybreak Foods. Legal expenses became one of the main grounds for the party's appeal to the president.
Senior business rescue practitioner Tebogo Christopher Raymond Maoto, who relied on findings by Deloitte, JGL and Nexus, said he would take responsibility for reporting these transactions to South African police. He also said he would consider a civil lawsuit to recover funds paid to Malahlela Attorneys.
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Invoices with identical work
Daily Maverick journalists analyzed accounting documents and tax invoices. According to their findings, the law firm allocated services across different categories. Under the Civil Recoveries category, invoices were issued for preparing legal opinions and civil claims to recover funds from former Daybreak Foods executives and contractors.
Under the Criminal Proceedings Support category, services included assisting forensic specialists, analyzing statements, and preparing materials for the police and the Hawks unit. The publication reported that invoices in both categories dated August 17, 2022, contained identical tasks, hours and dates, although the names of the performers were changed or duplicated.
Former Daybreak Foods CEO Matshela Seshibe said that the appointment of Malahlela & Company Attorneys/Black-White took place before he joined the company in May 2022. According to him, the appointment in January 2021 was initiated by the board of directors, recommended by then corporate secretary Kgabo Mapotse, and approved by then board chair Lerato Nage.
The Public Investment Corporation manages investments in Daybreak Foods on behalf of state clients through the Isibaya fund. Since 2017, the Government Employees Pension Fund, the Unemployment Insurance Fund and the Compensation Fund have each held equal 33.33% stakes in the company.
