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The vast majority - approximately 93% - of irregular expenditure in government departments and entities has never been followed up on, and this can create an environment that is “conducive to state capture”, according to the Auditor General’s office.
“I’m not entirely sure it’s our job to search for state capture, otherwise we would have been an investigative body not an audit body but sure as hell, we found some big indicators that said things are going wrong,” said corporate executive at the AGSA office, Jan van Schalkwyk.
Van Schalkwyk told a panel discussion at the Wits School of Governance on Tuesday that it had been heartening to see Minister of Public Enterprises Pravin Gordhan testifying about corruption over the last ten years, when he appeared before the Zondo Commission of Inquiry into state capture last week.
Auditor General Kimi Makwetu released the 2017/18 annual reports for government departments and entities on November 21. Only 23% of national government departments obtained clean audits, down from 30% in the previous year. Meanwhile unauthorised expenditure rose 38% to R2.1bn, while fruitless and wasteful expenditure increased more than 200% to R2.5 billion.
No consequences
Van Schalkwyk bemoaned the lack of consequences for accounting officers in the public sector who habitually ignore damning audit opinions. He described how the AG used to experience “very little contestation” from government departments. He then outlined a phase where auditees had a fantastic “intellectual exchange” at the end of the audit, which he welcomed.
“As auditors, we may miss certain things, we might not have spoken to the right people,” Van Schalkwyk said.
It then became a “little uncomfortable” according to Van Schalkwyk and the AG's office had to take a lawyer to the provinces they were auditing. “Nowadays it's blatant...[they] just don’t want you to give them a disclaimer,” he said.
This was demonstrated by the tragic incident in October when an AG official, investigating irregular expenditure in the Emfuleni Municipality in Gauteng, was shot and wounded.
Right to intervene
Van Schalkwyk said the AG’s office started an intense process to ensure its recommendations were followed and this culminated with President Cyril Ramaphosa signing the Public Audit Amendment Act on November 18 giving the AG greater powers.
“We don’t want to take over anyone’s job,” Van Schalkwyk stressed, adding they want the right to intervene only if the accounting officer and parliamentary committees fail to act against money lost to the fiscus. “It would be so great if we never used these powers…that would be absolutely magic,” he commented.
He envisions the implementation date of the amended act will be April 2019, the start of government’s financial year. Van Schalkwyk confirmed the AG’s team is back in Emfuleni after briefly pulling out, following the shooting.
He said the Chapter 9 Institution is conducting more thorough risk assessments and is not taking threats made against staffers lightly in the wake of the incident. He praised the reaction from parliament, the president and the police, saying they had been “absolutely impressive”.
* This story has been updated to reflect that the AG official who was shot was not injured fatally. Fin24 apologises for the error.
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