It’s time for truth of consequences
| ‘Massive’ change of culture needed to stem rising tide of wasteful and irregular public spending — AG
UNTIL there is a culture of accountability, wasteful and irregular expenditure in the public sector will continue, says auditor-general Kimi Makwetu.
He presented his report in parliament this week showing that irregular expenditure increased nearly 80% to R46.36billion in the 2015-16 fiscal year.
His report is about weak governance and a lack of leadership, lack of proper supply chain management, lack of accountability and lack of consequences.
A “massive” change of culture is needed, he says. “You have to change the attitude of so many individuals who are stuck in doing what they think they are there for.”
Which, judging by his report, is self-enrichment and obfuscation when the auditor-general pays a visit.
“Short of having strong and resolute leadership at the helm”, don’t hold your breath, is the essence of his message. This needs to come from the top and include “anyone who is in the management chain — from accounting officers responsible for the implementation of projects to executive authorities responsible for ensuring that goals and objectives are achieved”.
As long as there are no consequences the rot will continue.
“People normally respond when they know there is something really tough that is going to happen if they don’t.
“You need to introduce a culture of transparency of transactions, otherwise people just walk around thinking there is another six months of playing around, or six years, building a project that should have been completed six years ago but for all manner of inefficiencies.
“If they know there is going to be someone who is dedicated to following through, I can promise you it will make the required difference.”
He and his team of 500 chartered accountants and assorted other professionals have been subjected to a mixture of hostility, bullying and indifference. There was even a case of attempted bribery.
“The kind of work we do has always been vulnerable to abuse when people have a chance. It’s not so much a lack of respect for our office in particular as a lack of respect for the disciplines required in managing public finances.”
How discouraging is it when in spite of the team’s best efforts there is an 80% increase in irregular expenditure?
“Whenever we do something we wish it will lead to success. When that success continually escapes us we ask each other: ‘Is there anything better we can do?’ We are continually seized with the reality that there is a place for strong financial management in our country, in our institutions. If we are the professionals who have to undertake this task then we better not give up — because it’s ultimately in the interests of us all that we don’t.
“That is what sustains us despite the disappointments and the slow pace at which we seem to be going forward.”
Contrary to public perception there are some in the public sector who are “diligent” in dealing with the issues his office raises, he says.
There are those who “just go with the flow”, doing the bare minimum in response to the auditor’s concerns. Very grudgingly and with little or no commitment to improve.
“They’re like yo-yos. One year they’re good, the next year they go backwards.”
Then there’s a category “dismissive of our recommendations without saying so. They give the impression they are aligned to the recommendations you make but don’t do anything about them once you have left.”
These are the ones who end up with “perpetual negative outcomes”. They know there will be no consequences for their behaviour.
When the auditors walk out the door life will continue as usual.
“The risk of something attaching to you for not complying is very low. Which is why we keep bringing the issue of con- sequences into the equation,” Makwetu says.
What he finds encouraging amid the gloom are statements “from the people who ought to make them” about strengthening the powers of his office.
He makes the point that when the public protector’s office started it had almost the same powers as those of the auditorgeneral.
“The legislators gradually woke up to the reality that there is a need for remedial action. And I think this is what will start being addressed in terms of the AG’s office.”
There have never been rumblings like this before from such official quarters, he says.
“It’s the first time such pronouncements have surfaced in an official environment. It’s always been the lamentation of individuals participating in public debates. When it starts getting institutional expression it is encouraging.”
The power his office needs first is the power to access documents that officials are determined to hide from them.
Municipalities and government departments “consistently” receive disclaimers. A disclaimer means the auditor did not have access to the documentation and explanations required to substantiate suspicious transactions.
Along with the power to access all documents must come beefed-up investigative resources.
“We need the investigative capacity to get to the bottom of these infractions so that it is no longer in the hands of those responsible for causing the disclaimer in the first place.”
Is it possible that the extent of “irregular” expenditure in the public sector might be even worse than he has uncovered with the limited resources he has at his disposal?
“We have very little time to get to the bottom of the issues we deal with. These issues are very involved and often go much deeper. We can often only surmise how much deeper.”
Makwetu believes the right laws are in place to tackle financial mismanagement and corruption.
“It’s about shifting the focus of those in charge. The AG will always be a small element of that,” he says.
However, he is cautious about his office — a Chapter 9 institution like the public protector — playing a more highprofile role.
“If we are engaging in the public domain every second month it will dilute the impact of the work we do.”
The cases the public protector has to deal with are “more flavoury than when you have to deal with the complex accounting environment that involves multiple sets of people across the value chain”.
Their mandates are “distinct” and he discourages comparisons between South Africa’s most effective Chapter 9 institutions.
“The public protector has a mandate and function that lends itself to, and requires a more public attitude.”
He and recently retired public protector Thuli Madonsela used to meet regularly and swap notes.
“We would schedule a onehour meeting that ended up lasting four hours.”
Makwetu says South Africa is paying the price of political appointments in the public sector “regardless of their competence and capacity”.
His report highlights billions lost by state-owned enterprises in irregular and wasteful expenditure.
He says the first step towards turning them around is to “fix the culture of accountability”.
But there are also other, deeper issues.
“What we are calling for from a governance point of view is to stabilise the leadership roles and raise the oversight of boards to an appropriate level so that they are not creating a friendly, non-threatening relationship with management.
“Because sometimes management rides on the back of a board that is not going to ask too many questions, to do what they please.”
He says an audit of South African Revenue Service units suggests that the so-called rogue unit is “part and parcel of one of those units a tax authority would normally have so that it can begin to address whatever issues it is meant to address”.
His office investigated to ensure that the “appropriate signoffs for bringing it about were adhered to”.
Makwetu, 50, grew up in Gugulethu, Cape Town. Because of the political violence affecting education in the early ’80s his parents sent him to St John’s College in Umtata, “one of the best schools that never gets spoken about in the country”.
He attended the University of Cape Town, did his articles at Deloitte and became a chartered accountant. After working at Standard Bank, Nampak and Liberty Life he felt the call of public service and joined the auditor-general’s office.
Is “irregular expenditure” a euphemism for theft?
“You need to establish intent to decide if it was mere incompetence or deliberate — that’s where the public protector comes in.”
We hope.
The risk attached to not complying is very low. Consequences are part of the equation These issues are involved and often go much deeper. We can often only surmise how much deeper The public protector has a mandate and function that requires a more public attitude
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