Out of The Darkness

By Cyril Kahn

The book follows the narration of the main character, Neil, who is studying part-time to be an accountant while holding down a full-time position as an Articled clerk at an accounting firm. Upon performing his duties diligently at one of the audits, he finds an error in the transactions, and ultimately discovers that an unknown person has been embezzling money secretly out of the company. Therefore, it is up to him now to take his discovery to his supervisors and find ways to link the transgressor to the embezzlement. What happens along the way is a story of love, unity, celebration, disappointment, shock, mystery, and surprise all in one. Follow Neil and ride along for his adventure in uncovering the mystery of the stolen money.

• Language: English
• Publisher: Publishdrive
• Release date: Feb 8, 2024
• ISBN: 9781916849969

Book preview

Part One

Chapter 1

January 1982

It’s 4:35 p.m. on Friday, January 29th, 1982, and I am the only audit clerk remaining at AgriPipe, one of our firm’s biggest clients. All the other audit clerks had left at 4:15 p.m. to attend lectures at the local universities. I just wish that I was homeward bound, although all I had waiting for me was an empty one-roomed apartment and a weekend of studying. My study schedule demanded that I put in at least twenty productive hours over the weekend to keep up, which was stressful and tiring. I would have liked to see my friends sometime over the weekend, but I didn’t have spare money to go out with them. As it was, I was barely able to feed myself and keep a roof over my head. On top of everything, it had been a very frustrating week, and today had been a terrible day. I felt that I wasn’t making much progress with the work I was doing, and I was feeling very stressed. As a consequence, I wasn’t in a very good frame of mind.

Eugene, the audit manager, and Edward Manley, the partner in charge, were at our offices in the city reviewing the audit progress, and scheduling the following week’s audit tasks that needed to be completed before the completion deadline, which was two weeks away. I was attempting to complete one of the tasks that formed a material part of AgriPipe’s financial statements. AgriPipe is a wholly-owned subsidiary of a large American multinational corporation, AGDP Incorporated, and their fiscal year end is December 31st. As it was, we only had three weeks to complete the year-end audit, and I was trying to verify the efficacy of an intercompany account reconciliation, prepared by Andrew DuPont, the AgriPipe Financial Controller, that detailed the differences between what was recorded in the accounting records of Aqua Distribution Pipe’s (ADP), a sister company to AgriPipe, to what was recorded in AgriPipe’s accounting records at year-end.

I am Neil Cowen, and I work for Fortesque, Michell and Cootes, Public Accountants and Auditors, in Cape Town, South Africa. On January 1st, 1982, I commenced my third of five years of Articles of Clerkship, with the goal of becoming a Chartered Accountant.

The firm was better known as FMC, which we, as staff, say is an acronym for fools, morons, and clowns. Clerks from rival firms had an even worse name for us: f-ers, m-f-ers and c-nts, which was not very nice, but maybe wasn’t that far off the mark.

Most of my colleagues were studying Accounting and Auditing at ‘night school’. Those who attend night school are allowed to leave work every day at 4:15 p.m. to be at lectures at their respective universities by 5 p.m. But for those like me, who studied by correspondence through UNISA, and who didn’t have the privilege of attending lectures and having knowledge imparted to us by lecturers, but had to do all the reading and exercises to educate ourselves, were not allowed to leave at 4:15 p.m. We had to work until 5 p.m– (the office cut-off time). Sometimes, we even had to work overtime if the audit manager or partner wanted certain tasks finished before one of us went home. Talk about being at the bottom of the dung-heap.

I was studying through correspondence because I didn’t have a choice. Due to my lack of academic prowess, I hadn’t qualified academically to attend either a full-time University or night school classes. Luckily for me, UNISA was very forgiving when it came to having a less-than-stellar high school academic record, and I was able to register with UNISA to study accountancy.

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Allow me to give you some background; I started elementary school at the age of four, although six was the recommended age, and in elementary school, I was always in the top three of my class. However, when I entered high school at the age of eleven, I crashed into a wall. Emotionally, I was almost two years younger than most of my classmates. They were talking about girls, while I was still a child who wanted to play games and was treated as such. As a result, I became emotionally isolated, and my academic performance plummeted.

On top of my social and emotional isolation, my dad was diagnosed with leukemia when I was nine. He was in and out of hospitals until he died when I was two months short of my sixteenth birthday. Looking back, the emotional strain that I faced over those seven years must have had a direct bearing on my lack of academic prowess. Very soon after my father’s death, I realized that attending any university was something I would never experience, as there just wasn’t enough money for that, so I did just enough to pass matric. Consequently, when I left high school at the end of my matriculation year, my final matriculation results didn’t permit university entry. So, despite the fact that I thought that attending university was impossible for me, I am not using this as an excuse. I feel that I have been very successful, but it lays out the context which sets the scene for this tale.

After high school, I was required to perform two years of compulsory military conscription, something that all white males in South Africa were compelled to do under the Apartheid government. Although I finished high school in December 1976, I somehow managed to postpone my conscription for a year until January 1978. In 1977, I did some odd jobs and generally bummed around. I’m still not sure how I managed to buck the system and get that one-year reprieve, but I’m very glad that I did. Going into the military two months short of my nineteenth birthday was a lot better than it would have been at seventeen or eighteen, as I was far better equipped to deal with the bullying tactics of the corporals, who sadistically enjoyed bossing conscripts around. While I was in the army performing my compulsory military service, my mother, who had been on a downward spiral since my dad had passed away, sold the house we lived in for a pittance, as it needed a lot of maintenance and repairs that she was unable to afford. She died six months before my conscription period ended. So, here I was, in my twentieth year, alone, with no home or family to return to at the end of my military conscription, facing a very uncertain future.

So, what led me down the path of Chartered Accountancy? I had about one month left of my military service, and I needed a job almost from the day my conscription period ended. Someone I knew had started his Articles at FMC, and he told me that they were looking for accounting clerks. When I found out that Articles paid a salary, and I could study by correspondence at the same time, I signed up immediately, and that’s how I got to be at AgriPipe on the afternoon of Friday, January 29th, 1982.

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AgriPipe’s primary business was to use any HDPE or PVC plastic which could be melted down and extruded. The company produced agricultural and domestic irrigation piping, irrigation pipe fittings, and black plastic sheeting used for roofing underlay, or as a waterproof barrier under concrete slabs and foundation walls. In addition to buying virgin plastic pellets for smelting, AgriPipe would buy any type of used HDPE plastic container, mostly milk and juice bottles, from many of the poor, and often homeless, people who scavenged the nearby, horribly smelly, garbage dump for something to sell.

ADP was the largest manufacturer in the country of PVC pipes and pipe connectors used in all types of construction and drainage applications. It was highly unlikely that any building, no matter how big or small, didn’t have some ADP products somewhere in it. A sizable portion of the raw material purchased for AgriPipe’s production came from ADP. ADP was also a customer of AgriPipe, and they purchased irrigation piping and plastic sheeting from AgriPipe to sell to its customers. This was a win-win situation, as neither company produced any waste that needed to be disposed of. ADP waste was sold to AgriPipe, and AgriPipe’s waste and off-cuts would again be ground up, smelted, and re-used in the production process. Monthly transactions between the two companies amounted to many hundreds of thousands of Rand.

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The AgriPipe audit required much persistence to deal with vast amounts of paper and some poor accounting practices. The only positive, for me, anyway, about being assigned to this audit was the daily mileage allowance. I was paid for traveling from the FMC offices in the city to the client and back, a distance of just over thirty miles a day. As I had to support myself on the pittance audit clerks were paid, one week’s mileage allowance covered my fuel and running costs for my car for a whole month, and I had asked to be assigned to the audit to supplement my earnings.

Even though I had almost zero free time, I did all my car maintenance myself. Therefore, I didn’t have to worry about having to pay a mechanic if anything went wrong with my car; I only had to cover the cost of parts. My car, a very rusty 1969 Fiat 125, was extremely reliable, so the rest of a month’s travel allowance allowed me to survive on a bit more than bread and jam, canned baked beans, or spaghetti in tomato sauce. Occasionally, I could even afford to go out for a few drinks with my friends, buy a six-pack of crappy beer, or a bottle or two of Tassies, the iconic red wine university students drank, although it was quite good considering that it was so inexpensive. I was even able to treat myself to a meal in a restaurant occasionally, provided that I had been very frugal in my spending for an extended period.

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There were seven of us on the audit team, and everybody tried to avoid drawing the ‘short-straw’; auditing the AgriPipe/ADP intercompany account reconciliation. First and second-year clerks were exempt from this task as their accounting and auditing skills were deemed inadequate. The audit manager was certainly not going to do it, so the task always fell on one of the three mid-level clerks on the audit, of which I was one. Guess what? I drew the ‘short-straw’.

As I am inquisitive by nature, I performed two ratio analyses that were not part of the audit program. In my opinion, they should have been, as we performed them on almost every other manufacturing company audit. I first compared the annual cost of raw materials purchased to annual sales of goods, and then compared the labor costs to annual sales, to determine whether any significant or unusual changes in these percentages had occurred over time. I felt that this would provide a meaningful baseline, and highlight any inexplicable trends in cost changes. My analyses showed that although labor costs had stayed relatively constant as a percentage of product sales, raw material costs showed a year-on-year smooth increase of approximately seven percent. When I queried this increase in material costs with Stanley Crew-Smythe, AgriPipe’s CFO, and subsequently, with Edward Manley, the audit partner, both told me that as plastics were a by-product of crude oil, and that crude oil prices were increasing year-on-year, the price of plastics increased in relation to the price of oil. When I mentioned that a large quantity of the plastics used by AgriPipe were scrap materials, I was told that the price of scrap plastics had also risen due to the rise in the crude oil price.

At some point during my discussion with Edward, he angrily said, You are wasting time by asking all these nonsensical questions, and you’re increasing the audit cost, which actually meant that as the audit fee was contractually fixed, if employee time could be reduced, the profit margin increased, And you had better just stick to the audit program. Changes in cost percentages are management’s concern, not ours, and stop asking questions which may upset the client.

But I was still curious. The price of crude oil hadn’t risen year-on-year at a smooth rate of seven percent, so why did the cost of materials purchased by AgriPipe show such a smooth trend? This made no sense to me, but I was under orders not to follow my thoughts.

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Before I received the AgriPipe/ADP account reconciliation, Eugene told me that auditing the reconciliation was a ‘daunting task’, and I thought he was being melodramatic. However, when I was given the reconciliation just before lunch on Monday, January 25th, my heart sank; the reconciliation appeared to be shambolic. Several hundred transactions occurred monthly between the two companies, and an eight-columned analysis paper for separating debits and credits was used to prepare the reconciliation, which was given to us already totaled. I just hoped that the entries were in the correct columns and that it had been totaled correctly, for I had no way of checking it. We only had 8-digit calculators, and for such large amounts, a 12-digit calculator was required. The reconciliation was thirty pages long, which meant that there had to be over eight hundred transactions comprising purchase and sales invoices, credit notes, debit and credit journal entries, debtor/creditor setoffs, and payments. The audit required tracing transactions from the reconciliation to the source documentation, in order to verify that all entries on the reconciliation were proper, and were correctly accounted for. To confuse the issue even more, in some places entries had been crossed out, only to reappear on another page.

For those without any accounting knowledge, only transactions that had been accounted for in the books of one entity, but not the other, should appear on a reconciliation. Therefore, more than eight-hundred transactions were either not recorded in AgriPipe’s books but accounted for by ADP, or were in AgriPipe’s books, but not yet recorded in ADP’s books. To confuse matters further, there were times when set-off’s between goods purchased and goods sold were used as a method of effecting payment. Sometimes, the debtor/creditor set-offs – which basically means that if I owe you a hundred bucks, and you owe me eighty, I pay you twenty and we’re square. There were times when these set-offs were round numbers and didn’t apply to specific transactions, making it extremely difficult to determine what should and shouldn’t have been on the reconciliation. All in all, it seemed to me that the accounting records of AgriPipe, with regard to ADP anyway, were in complete disarray. Was the problem at AgriPipe, or ADP? I was having a torrid time for trying to make head-or-tail of the mess. Many times I thought, ‘What the fuck am I doing this for? Sweeping streets would probably be more mentally stimulating, and far less stressful than wading through this shit.’

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On that Friday, I had been in and out of Andrew’s office several times to query the logic behind certain entries. Some made no sense to me, or I suspected, were downright wrong. When I approached him for what was to be the final time on that day, he got very angry with me. He pointedly said that maybe I shouldn’t be auditing the reconciliation if I didn’t know what I was doing. When I persisted with my questions, he asked me directly if I was insinuating that he didn’t know what he was doing. I didn’t want Andrew to complain about me to Eugene or Edward that I was being a nuisance. I placated him by apologizing for pestering him and wished him a great weekend. However, deep down, I felt that something was very wrong, but didn’t know what. But most of all, at that point I didn’t want to be removed from the audit and lose out on the weekly travel claim, as it played a significant part in my financial survival.

As it was already late on Friday afternoon, and I’d already had a very unpleasant run-in with Andrew, I decided that, for now anyway, I wasn’t going to ask him any more questions. In addition, quitting time for the day was approaching, and I wanted to leave the office as soon as I could, so I decided to keep any further queries I had for the following week. But by the time I was ready to leave, I had come across a few more entries that didn’t seem logical.

I was packing up the audit files to go home when Andrew came into the audit office. Hey, Neil, the reconciliation I gave you was ‘preliminary.’ Here is the final version for year-end. Please give me back the one you have, and while he looked at me expectantly, I looked at him incredulously.

I had worked on the ‘preliminary’ version for a week. I had made copious notes and audit verification marks, and now he wanted it back? Sorry, Andrew, but I can’t give it back to you now. I first have to transpose my notes and verification marks for the transactions I’ve already audited and validated on the version we have onto the one you’ve just given me. There isn’t enough time to start over from the beginning. I’ll return the ‘preliminary’ one to you when I’m finished with it, I said sarcastically, emphasizing the word ‘preliminary.’

Andrew’s face went red, but he knew I was right. Just return the ‘preliminary’ reconciliation to me once you’re finished. Can you do it before you leave for the weekend?

Andrew, that’s impossible. It will take me at least two to three hours to transpose everything from the ‘preliminary’ reconciliation to the one you’ve just given me, I said, once again emphasizing the word ‘preliminary’, but more to the point I found this request to be rather suspicious and inappropriate.

As I already had reservations regarding the accuracy of the reconciliation, I didn’t let on that he had now increased my suspicions considerably as to the accuracy and validity of either of the reconciliations. I found it strange that, only after I had asked so many questions and made him angry, he had produced another version? More puzzling, how had he done that in such a short space of time, as it was thirty pages long?

Andrew, I’ll try and complete the transpositions on Monday morning, and then I’ll return the ‘preliminary’ reconciliation to you, I replied calmly, although my mind was churning over at an alarming rate. He was a bit taken aback, so I suggested that he phone Edward Manley, the audit partner, and ask him if I could work late. At that point, I would be entitled to overtime pay, which the client had to pay over and above the quoted fee, and overtime had to be agreed between the partner and the client before it could be worked. A wave of anger passed fleetingly over his face before he composed himself, and reluctantly agreed that Monday would be fine, but that he would hold me to delivering the ‘preliminary’ reconciliation to him on Monday morning. As a threat, he said that he would report to the senior and partner if it was not finished by then, and he stormed out of the office and slammed the door behind him.

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Another thing that piqued my curiosity was that Andrew had always appeared to be obsessive, with a place for everything, and everything in its place. His desk was always neat and tidy, with his pens lined up in a straight line on the left side of his desk, red, black, and blue, always in the same order, and with his in and out trays on the right side of the desk always square with the corner. If something was deposited in his in-tray for his attention, he would address it immediately. Once he finished with it, he would place it in the out-tray, with written instructions for his staff. His staff knew to come to him exactly thirty minutes after they put something in his in-tray and retrieve it. On several occasions, I had heard him shouting at his staff because they hadn’t returned after exactly thirty minutes.

Andrew’s obsessive behavior also applied to the document archive and filing room, a large room approximately eighteen by twenty-five feet, with shelves approximately fourteen inches deep lining the right side and rear walls. On the left of the entrance were eight locked fireproof five-drawer document cabinets which contained all the company’s statutory documents, share registers, management minute books, the year-end general ledgers, copies of tax filings, personnel files, and all other records that needed to be kept permanently and/or securely for specific periods in terms of the Laws of Prescription. The cabinet drawers were all neatly labelled, indicating what was kept in each cabinet, and according to the time the records needed to be retained; either permanently in the case of some documentation, or for however many numbers of years for others. The drawers were alphabetically labeled on the outside, and inside every file had to be in its correct place. The only people who had keys to the financial records cabinets were Andrew and Stanley, the CFO

Stanley was originally from England and had a dry, droll sense of humor, and he didn’t take anything nearly as seriously as Andrew did. Even though he was Andrew’s boss, he’d told us that on numerous occasions he had received Andrew’s ‘lecture’ on the necessity of ensuring that everything had to be in the correct place. As he didn’t want to ever have to be subjected to the ‘lecture’ again, he never went to the filing room himself, or ask anyone other than Andrew to retrieve something for him. Once Stanley finished with the documentation he had requested, he would return the documentation to Andrew for replacing in the cabinet. As an example, a file starting with the letters Ab would always, always, have to be in front of one starting with Ac, and if anyone placed anything in the cabinets outside the prescribed order, Andrew would get very agitated, ascertain who had put the item in the wrong place, and then lecture that person on the necessity of having everything in the right place.

A similarly obsessively-organized system applied to the storing of the binders containing supplier/vendor invoices, copies of AgriPipe’s sales invoices, and bank statements with returned cheques. Every binder had to be correctly labelled, with all labels printed with the same sized print; sales invoices binder labels were printed in red ink, with the start and end invoice number, and start and end date; supplier invoices binder labels were printed in black, labeled by month, and then alphabetically by vendor/supplier name. Bank statement files were labelled in blue. The binders containing the oldest documents were always on the bottom shelf starting on the left, and then running left to right across the wall, until the next shelf was required, once again starting from the left. The most current binders always had to be on the topmost shelf. Andrew maintained that as these would most likely be required more often than the older ones, it was easier to reach up and retrieve a file as opposed to bending down.

Documents were kept only for as long as they were required to be retained in terms of Prescription Law. Every quarter there was a clean-out of the last quarter that had passed the statute date. All the documentation that was no longer required was destroyed in the blast-furnaces to ensure, to quote Andrew, ‘Complete destruction, so that no outsider can get hold of our confidential company records’. Every quarter, all the remaining binders were moved, with the oldest being moved into the space on the bottom left vacated by the files that had been destroyed.

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Several things concerned and puzzled me. Andrew was so methodical and obsessive with his desk and the filing room, but the financial records pertaining to ADP appeared to be in complete disarray. But here I was, at the end of the first week of the audit. Now, after I had spent the week auditing the ‘preliminary’ ADP reconciliation, it was now superseded by a newer one? Was it because he didn’t have the accounting knowledge required to be the Controller, and didn’t know what he was doing? Or was he trying to hide something? But then, why had nothing been uncovered in previous audits?

I quickly dismissed these thoughts. After all, he prepared monthly financial reports for the company management. At the audit commencement meeting, Edward and Eugene had asked Stanley if any anomalies had been noted in the monthly reports. Stanley said that to the best of his knowledge and belief, the company’s results were consistent with business operations. So, taking this into account, I believed that it was I who was lacking the knowledge, or experience, to understand the complexity of keeping the records methodically. After all, Andrew had been the AgriPipe Corporate Controller for almost eleven years. Every year, the audit had been finalized without any findings that didn’t have reasonable explanations. There had also been no comebacks in any subsequent period from either the holding company in America or its auditors, so at this point, I was very much doubting myself.

However, my gut feeling told me that something was wrong, and I didn’t consider Andrew’s behavior normal. So I made a snap decision that I wouldn’t leave any of the audit files and documents in the office over the weekend. I would take them home with me, but I needed partner's permission to do this. So, I phoned Edward and said that I didn’t want to leave any of the files or documents that we were working on, even those that belonged to AgriPipe, at the client’s premises. When Edward asked me why, I gave the excuse that I was concerned that the cleaners who came in over the weekend would move our files and documents around, and if anything went missing, we’d be blamed. Edward vacillated, and said that it was most irregular to remove client files from a client’s premises, but, if I was that concerned, I needed to get the client’s permission. He said that if I received it, I had to come into the FMC office and drop them off there for safekeeping. He said that there was no way I could leave them in the trunk of my car for the weekend because if anything untoward happened to me, or my car, over the weekend, the files would be safe in the firm’s possession. He said that he would wait for me to arrive. But first, I had to get the files off the premises without being caught, and I wasn’t sure how I was going to achieve this.

Just as I was thinking about what to do, Andrew came back. Neil, I’m sorry for walking out and slamming the door. That was very wrong of me. Won’t you please join me and Stanley at Bosman’s for a beer to decompress? It’s been a high-pressure week with long hours, and I think we all need some respite, he said jovially. This was definitely weird. As far as I knew, neither the audit manager, nor any of the other clerks, had ever been asked by anyone at AgriPipe to go out for a drink after work. So not only was this weird, it was also out of character, for only a short time earlier he had been very angry with me. In addition, there had never been any type of camaraderie, or even any friendly banter, between the auditors and him prior to this.

Andrew, I’m sorry, but unfortunately we’re not allowed to go out with a client or accept any largess without partner permission. In any event, I have to go and meet Edward at the office on my way home, I answered, trying to sound apologetic. However, in order not to seem churlish, standoffish, or ungrateful, I said that I would gladly accompany them some other time, but would need prior notice, and only if I obtained permission from Edward. He seemed amenable to this and told me that he and Stanley were leaving the office immediately, but that if I changed my mind, I knew where to find them.

Andrew telling me that he was leaving immediately was fortuitous. Even though I was already off-the-clock, and couldn’t charge and be paid for the additional time, I waited another fifteen minutes, hoping that in that period, Andrew and Stanley would leave the premises. I placed the ‘preliminary’ and ‘final’ versions of the reconciliation into the first of four thick binders containing the supporting documentation. I needed to take those four binders with me, and I’d have to carry those separately. But to only take them with me would look even more suspicious if Andrew came in over the weekend, as I suspected he might, so I decided to take all the audit files, including the ones my colleagues were working on, with me as a precaution. It took me another ten or so minutes to pack up all the other audit files. If Andrew came looking for the reconciliations over the weekend, all the audit files would be gone, not just the reconciliations and the supporting documentation.

I was also concerned that if documents went missing, and I or one of my colleagues went to ask Andrew where the documents were, he could accuse me of having lost, misplaced or destroyed these, as I was the last auditor to leave. Most importantly, if any of the documentation related to the reconciliation, even documents I had already inspected were removed, I would have no proof that anything was wrong, if indeed anything was, and the week that I had spent on the reconciliation would be deemed to have been for nothing. Eugene, the manager, who didn’t like me anyway, would definitely be annoyed, and he would take great delight in reporting me to Edward. Knowing Eugene, he would probably insinuate that I had spent many chargeable hours doing nothing, but that wasn’t my real concern. My real concern was that Andrew would remove the ‘preliminary’ reconciliation on some pretext or other, and then feign no knowledge of its whereabouts on Monday morning. So, in order to remove all the files we were working on from the audit office, I would have to make several trips to and from my car on both ends, but I felt that it was a prudent course of action to take. I still had no idea what I was looking at or for, or if there was anything untoward or suspicious going on.

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To leave the premises, I had to pass through the security checkpoint, and everything except my briefcase would be inspected. Sure enough, when the security guard on duty saw the files I was carrying, he said that he would have to ask permission from someone in management for me to remove them from the premises. I took a chance and told him to call Andrew, hoping that he’d already left, otherwise I’d be screwed. When he said that Andrew had already left, I asked him to call Stanley.

Stanley asked to speak to me. I explained that I was going to FMC’s offices to discuss the progress with Edward, and to get some reviews performed. Stanley, not being anal like Andrew, had no objections to me taking the files, and he told the security guard that it was fine. After making three trips to and from my car, I left quickly. I was concerned that Andrew might return, as Stanley was still there, and they were supposedly going to the pub together. But one thing I was almost dead sure of: Andrew would never have allowed me to leave with all the documentation.

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I arrived at our offices after an hour-long commute in traffic through some of the not-very-salubrious areas of Cape Town. Once I’d offloaded everything, I went and told Edward my real concerns. I showed him the two different reconciliations that had been provided by Andrew, as well as some of the supporting documentation.

After spending an hour with him and going through some of the questions I’d asked Andrew regarding some of the transactions, and narrating the answers I’d received in response to my questions, Edward asked, "So, Neil, what