Business Day

Lifestyle audits ‘costly and not graft foolproof’

- Londiwe Buthelezi Business and Financial Writer buthelezil@businessli­ve.co.za

Performing lifestyle audits on state employees is unlikely to have a meaningful impact on corruption as graft ringleader­s often use channels where their transactio­ns cannot be detected, speakers at the Public Sector Forum said on Tuesday.

President Cyril Ramaphosa renewed the call for lifestyle audits on public-sector employees in his 2018 state of the nation address when he said he was looking at introducin­g them for ministers and public servants.

A technical task team, consisting of law enforcemen­t agencies, the SA Revenue Service (Sars) and the Financial Intelligen­ce Centre, among other entities, has been establishe­d to develop the framework that will make lifestyle audits possible.

Ramaphosa is expected to announce the progress of the framework in his 2019 address.

While the idea is a noble one, the government will first need to deal with loopholes that could make these audits another means for corrupt leaders to victimise those investigat­ing them, said Claudelle von Eck, CEO of the Institute of Internal Auditors SA (IIASA).

“It’s a very good idea on the surface, but how are we going to implement it and how are we going to ensure that individual­s in the game will play it as they should?” asked Von Eck.

She said the government will need to ensure the informatio­n gathered during the audits is highly secured and cannot be used against audited individual­s to blackmail them.

Pumla Sogoni, governance officer at IIASA, said the biggest concern with the envisaged audits is that they will encroach on people’s privacy, contraveni­ng the constituti­on.

“There are existing controls the Sars audits, the Public Finance and Management Act (PFMA) and the Municipal Finance Management Act (MFMA). They are very comprehens­ive pieces of legislatio­n. The systems are there but they are manipulate­d by individual­s.”

Sogoni said people who do not declare all their assets and relationsh­ips will always find a way to segment that informatio­n, and corruption mastermind­s will always get away.

However, Pulane Mkhize, the director for internal support in the accountant-general’s office, said lifestyle audits will allow the government to cast the net wider than Sars audits as the tax agency only audits a sample of people who have to explain the difference between their income and lifestyle.

“If we can arrest this in the public service, we can halve the amount of corruption because it takes two to tango. It can have an impact on what is happening in the private sector as well, if we don’t have people who take bribes in the public sector.”

Jacqui-Lyn McIntyre-Louw, financial accountanc­y programme leader at North West University who performs lifestyle analysis, said these audits are costly, complex and take a long time to complete.

HOW ARE WE GOING TO IMPLEMENT IT AND HOW ARE WE GOING TO ENSURE THAT INDIVIDUAL­S IN THE GAME WILL PLAY IT AS THEY SHOULD?

Forensic investigat­ors look at whether the gap between a person’s assets and their current and past income can be explained by other factors such as an inheritanc­e or other legal windfalls. Sources used to gauge the gap between income and lifestyle include statements of assets and liabilitie­s, tax returns, the deeds office and the master of the high court for trusts, as well as examining occupation­s of spouses.

They also subpoena bank statements in certain circumstan­ces. Social media has also become a good source as people like to show off their lifestyle, McIntyre-Louw said.

“But doing a lifestyle audit takes a lot of time. You need a lot of resources. I don’t think it’s going to happen very soon.”

 ??  ?? Cyril Ramaphosa
Cyril Ramaphosa

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