Allegations against Auditor-General: findings of independent legal investigation

Meeting report

The Chairperson welcomed the Office of the Auditor-General (OAG), and the Audit Committee (AC) that handled matters of ensuring compliance. The Committee would receive a briefing from the OAG, after it had heard an initial note on what had occurred in the previous few months. The Committee appreciated that the AG and the Deputy Auditor-General (DAG) took it upon themselves to raise the matters that affected the Auditor-General of South Africa (AGSA) with the Committee without any instances of coercion. The Committee appreciated it when the AGSA hosted a workshop with the Committee at its Head Office in Pretoria. It was unusual, but the Committee appreciated it because it was in the nature of the AGSA to uphold ethical standards and areas of good governance.

The Committee would hear the final report promised to the Committee, and the areas that the AGSA had to adopt going forward, as informed by the independent report that it promised when it gave the initial briefing [in August 2022]. The Chairperson said he had read the documents that the AGSA forwarded to the Committee, and he appreciated the detail of the reports. It was in a limited sense that one would find institutions that would forward those kinds of reports without being asked to do so. This was something that ought to be encouraged. The OAG stood above others in its transparency, and modelled itself on the standing of the OAG in terms of the Constitution. The matters which were detailed would be dealt with in the report. The OAG’s standing had been confirmed, and such were the AGSA’s currencies. The Chairperson was “excited” that the AGSA exhibited that level of adherence to good governance and ethical conduct.

Interrupting his remarks, the Chairperson wished Mr Peter-Paul Mbele, Committee Secretary, well with his studies abroad.

If one had read the legal investigation report by the AGSA, and if one had read the Public Audit Act (PAA) one would have found that generally, the matters raised were those that were within the realm of the AGSA itself, and within the role of the Committee to ensure the independence of the OAG, as well as strengthening and protecting the AGSA. The Committee had to receive those kinds of reports through engagements, and determine through oversight if the AGSA was still on track. The Committee would also need to work together with the AGSA to frame a better way forward in dealing with matters confronting the AGSA. The Committee felt that the sensitivity of the report’s subject matter would require it to meet in-person, so it could have direct engagement. The Committee appreciated the AGSA making a trip to be with it in Parliament.

Mr O Mathafa (ANC) moved for the adoption of the agenda, and Ms N Hlonyana (EFF) seconded.

Auditor-General’s opening remarks
Ms Tsakani Maluleke, the Auditor-General (AG), thanked the Chairperson for the opportunity to update the Committee on the developments since the last time she met with the Committee. During the engagement the previous month, she committed that, in the interests of transparency and accountability, the AGSA would present the outcome of the legal review that the AGSA had instituted as part of dealing with an internal matter. She had come before the Committee because she believed that to restore confidence and defend South Africa’s democracy and public institutions, there was a need to promote accountability by adhering to and respecting due process, and transparency. As a Chapter 9 institution, the AGSA had a duty to serve the people of South Africa, and to do so with integrity and accountability. That underpinned the meeting. All were ultimately accountable to the spirit and the values of the Constitution.

Ms Maluleke reminded the Committee that she recounted how a few months ago, a member of her executive team, Mr Mlungisi Mabaso, Chief People Officer (CPO), asked for a meeting, which she granted. The parties met in her private boardroom, which was adjacent to her private office. This was late in the afternoon of Monday, 27 June 2022. Mr Mabaso felt aggrieved for how Ms Maluleke expressed herself when holding him accountable for his performance, and he wanted to understand how he and Ms Maluleke had got there. She apologised for hurting his feelings, which was certainly not her intention. She asserted her view that his performance and that of his team needed to be urgently improved. She reminded him of previous conversations in which she had raised performance issues with him. In that same meeting, Mr Mabaso announced that because Ms Maluleke had hurt him, he could also hurt her. At that point, he produced a piece of paper in which he accused her of unprofessional, unethical, and corrupt conduct. The piece of paper set out nine bullet points on decisions dating back to 2014 up to 2021. That period covered her tenure as Deputy AG (DAG), and included the initial period of her tenure as the AG.

Mr Mabaso reiterated multiple times in that meeting that in his view, those transactions and the decisions Ms Maluleke had taken were corrupt, unprofessional, and unethical. He asserted that if the allegations were to be made public, that would hurt her reputation. He requested that he and Ms Maluleke agree on a separation with a financial settlement, so that he could leave the OAG. Her immediate response was that she would not entertain any discussion on a financial settlement. She told him that he should do his job in accordance with his employment contract, and that if he no longer wanted that job, he should resign. She was very clear at that moment that she would not be intimidated. She would not be threatened and would not be blackmailed from holding an executive accountable for underperforming his duties. That was not how the OAG did things. There were standard procedures through which staff or the public could raise any good faith concerns about decision-making, or any concerns regarding the office that Ms Maluleke led. The OAG took threats and intimidation very seriously, irrespective of who was making them, or their level of seniority. In that instance, Ms Maluleke took the threat to hurt her seriously. More importantly, she took those allegations seriously, especially given the nature of her role as the AG. Given the nature of those allegations, and the manner in which the allegations reached her, she immediately reported the incident to the DAG, as the head of administration and the accounting officer of the institution. She asked the DAG, in his capacity as the accounting officer, to institute independent processes to look at both the accusations against her, and the conduct of the CPO. Even though the matters related to operational issues within the ambit of DAG’s responsibility and authority, she was clear that the responsible thing for her to do was to proactively bring those matters to the attention of the Committee. She was also proactive in briefing the internal executive team as well as the OAG’s established governance structures, specifically, the independent audit committee and the Remuneration Committee (RC). She understood the importance of her role in safeguarding and supporting democracy. Therefore, she could not have such allegations brought against the AG, and leave the allegations without being examined, investigated, and brought to a conclusion. She also appreciated that her role was to hold public officials accountable, and as such she must equally expect to be held to the very same standards, or even better.

Further, she was clear that she could not allow herself to be intimidated or threatened from doing her job, be it as the auditor of the public sector, or as the leader of the AGSA as an institution. It was against that background that she took the proactive step to have the allegations be subjected to a swift and independent review. She needed to be clear: As the Chairperson said in his introduction, the AGSA had been extremely transparent with its staff, and with its oversight bodies about the matter, right from the very beginning. In her view, no one should be above the rules. Every institution received complaints and accusations from time to time. But the rules must be used to deal with such matters; learn from the experiences that arose when matters such as those were raised; and continually seek to improve and strengthen institutions. As the AGSA had said in its public announcement two weeks before, to strengthen the systems of integrity, transparency, accountability and performance in public institutions, the AGSA must hold itself to the same standards, or better yet, it must lead by example. She believed that she led by example, demonstrating that no one was above the rules. In each of the decisions that were subject of the allegations and the subsequent legal review, she confirmed that in exercising her authority, she applied her mind, consulted as necessary, and carefully considered her responsibilities to build and sustain the capability that the OAG required in that moment, but also as far as Ms Maluleke could see into the foreseeable future.

Briefing by the Deputy Auditor-General
Mr Vonani Chauke, DAG, presented an account based on a set of slides. [Please see the electronic document for details referred to below.]

• Introduction
• The role of Scoag in relation to the AG and the institution
• Scoag’s role in relation to salary, allowances and benefits of AG
• Background to the investigation and legal review
• Procedures to deal with allegations
• Procedural requirements for complaints/allegations at the AG
• Was the CPO’s submission a protected disclosure?
• The allegations categorised
• High level summary of the opinion (which showed the category of the allegations and the details of the allegations themselves)
• Salary, allowances, benefits
• Vacuum in the law and its application
• Security costs
• Salary increases
• R860 000 interest free loan
• Interest paid on deferred compensation
• Recruitment of key personnel
• Head of Audit (National)
• Chief Risk Officer
• Business Unit Leader: Communication
• Supply Chain Management
• Attempted Influencing to appoint a personal coach
• Corrective Action
• High level plan of action

He recapped the background details of the matter. He said that Ms Maluleke told him that she needed to know if she had erred, so she could take the appropriate action. She made it clear that if there was anything she had done wrong, then she wanted the OAG to correct it. She gave Mr Chauke the freedom to go ahead and commission an independent investigation. This was undertaken on his behalf by the law firm Bowmans. There were still other linked processes happening, on which Mr Chauke would update the Committee.

Before detailing the allegations, Mr Chauke addressed the importance of having an independent AG. He addressed the expectations and responsibilities of the OAG and the SCOAG as the OAG’s oversight body. He referred to the full report (a document separate from the presentation). On page 27, paragraph 79, the legal opinion was clear on categorising the aspects where the OAG needed prior approval of SCOAG, and on the areas in which it needed to consult the SCOAG, or to report to the SCOAG. Most of the transactions mentioned in the allegations were ones where the AG, when she was the DAG, did not consult with the SCOAG. In paragraph 79, the legal opinion clearly established the SCOAG’s powers, and also the duties of the AGSA in respect of the SCOAG under the PAA. Whenever the AGSA needed to retain any surplus after its year-end process, it would come to the SCOAG for approval. That was where the AGSA needed the SCOAG’s prior approval. In some instances, the AGSA needed to consult with the SCOAG. In the full report, there were specific areas that were mentioned. The issues the AGSA needed to consult on were: Its code of conduct; its audit standard; and the basis of the fees it charged. Additionally, the AGSA went through a process of consulting with the SCOAG prior to appointing the DAG. This system was created to allow the AGSA to be independent, and accountable only to the Constitution.

Mr Chauke noted that paragraph 18 of the full report said that the AGSA’s duty to consult the SCOAG was “therefore limited to the relevant section listed above”. Some of those provisions dealt with AGSA powers after consultation with the SCOAG. The letter containing the allegations implied that the SCOAG’s approval was required; in terms of the reference section, that was not the case. The SCOAG did not have the authority to authorise operational transactions, as that would compromise its oversight role as envisaged in section 55(2)(b)(ii) of the Constitution. The opinion went on to list additional Constitutional Court judgments. He wanted to set out the fundamental principle of how the OAG was created to be independent.

The role of Scoag in relation to the AG and the institution
• Section 55(2)(b)(ii) of the Constitution requires the National Assembly to provide for a mechanism to hold organs of state accountable
• Scoag is established in terms of section 55(2)(b)(ii), read with section 10(3) of the Public Audit
Act (PAA)

Scoag’s role in relation to salary, allowances and benefits of AG
Section 7(1) of the PAA detailed the SCOAG’s role in relation to the AG's salary, allowances and benefits. After the amendment to section 7 of the PAA after 1 April 2019, the AG was given additional powers.

Mr Chauke said that some of the transactions mentioned in the allegations happened in 2017 to 2018. It was important to recall the dispensation that was applicable at that stage.

Background to the investigation and legal review
Mr Chauke said that there was a factor which would take the AGSA “years to rectify”, which was the fact that the AGSA relied on its trainee accountants to do its audit. In 2022, the AGSA hired over 400 trainee accountants. About 50% of those people did not have the CTA (Certificate in the Theory of Accountancy), the Honours degree equivalent that allowed one to go and write one’s board exam. At that stage, the AGSA was busy with matters related to the Municipal Finance Management Act (MFMA). Half of those people were not available because they were preparing to write their final exams. While the AGSA was committed to transforming the accounting profession to give people an opportunity who did not necessarily have a CTA, it was also important to understand the operational requirement in making that decision. For the AGSA to have appointed so many people would affect it significantly in terms of its ability to conduct its audit. In the past, he had shared with the Committee that it was even worse from a financial perspective, because with the MFMA, most of the AGSA’s auditees were not in a position to pay it. If the AGSA did not use its own people, it was forced to go and use private firms. The AGSA did not get paid by the auditees; it had to use its other reserves to pay those audit firms. Thus, it was a fundamental concern. When the AG was the DAG, she had made a strategic decision with her Executive Committee (Exco) that the AGSA needed the right balance with the trainees who had a CTA to respond to its operational requirements. While the AGSA gave its people the best support in 2022, and most did not pass, it would have the same problem the following year until people went through the AGSA’s system. Its hope was to give people the best support it could so that they could pass, and be available for it next year. However, it was a decision that should have been taken in consultation with Mr Chauke himself and the AG.

On the subject of the AG sharing her concerns about the CPO’s performance: She shared her concerns during a meeting with senior management. These were people involved in implementing the strategy of the People Portfolio. Mr Chauke had been in that meeting.

The AGSA had also asked Bowmans to investigate the conduct of the CPO. Bowmans advised the AGSA that to investigate without hindrance, it was important that it suspended the CPO, and thus the CPO was suspended.

Procedural requirements for complaints/allegations at the AG
Complaints or allegations against the AG are dealt with in terms of the AGSA Complaints Policy and Procedures, June 2021. The complaints against the AG are classified as category four complaints.
The procedural requirements in this case are –
• Complainant must submit complaint to the Business Unit Leader (BUL): Risk and Ethics
• BUL: Risk and Ethics must submit complaint to the DAG, after consultation with the Chief Risk Officer (CRO)
• The DAG must within seven days notify the AG and submit the complaint to the Chairperson of Scoag
• Scoag will determine the next steps.
Therefore – “submitting” the document to the AG directly was a material breach of the Complaints Policy and Procedure.

Was the CPO’s submission a protected disclosure?
Mr Chauke said that the external legal team advised him that when the CPO provided that particular document to the AG, the team had to test whether it was covered under the provisions of the Protected Disclosures Act, 2000. The conclusion was that the submission is not a protected disclosure

High level summary of the opinion
Mr Chauke presented a summary of the allegations made against Ms Maluleke. The allegations were organised into the following categories:
- Salary, allowances and benefits of the former AG;
- Recruitment, selection and appointment of key personnel;
- Supply chain management.

Vacuum in the law and its application
• Section 219(5) of the Constitution states that national legislation must establish a framework for the AG's salary, allowances and benefits.
• Section 7 of the PAA (prior to 2019 amendment) stated that Scoag must consult the person recommended for appointment as Auditor-General and make recommendations to the President for the determination of the conditions of employment of that person, including an appropriate salary, allowances and other benefits.
• Scoag only made recommendations in respect of a salary and termination bonus in line with that of the Chief Justice. Scoag made no recommendations on allowances and benefits.
• The law was silent on the position where no recommendation or determination was made.
• The DAG (accounting officer), in the circumstances, had an implied duty and authority to provide for the allowances and benefits of the AG.
• The AG signed a “remuneration and conditions of employment: AG” document to close the vacuum, providing some certainty (the conditions document).
• The conditions document regulated various conditions such as leave, official vehicle, Cape Town accommodation etc. Where this document was silent, normal AGSA policy would apply

Salary, allowances, benefits
Mr Chauke then dealt with the allegations in detail, where each allegation was set out, and the legal opinion was given below the details of the allegation. The individual allegations were organised under the following headings:
- Security costs;
- Salary increases;
- R860 000 interest free loan;
- Interest paid on deferred compensation.

After discussing the R860 000 loan, Mr Chauke said that of the transactions that he had mentioned that far, the people that were implicated were able to talk about those particular transactions. But the late AG Kimi Makwetu was not able to tell his side of the story. He could not finish his time in office; he passed away a few days before his term ended. Mr Chauke observed that Mr Makwetu kept the fact that he had cancer to himself. While the exact reason for the advance may not be known, when Mr Chauke looked into the circumstances and the timing, he thought that Mr Makwetu’s illness might have had to do with that particular advance.

Recruitment of key personnel
The presentation set out each allegation, and the legal opinion was given below. The individual allegations were organised into the following categories:
- Head of Audit (National)
- Chief Risk Officer
- Business Unit Leader: Communication

Regarding the recruitment of the Business Unit Leader: Communication, Mr Chauke said that with communications, there was no clear indication as to which professional body the AGSA required the candidate to be registered with. He still needed to look into that. His assessment was that the AGSA may not have applied enough rigour in approving the job description. On the audit side of the business, the AGSA was very clear about membership in professional bodies, because that was its “bread and butter”. But on the support side, there was a need for the AGSA to look into membership in professional bodies, and then come back to report to the Audit Committee.

The legal counsel had explained what meeting the legality requirement meant. Once one sets a job description, one needs to ensure that one holds everyone accountable to that particular job description. If one did a waiver, one needed to document the reasons. In that case, the rationale for shortlisting Mr Harold Maloka for Business Unit Leader: Communication had not been documented. Good practice within the AGSA should have dictated that that got documented, and was part of the files it had. In that case, it was not done. It was an area that the AGSA needed to improve on. While the CPO was suspended, Mr Chauke was fulfilling the role of Acting CPO, and he needed to ensure that the AGSA resolved those particular issues.

The Chairperson asked Mr Chauke to pause at that point.

Discussion
The Chairperson said that it was in line with the legal opinion that with the matters of recruitment, if one issued a published call for any interested parties in a particular position, then one could not deviate from it, because then one would have denied others who had an interest in that position. Therefore, the actual deviation waiver from there would attract some kind of challenge. The legal opinion began to realise that the AGSA had the authority to handle these matters because the law covered them. But if the law covered it when it did a particular action, it needed to keep record of each and every step, and document whose responsibility it was in terms of recruitment. Secondly, the AGSA needed to be clear at what stage of that process it would want to revert into that factual predetermination that those individuals were supposed to be somewhat like that. The legal opinion was saying that in the AGSA’s advert, it had never stipulated that there should be an equivalent qualification, which might have been a slip, even if there was an indication at that point of a stated provision on what equivalent qualification was acceptable. The AGSA’s actual judgement would have been well covered and there would have been no point in querying the legality of the matter. In the Chairperson’s opinion, perhaps in hindsight, the AGSA may have reflected that if it had done A, B, C, D, E, that would not have landed it into that situation.

Mr O Mathafa (ANC) thought the Chairperson’s question was proper. But how he interpreted things was in line with how the SCOAG normally accounted financially. Prescripts would be laid down, but where it was not humanly possible, or where there were issues of justification, deviations were allowed. But as and when one deviates, it must be documented in some way to be able to indicate why one moved away from what the prescripts would have dictated. As he read the presentation, and listened to the DAG speaking about issues that the AGSA was going to bring forth, to tighten that process, he learnt that the allegations actually brought up new lessons that the AGSA would be able to learn from to enhance its inner workings. The opinion spoke to the allegation that was made, and the allegation was very direct, alleging certain unbecoming behaviour on the part of the AG. But based on the context that Mr Chauke had set out, and on what he had just said now, according to the opinion, it was not believed that what happened really satisfied the allegation. The view was that there, the AGSA could move forward.

Mr Mathafa asked what new measures the AGSA was going to put in place, that would also assist, for the sake of posterity, that whoever then comes after a particular person would be able to know that there was a gap, but that gap had been closed, and it had been closed in that particular way. As much as there was an allegation, as far as the opinion is concerned, it said that the allegation did not pass the test. When he read the report, he was quite comfortable with the following: As far as deviations were concerned, they were allowed, and the only issue was that perhaps the AGSA needed to have captured the details in some way so that it was able to know how things happened, and how it would move forward.

Mr Chauke said the AGSA noted the finding and the particular flaw that happened. The role of documenting the deviations would sit squarely within the CPO’s domain as the custodian of the recruitment process. Unfortunately, in that case, the reason for the deviation was not done, and the legal counsel looked into the legality; it looked into the documents that were available in the AGSA’s policies. Because the reason for a deviation was not documented, the legality part did not pass. The AGSA was going to ensure that in future, if there were things like that, it would properly document such things. It did have waivers within the Office – it adequately documented its waivers and deviation. With the standard applied to documentation, it would attend to the human resources (HR) weaknesses that led to that flaw. One such flaw was the documenting of such things. Normally, it would not be done by the DAG, but instead, the person who was the process owner would document that, and then it would come to the DAG to be signed off. The panel (i.e. the recruitment panel) should have, in that case, signed off for that particular matter. Mr Chauke’s understanding was that the AGSA came up short on the documentation side of things. The panel was clear: Mr Harold Maloka scored the highest points in the interview. The interview process did confirm that he was the right person. It could be possible that in putting the job description out there, the AGSA erred in not indicating what the key qualification was, and that something equivalent would be acceptable. In the case where it accepted an equivalent qualification, it should have adequately documented that. As auditors, the AGSA appreciated that information was important. It asked its auditees to do the same thing. The AGSA should have done the same thing itself to ensure that when someone came to review it, they fully understood the rationale that was applied to that particular matter. As the legal opinion said, it was not corrupt, unethical or unprofessional behaviour, but the AGSA had been found wanting on the documentation part.

The Chairperson said that when he read the details from the lawyers on those matters, what was interesting was that the documents on the actual scoring and determination of the performance of those who were interviewed did exist. There was documentation on the actual determination that was arrived at in terms of who should be appointed. There was an indication that Mr Maloka scored highly in the interview, and what was not there was the waiver, or the deviation. With deviations, it was clear if the upkeep of documents should be realised; one had people who had been assigned that responsibility. Through that responsibility, SCOAG expected that such individuals must be held liable for instances of failure or lapse, because the realisation of such as having to fulfil the litmus paper test on the deviations’ overall legality was based on the existence of documentation. If someone was blamed on that aspect, and it had no documentation anywhere which justified such an appointment, and the individual concerned who had been appointed was “in an embarrassing state”; as such, it became an emotive aspect in terms of the individual occupying such a position. That was why the Chairperson was asking the question about who was responsible because that gave detail on the individual affected, and those who were interviewed in the fit-for-purpose analysis. He agreed with Mr Mathafa that the lawyers had to deal with a test as to whether the allegation fitted within unethical conduct, corrupt practices, and unprofessional conduct. However, the lawyers did need to consider the legality aspect. The individual concerned who was supposed to take such a decision was then a matter which became primary in as far as that kind of situation was concerned. It was confirmed that the AGSA’s judgement was based on certain things that should have been documented. Therefore, the AGSA’s remedy needed to have some kind of a focus in that area.

Mr Chauke replied that the AGSA would definitely do that. It would ensure that where actions were not being taken, and executives that were supposed to do a job did not do that job, it would take appropriate action.

DAG Briefing (continued)

Supply Chain Management
Mr Chauke then dealt with the allegations under the heading:
- Attempted Influencing to appoint a personal coach.

Corrective Action  -  High level plan of action
• The AGSA takes the outcome of the legal opinion seriously and is in the process of identifying areas where governance and controls should be tightened.
• The AGSA will prepare a time-bound plan of action to address governance and internal control weaknesses.
• The plan of action will be shared with the Audit Committee for comment and tracking.
• The AGSA is investigating the matter relating to interest payment, and appropriate action will be taken.
• Similarly, the AGSA notes the finding on the procedural flaw in the process of appointing the head of communications. It will attend to the HR management weaknesses that led to this flaw, amongst these being the crafting of job descriptions on the support side of its organisation. In this specific instance, it is comfortable that it ended up with the right candidate for the job, who was appointed following a normal interview process.

Discussion
Mr Xolisile Mgxaji, Committee Content Advisor, recalled that he explained to the Chairperson that there was an issue during the appointment of the late Mr Makwetu as the AG. He recalled that Mr Chauke referenced section 7(1) of the PAA before it was amended that salaries should be in line with the high echelons of the judiciary. Extensive research was done on the benefits and allowances of the high echelons of the judiciary. The Office of the Chief Justice (OCJ) was telephoned, because of a rumour that the Chief Justice had a house in Bishopscourt, Cape Town. He and his colleagues went to a meeting of a subcommittee at Alexander Forbes in Johannesburg. The subcommittee was made up of three members and the SCOAG colleagues. But in a nutshell, despite those efforts, the colleagues could not establish what those salaries and benefits could be. The SCOAG then said that it needed to confirm the salary. The benefit and allowance should be according to the institutional policy. Mr Mgxaji said he was unsure what the communication was thereafter between the Speaker and the President, because the SCOAG would resolve on the salaries, and then that the benefit and allowance would be in line with institutional policies. He recalled that Mr Makwetu called him about delays. The SCOAG was not kept abreast of what the developments were concerning that matter of benefits and allowances.

The Chairperson observed that some confirmation was needed going forward to affirm the position (i.e. the position on benefits and allowances). The intention had been there to deal with those things, but then it might have “slipped through the cracks” of communication. It was within the SCOAG’s power to find a way of finalisation together with the AGSA on that matter.

Audit Committee Briefing
Mr John Biesman-Simons, Chairperson: Audit Committee (AC), AGSA, presented. The AC comprised four members. The Deputy Chairperson, was enrolled in time-consuming postgraduate studies at Harvard Business School, United States of America, and she had tendered her apology for being unable to attend the meeting. Another member of the AC was Ms Carol Roskruge-Cele, who was unable to attend the meeting due to travelling to a funeral in the Eastern Cape. The last member was Mr Cedrick Mampuru, who attended the meeting virtually.

The presentation covered the following. [Please see the electronic document for details referred to below.]
• Introduction
• Purpose
• Applicable policy requirements
• Application and policy requirements
• Steps taken by AG and DAG
• Conclusion of the Audit Committee
• Conclusion

Mr Biesman-Simons said that, like the SCOAG, the AC was an oversight body and did not get involved in any operational responsibilities. The AC’s report was based on information supplied to it, thus all information was “second-hand”. For that purpose, the AC used the word “allegedly”, because it had no proof of anything at that stage. Mr Biesman-Simons was a chartered accountant by training, but he knew from common knowledge that attorneys used “allegedly” all the time for the same reason. In no way was the AC doubting the veracity of any assertions made to it. But equally, a tenet of the auditing profession was one of professional scepticism. Therefore, one did not just accept things; one needed to interrogate things. The AC had certainly done that, and not “blindly” accepted things on any of the matters Mr Biesman-Simons would be talking about.

Introduction
Mr Biesman-Simons added that the Chairperson mentioned the openness and frankness that had taken place, and the AC echoed his comments in that regard. The AGSA prided itself on leading by example. The AGSA was charged with auditing all of the government institutions. Imagine if the AG had a qualified audit report – it would be “the laughing stock of the nation”.

Purpose
Mr Biesman-Simons added that the AC did meet with the advocate involved in the AGSA investigation; it did not just read his report. The AC spent about an hour and a half on a Saturday morning with the advocate, and the AC was very grateful that he cooperated with the AC. The advocate was on vacation at the time; many people put a lot of effort and time into the process.

Application and policy requirements
• The AGSA’s complaints policy and procedures provide that allegations or complaints against the Auditor-General as a person must be submitted to the DAG to forward the complaint or allegations to the SCOAG.
• The Audit Committee was advised that, in confronting the Auditor-General directly with his allegations, the CPO not only breached the AGSA’s complaints policy and procedures, but also contravened the procedural requirements of the Protected Disclosures Act 26 of 2000 for disclosures made to an employer.
• Section 6 of the Protected Disclosures Act requires a disclosure made to an employer to be in accordance with the employer’s process prescribed for that purpose. This unprocedural step by the CPO left the Auditor-General with no plausible choice but to self-report the matter to the DAG for further assessment and engagement with relevant oversight structures.

Steps taken by AG and DAG
• The Auditor-General immediately notified the DAG of the incident. Two days later, he met with the DAG in person and requested him to investigate the matter independently; thereafter, she informed the SCOAG Chairperson about the allegations. On 26 August 2022, the Auditor-General, with the support of the DAG, formally briefed SCOAG on the incident with the CPO.
• The DAG has kept the Audit Committee informed of the nature of the independent legal assessment conducted by Advocate Werner Krull, the legal counsel, who was instructed by Bowman Attorneys.
• Although the attention of the Audit Committee was focused (for the present) on Adv. Krull’s legal opinion, it was advised that both Bowman’s investigation report into the conduct of the CPO and their report on the control weaknesses identified contain a number of recommendations for the DAG to consider. The committee will engage the DAG on those recommendations in due course.
• The audit committee also engaged with the author of the legal opinion, Adv. Krull.
• The Auditor-General subsequently engaged with the Audit Committee.
• The committee was satisfied with the Auditor-General’s open and frank responses to the questions posed by its members.

Mr Biesman-Simons added that the AC met at least three times per year. The committee had an annual work plan, and it discussed matters that arose. Anything that was not cleared was automatically carried forward to the next meeting. Until the matter of the allegations against the AG was put to bed, the AC would remain involved. Additionally, it would pay particular attention to that matter because of the overall reputational damage to the AG and to the AGSA.

Conclusion
• The Audit Committee commends the Auditor-General for living up to the constitutional values of transparency and accountability by subjecting the nine allegations to independent and objective scrutiny.
• Having thoroughly interrogated the legal opinion, the Audit Committee noted process-related weaknesses in two out of the nine allegations against the Auditor-General, namely the calculation of interest paid to the deceased estate of the late AG Mr Makwetu and the appointment of the Head of Communications. These isolated matters of procedure will be considered in the broader context of the AGSA’s organisational risk assessment. The executive leadership committed to including the procedural weaknesses in a plan for the committee’s monitoring at its scheduled meetings.
• The committee’s study of the legal opinion also revealed an emerging governance concern. This concern relates to the untenable situation where the DAG determines certain conditions of service of the Auditor-General, a constitutional functionary that the DAG reports to.
• The AGSA will address this concern in due course. The audit committee will provide the necessary counsel to management, if and where appropriate.

Mr Biesman-Simons added that there was currently a situation where the DAG was being “forced” to make decisions that related to the AG. The DAG reported to the AG, yet had the power to make decisions. The AC believed that that needed to be addressed. It believed that a process needed to be brought into being that addressed that issue. The AGSA would follow up on that issue, and refer back to the SCOAG, because it might require an amendment to the PAA. Where the AGSA wished for the input of the AC, it was glad to do that.

Discussion
The Chairperson observed that the affirmation of the internal control environment was critical in that instance. Therefore, the AC remained an institutional mechanism to certify such matters were being attended to.

The SCOAG was dealing with a legal entity following the foundations of South Africa’s Constitution, from the AGSA’s existence to its own operations, and the cause of having systems which were going to put it into a high standard in terms of filtering South Africa’s democratic practice. Therefore, the SCOAG itself could not slip away from such legal parameters. That was why the SCOAG appreciated that such openness was carried within the internal operational environment of the AGSA. When the AC came to the SCOAG, it did not come because it had been forced to come to the SCOAG, which was why the SCOAG appreciated that example. The exemplary nature of attending to those aspects guarantees that the AGSA indeed established itself within clear parameters of the highest law of the country, the Constitution, and was assisted by the PAA.

The Chairperson also observed that the AC’s briefing sought to tell the SCOAG that certain matters were being attended to. Otherwise, if that was not the case, that would require the SCOAG’s full attention. That would have amounted to a failure to observe the AGSA’s internal control environment.

Ms N Hlonyana (EFF) was very happy with the report from the OAG. She was glad that when the AG saw the “devil at her doorstep”, she reacted properly and professionally to ensure that she informed the DAG. She then removed herself from the situation and allowed the process to run the way it had.

What pained Ms Hlonyana the most was that South Africa was not looking at what it should be. The SCOAG was sitting there questioning the credibility of the AG instead of actually looking at why it was there in the first place. It was because the CPO unlawfully tried to get monies out of the AG. The journalists, and everybody else in the country, were “not actually looking at the CPO”; instead, the SCOAG was looking at a list of nine things that the CPO had accused the Auditor-General of. The AG was in the meeting trying to clear her name, instead of the SCOAG dealing with exactly why it was there. The SCOAG was there because a man at the OAG wanted to solicit unlawful payments. No one was speaking about that. Ms Hlonyana stated that no one was speaking about the rot found in South African institutions, “when we're trying so hard to have the independent institutions be independent”. The AG was now “put on trial”. The AG was now the one who was being looked at. The question was being asked on Members’ opinions about what the AG had been accused of. The AG was accused by a man trying to get the AG to pay him, “or else”. Why was the SCOAG not looking at that particular problem?

Ms Hlonyana did not have any issues with the presentations. The SCOAG had always supported the OAG from the beginning and always ensured that it gave the necessary support. People's names had been dragged through the mud. The late AG’s name was being dragged through the mud, and she did not understand why, because the late AG, Mr Makwetu, made sure that he served the country with honesty and credibility until the day he passed away. But today, the SCOAG questioned him and his contribution to the country. This was because there was “that devil that no one wants to speak about”. She argued that no one wanted to speak about the CPO to say that the SCOAG was there because that man tried to get what was not due to him.

She also asked about the safety of the OAG. Even when Mr Makwetu was still alive, the issue of the safety of the AG and the people who worked for the AG had always been an issue. There was the issue of auditors in South Africa getting threatened, and the SCOAG had cases that were brought to it to say that an incident had happened. If she recalled correctly, there was an incident where a person was shot. The SCOAG called the South African Police Services to appear before the Committee, and it asked the SAPS what it was doing to make sure that it defended the OAG, but nothing had happened. But what was happening now was that on a Friday, the SCOAG was “being dragged to Parliament”, not to deal with the issue of the CPO, but to come and question the credibility of a woman. It questioned the credibility of a woman who ensured that she was serving South Africa. She (the AG) was being questioned because of that man, the CPO. It was not fair. Ms Hlonyana really wanted to know what was going to happen to the CPO. When it was with the AG in Pretoria, the Committee said it wanted a case to be opened. A case must be opened. Ms Hlonyana strongly felt that a case of intimidation and a case of solicitation must be opened. She expressed how the situation made her extremely angry. “Because as a nation, we're typically doing what we always do”. There was an issue of an abuser, an issue of a thief, and an issue of a man who “should never even work anywhere in South Africa ever again”.

Mr Mathafa picked up on the Chairperson’s topic of how it was very rare that a public entity did what the Chairperson of the Audit Committee mentioned, i.e. self-reporting, because in most cases, matters of such a nature were “dragged out” of those institutions. Mr Mathafa wanted to commend the AG for doing what she did, and not to let matters slide and take them lightly. He agreed with Ms Hlonyana. He was not necessarily delving into the merits of the case because processes were unfolding. As the Committee indicated when it was in Pretoria, it would give the necessary support to ensure that the AGSA completed its processes. It could then come back to be able to share its findings with the Committee. His view was that the Committee was dealing with a matter of extortion that went wrong, in the sense that the person who was supposed to be intimidated “did not bite”. For that, he wanted to commend the AG for standing her ground, but most importantly, for putting herself under scrutiny, because immediately, she removed herself from the platform and said to the DAG that there was a matter which involved her, and asked the DAG to investigate. She did not give limitations and parameters on how far the investigation could go. It clearly meant that the AGSA took accountability issues very seriously.

Mr Mathafa observed that the AGSA had two processes. One dealt with the conduct of the CPO, and was unfolding. The AGSA indicated that there would probably be a sitting the following week. The second part was what the AGSA reported on, where allegations were made against the AG herself. The AGSA supported that with the opinions that a law firm crafted. This was “not just an ordinary law firm” – the Committee had had many interactions with Bowmans, and it was a reputable law firm. Bowmans had extensive experience in the public space. It showed that the AGSA and the AG herself were not scared of scrutiny. That process was unfolding, and legal opinions had been given. The AGSA had identified lessons. He requested that with the identified lessons and corrective measures, perhaps a report to the SCOAG could be drafted on the areas that could be improved regarding internal operations. This would enable the SCOAG to monitor compliance going forward. He did not think there would be a scenario where the AGSA had identified a lesson reoccurred, when there were measures that the AGSA itself had identified as corrective measures. The proactive nature of the AGSA was welcome, as was the involvement of other stakeholders. Not only did the AG involve the DAG, but the DAG also involved the remuneration committee and the audit committee.

Mr Mathafa said that there were areas that he thought did not fall within the SCOAG’s mandate. The SCOAG wanted to allow the AGSA the space to conclude on those matters. But where there were issues of law-making, requirements of law amendments, remuneration of the AG, and any other matter that would require the attention of SCOAG, he suggested that with those particular issues, Mr Mgxaji and the DAG assist the SCOAG in compiling those issues into a readable paper. It would be able to take such a paper to its legal unit in Parliament to receive guidance on how best to respond to those issues. He suspected that there would be areas that SCOAG might need to make a pronouncement on. But it would serve the SCOAG best if it was able to receive the necessary legal advice on how best to respond to those issues. He felt that the Chairperson would be capable of issuing a statement on how to move forward.

Mr Mathafa also found slide nine very telling, as it indicated the areas where the AGSA had to consult, where it had to seek permission, where it had to seek concurrence, and where it had to advise the SCOAG. That put the whole picture into a consumable size. He thanked the AGSA for the presentations, which would be able to assist Members where issues were raised, whether it was in the public domain or in Parliament. He agreed with Ms Hlonyana that South Africa “had a culture of reporting at face value”, but it did not necessarily go deeper into what led to where things were. Perhaps it was a case of “bad news selling”. He felt that the report clarified many issues.

The Chairperson was advised that Mr N Singh (IFP) was in Gauteng, but might have had problems with connectivity.

From the outset, the Chairperson was struck by the encouragement “from the word go” to report. He had listened to the AG when she spoke passionately about her attitude in dealing with her work, keeping to the values of the Constitution, driven by purpose, and upholding the critical principles of ethical conduct. That was critical for the SCOAG as a guarantee of an office which ought to be trusted to carry out its work in line with the Constitution. He felt that the SCOAG needed to pronounce clearly on that matter. Ms Hlonyana had expressed how she felt about a woman who trusted an employee to have a meeting objectively, which ended up being a confrontational exercise. This matter bordered on bringing into question the safety of the AG in the meeting. The SCOAG had been alerted to how a disciplinary hearing would take place on 21 to 23 September. The SCOAG would leave that exercise to the AGSA’s internal trust environment.

The Chairperson said there was an angle that related to how the AGSA’s institutions had operated collectively. In the PAA, there were clearly defined areas which were in various hands in dealing with matters. He appreciated how the Audit Committee had handled matters, and provided that kind of report to the SCOAG. With trust, the SCOAG gave over to the AGSA to finalise the processes, and deal with the matters highlighted by an independent firm. The SCOAG, with the Content Advisor, could interact with the AGSA on some of those matters. The AGSA would return to the SCOAG when the AGSA tabled its annual report. At that time, the AGSA could first highlight those areas that needed attention. It had been the SCOAG’s attitude that those matters must be brought forward to be finalised, and there was no justification to have matters hanging around for long, more so when those matters related to an institution which ought to uphold the highest values of the country in the performance of its own task. The AGSA’s responsibility was onerous, and therefore it ought to, at all times, be well-covered when it came to ethics, and to uphold the highest standard, so that no one in the country would want to have a referral when they failed to do what was right. The SCOAG appreciated the AGSA’s attendance. The Chairperson had looked into the PAA, and each and every step of the process, even the report of the lawyers, attested to some observation. A slip towards certain angles was not necessarily based on “doing bad” but on doing good. He suggested that the AGSA go back and look into those areas, and advise the SCOAG appropriately. The SCOAG would look into such instances and have finality on those.

The Chairperson said that the AG’s conduct had made the SCOAG have full trust in the body of the OAG, based on how the matter of the allegations had been handled. The SCOAG’s full trust still remained going forward in the fulfilment of the key objective as outlined in the PAA of ensuring that the AGSA operated independently. The SCOAG was sure that the AGSA’s secure environment ensured that it was doing its work without fear or favour and was accountable for its own conduct. The SCOAG appreciated the way the AG handled matters. It was a bit personal. He had read the accusations. The last paragraph of that document had become so personal that the AG herself, let alone the Office, would have been “made to shiver”. He left those kinds of things to the AGSA’s own processes.

Mr Biesman-Simons said that the Audit Committee saluted the AG and the DAG for their self-reporting and follow-up. It was not that common. Things got “swept under the carpet”, and all sorts of excuses were made when things did come out. Such honesty was reassuring for the Audit Committee.

The DAG thanked the SCOAG and the Audit Committee for the support. The AGSA took the point on how it should take things forward with the reports that needed to be tabled. He would conclude the other matters that were still happening in the office.

Ms Maluleke said it had been a difficult saga to contend with. But one rested on a few things that made up the Office: The principles for which it stood; the things she had learned from AGs that had come and gone; the formidable team that she was proud to work with; the strength of the AGSA’s governance systems, notably the audit committee; the work that the DAG and his executive did; and the support and guidance from the AGSA’s oversight mechanism. The SCOAG had been able to avail itself to have a frank dialogue, and have an “extraordinary meeting” concerning a matter that was “completely unprecedented”. That spoke tremendous volumes about the SCOAG’s commitment to fulfil its own constitutional requirements in supporting and protecting the Office. As for the AG and the team she led, they continued to do the work they were charged with. In the midst of the storm, what held the team together was a recognition of what it stood for and what it was charged with doing for the benefit of South Africa’s democracy and the people that the AGSA was there to serve.

The Chairperson said that on behalf of the SCOAG, he would take time to meet with the Makwetu family, specifically Mrs Makwetu. To find a dead man's name being used in that way it had been, “we find these things hurting”. The SCOAG would give itself time to meet with Mrs Makwetu in solidarity, and meet with the family. The SCOAG would further comfort the family that the matters were in good hands, so that it solidified the fact of the matter that whatever the late Mr Makwetu did for the country in service, and what he did for the institutions in terms of accountability was still well appreciated.

The Committee Secretary said that the SCOAG could deal with a particular issue which needed to be finalised (which the Chairperson referred to) in the next meeting. The Chairperson agreed with that.

In response to a question, the Chairperson said that the SCOAG had set up a process and that the Content Advisor and the OAG would work on those instances.

The meeting was adjourned.