Incoming Auditor-General's terms and conditions of employment

Standing Committee on Auditor General

29 January 2014
Chairperson: Adv M T Masutha (ANC)
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Meeting Summary

The Committee deliberated on the terms and conditions of employment for the incoming Auditor-General, Mr Kimi Makwetu. It had come to light that certain aspects of the Chief Justice salary package differed from the AG’s package calculation. Alexander Forbes had compared the total benefits of the Chief Justice to the AG for a similar period of service, and found that the AG would come out with R32 million whereas the Chief Justice would receive R37 million.  Alexander Forbes had since come with six different scenarios of remuneration for the AG. Scenario 1 was, if the state chose to pay the AG R3.8 million annually, that at the end of the seven-year term, the whole salary package needed to reach R37 million, but Scenario 1 resulted in a R25 million salary. There was thus a shortage in reaching the R37 million. Hence Alexander Forbes spoke of a 50% terminal bonus to equate the amount to the R37 million. Scenario 2 had the state paying the AG R4 million annually. At the end of seven years, the AG would have received R27 million, which was still short of the principal amount. The terminal bonus for Scenario 2 would be 40% to equate that amount to R37 million. Of all the suggested scenarios that Alexander Forbes had developed, the Committee had felt that the most appropriate scenario would Scenario 3 which offered R4.398 million per annum with R5 600 housing allowance.

If the state chose Scenario 1, the AG might not be incentivised to accept it as his current salary was close to that, with a difference of only R100 000. The other extreme would be Scenario 5, where the state would give the AG R5 million annually. The risk there was if the AG decided to resign before the end of the term. In the fourth year, for instance, the AG would have received all the benefits. There had to be an incentive for an individual to serve the full term of seven years, knowing that there was a terminal bonus of 30%. At that stage if one compared the R4.3 million to the current salary of the incoming AG, the difference was R600 000, which the Committee felt would be an adequate incentive.

The Committee task team was asked to engage the incoming Auditor-General about the Scenario 3 remuneration package.


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