Threats of violence against AGSA staff at municipalities: progress report

Standing Committee on Auditor General

06 March 2020
Chairperson: Mr S Somyo (ANC)
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Meeting Summary

Threats and intimidation against auditors during recent MFMA audits: AGSA briefing

The Standing Committee met with the SAPS National Commissioner, the Auditor-General, the Nelson Mandela Bay Municipality and the eThekwini Municipality for a follow-up briefing on threats and intimidation of Auditor-General South Africa (AGSA) auditors in certain municipalities. For example, the AGSA team received a sealed envelope that contained newspaper clippings aimed at threatening the team while auditing Nelson Mandela Bay Municipality. 

The Committee emphasized the seriousness of the matter especially since the implementation of the Public Audit Amendment Act which introduces stronger powers for the Auditor-General. Members took a dim view of the Department of Cooperative Governance and Traditional Affairs (COGTA) official who failed to present a progress report to the Committee. They noted that Nelson Mandela Bay Municipality and the eThekwini Municipality appeared to treat the matter without sufficient seriousness. They appealed to SAPS to pursue the cases and get results. Members asked about security at audit sites and requested commitment from stakeholders to ensure an integrated approach is taken with collaboration with each other to ensure a united front on the matter.

Meeting report

Opening remarks
The Chairperson said this was a follow-up meeting to the briefing given by Auditor-General South Africa (AGSA) on 4 December 2019 on threats of intimidation made against auditing teams that were auditing municipalities in terms of the Municipal Finance Management Act. He emphasized the seriousness of the matter and the relevant stakeholders were present, drawing attention to the Department of Cooperative Governance and Traditional Affairs (COGTA) presence as it has responsibility over municipalities. Their aim was to determine the steps these institutions are taking going forward to ensure the protection of the Office of the Auditor-General. He drew attention to General Khehla Sithole, SAPS National Commissioner, attendance at the meeting.

COGTA progress report cancelled
The Chairperson said that the Committee is meant to receive a progress report from COGTA.

Mr Thobani Matheza, Parliamentary Liaison Officer: COGTA, confirmed that there was meant to be a department official presenting a progress report based on the findings presented to the Committee previously. The official would not be presenting because he did not receive any progress reports from the provincial coordinators and SARS. He apologized for the absence of the Acting Deputy Director General.

Mr Z Mlenzana (ANC) had a dim view of the apology excusing the absentee. He proposed that when they reach that agenda item that the record must reflect that there was no presentation, but the Committee must still deliberate on the matter and what must be done with the Department starting from the executive and working down the structure.

Ms N Hlonyana (EFF) agreed that the absenteeism is unacceptable. The Department official may not simply excuse himself from Committee meeting but must explain to the Committee what the issues are.

The Chairperson acknowledged both Members' dissatisfaction at the absenteeism.

Ms S Van Schalkwyk (ANC) agreed that the threats to AGSA are a serious matter. It is not a closed matter and there is wide media coverage on it. It is an insult to the Committee with its oversight mandate and the matter needed to be communicated to the appropriate COGTA senior officials to ensure accountability. It is not the Committee’s responsibility to ensure that the Department is prepared on time to present their findings to the Committee. The Department was given ample time to prepare for the meeting. She proposed that, if it is necessary, corrective rather than punitive measures need to be taken to ensure this is not repeated.

Ms Hlonyana proposed that the Committee communicates to the Minister that she takes on the matter forward urgently.

Mr Mlenzana proposed that they take the matter up with the Director-General and Minister, failing which they escalate the matter higher.

The Chairperson noted the seriousness of the matter and stated that the way forward would be to notify and appeal to the stakeholders mentioned. He thanked SAPS for being present at the Committee meeting.

SAPS briefing
Lt Gen Moeketsi Sempe, SAPS Divisional Commissioner: Visible Policing, gave a follow-up briefing on the intimidation of AGSA auditors in certain municipalities with specific focus on progress made. He reported on the Nelson Mandela Bay Metropolitan Municipality complaint that no case was opened with SAPS. An arrest was made on the Temba intimidation complaint in the Moretele municipality, however the case was thrown out by the prosecutor on the basis that there was no prospect of successful prosecution. On the Rustenburg complaint about vehicle theft, the vehicle has not been traced but they are continuing the search for the vehicle. For the Vanderbijlpark attempted murder complaint, a ballistic report was obtained but no arrest made. No case was opened with SAPS for the Umsunduzi Municipality complaint, but the matter was resolved by COGTA. With the Sydenham intimidation complaint, the case was withdrawn as the cellphone number from which the threats emanated could not be traced. He verified however that the case is still open.

The Chairperson thanked SAPS and invited the Auditor-General to give feedback.

Auditor-General briefing
The Auditor-General, Mr Kimi Makwetu, introduced his team. He commended SAPS for its responsiveness since the previous Committee meeting. It is important for the Committee to be proactive in solving these challenges for various reasons. Firstly, at the beginning of the implementation of the new amended powers of the Office of the Auditor-General, at the start of the new financial year on 1 April 2020 the amended powers are going to apply to a significantly larger number of auditees. Secondly, their powers are broader resulting in the ability to probe deeper. And lastly, the team’s reach is more expansive in investigating material irregularities over all provinces and departments. It is not an easy conversation to be had and should be raised as a flag to remain on the Committee’s agenda. It is important to navigate these environments in which they audit and the threat to auditors.

He raised concern about the Vanderbijlpark shooting and attempted murder of one of their staff members which is still under investigation. Of all the cases of intimidation and threats, this was the most serious one as the staff member was injured. It is one of the worst incidents that AGSA has experienced. The fact that it is still is under investigation means that something needs to be done to escalate it.

Ms Alice Muller, AGSA National Leader: Audit, updated the Committee on the support from SAPS. Three actions have been taken. Firstly, the engagements between SAPS provincial commissioners and AGSA business executives in the provinces has taken place over the last 18 months and there are only three provinces outstanding. Secondly, the engagement with the station commanders that occurred with high risk auditees as identified by the Office of the Auditor-General. They want this action institutionalized across the country so that it becomes the new standard for doing business. Lastly, they have developed plans in collaboration with SAPS per province which are being finalized and then they would be implemented. These plans have preventative and responsive measures.

Ms Hlonyana asked why a case was not opened for the Nelson Mandela Bay complaint. With the Public Audit Amendment Act implementation, there would be a higher risk to auditors. The failure to prosecute or arrest those who commit acts of gangsterism does not reflect the seriousness of the matter and how unacceptable it is.

Mr O Mathafa (ANC) said that in his view even if the SAPS case was refuted by the National Prosecuting Authority on the basis that the prosecution would not be successful, this does not mean that there is no risk. He asked what measures are to be put in place where there is a possibility of a threat. He asked what the role of other enforcement officers were such as the metropolitan police. Other law enforcement officers should be assisting before reverting to immediate assistance from SAPS. He asked what the duration of the security is that an auditor receives. Is it just to go to the audit premises or for the entire duration of the audit? Usually these threats are not carried out at the premises but away from those premises.

With the Vanderbijlpark complaint, he felt that a clear signal needs to be sent to potential criminals to eradicate the feeling that they will not be caught. AGSA is carrying out a constitutional mandate and as such a threat to AGSA is seen as a threat to the Constitution which is the supreme law. As legislators they cannot allow the undermining of the Constitution. He drew attention to high profile cases and asked if in those cases it is possible to allocate some sort of seniority. It is necessary to close the gap between when the investigation occurs and when reporting to Parliament happens. In light of the higher risk of threats to AGSA auditors as a result of the amended Act, is there a possibility of conducting audits off-site at a venue that is more secure?

Mr Mlenzana referred to the SAPS slide on Threat and Risk Assessments and stated that it was welcomed but they needed to be proactive rather than reactionary. He proposed having quarterly reports from SAPS and COGTA referencing the lack of tangible progress made by SAPS such as where no case was opened for the Nelson Mandela Bay Metropolitan Municipality complaint.

Ms Hlonyana noted that with the Sydenham telephone intimidation complaint, the phone number was unable to be traced. Is it a hopeless situation where the threatened auditors should not bother reporting the incidents to SAPS? The failure to deal with the threats adequately affects the confidence of the citizens and AGSA is relying on SAPS. With the Rustenburg stolen vehicle not being traced, she noted the occurrence of stolen vehicles being moved across the border and asked if SAPS is going to leave the matter suspended or would they take a proactive stance. A threat cannot be taken seriously only once a case is opened. There needs to be better planning and collaboration with other agencies as part of the safety network dealing with the threats.

Ms Van Schalkwyk echoed the need for seriousness in the way SAPS is handling the matter and expressed her appreciation at SAPS presence at the meeting. She disputed the clarity of the presentation and asked COGTA to provide answers on why a case was not opened for the Nelson Mandela Bay Metropolitan Municipality complaint. With the Umsunduzi Municipality complaint, she asked COGTA how the matter was resolved. She asked if the relevant person came forward to verify their qualifications or was it found that the qualifications were fraud and what was done to remedy this. She asked about the type of accommodation provided to the auditors considering one of the complaints was from a woman who woke to an intruder in her room. More young women are entering the auditing profession and this needs to be considered.

Auditor-General response
Mr Kimi Makwetu replied about staff accommodation that when auditors do their fieldwork, it involves proper assessment of potential venues and not releasing that information but keeping it amongst team members. They do not allow information to be released and vary the accommodation to ensure safety of staff members. On an alternate audit venue rather than the audit site, he explained that the nature of auditing is that the physical evidence needs to be corroborated by the relevant people at the audit site. In other words, the nature of work is that the auditor needs to hear a voice that puts credence to the physical evidence. This creates a challenge for doing off-site audits at a safer venue as it places a limitation on their work and the investigation might as well be conducted from the AGSA office.

The Vanderbijlpark case caught them off guard and it has been flagged to be taken further. He agreed with Mr Mlenzana’s proposal that quarterly risk assessments be done. He proposed that a joint statement be made by SAPS, Parliament and the Auditor-General expressing their dim view of the situation which should act as a deterrent as it will acknowledge the mandate of auditors when auditing as it is done in the context of the Constitution. There is a need to voice a collective standpoint that is clear and sharp so that anyone who is audited knows that the objective is greater than merely having their books checked but is part of a greater constitutional mandate.

SAPS National Commissioner response
Gen Khehla Sitole replied about strategy saying when it comes to the prevention action plan, it needs to be a multidisciplinary-collaborated plan which brings in the public sector. When an auditor does as audit in a specific environment they may be engaging with criminals and the process needs to be protected. It is not purely the Auditor-General’s responsibly to pre-empt the dangers. As the Public Audit Amendment Act is implemented, the new action plan needs to be flexible and respond to the new reality as reflected by the amendments to that Act. The action plan needs to be corroborated with the Auditor-General’s report on all cases being investigated and they will share that information to form the quarterly report.

When a threat is reported, there are two processes that run concurrently, firstly an investigation and secondly a threat assessment related to the complainant’s fear extending beyond the investigation. If the prosecution does not go further, the threat assessment may continue which may lead to the finding that the complainant needs continued security. If it is found that the threat no longer exists, the assessment may be withdrawn, and security is no longer needed. The point here is that threat processing must continue.

On the proposal that other law enforcement comes into play, they have an agreement with metros, and metros are compelled by law to provide their plans to the Provincial Commissioners. Municipalities must be part of the multidisciplinary collaboration plan. He emphasized the need for sharing information and working together to ensure they have better plans. He confirmed that secured accommodation would be provided. Safety orientation workshops need to be held with auditors so they can also raise their own awareness of what is considered suspicious behavior.

Ms Vanuja Maharaj, AGSA Corporate Executive, stated that the auditor teams are very aware of the auditing environment in which they audit and elaborated on those circumstances. She cited the examples of an audit where SMME owners burst into the municipal offices and made requests for payments and there were various assassination attempts associated with contracts that were being audited. Whilst the auditors are conducting their audit and work with officials of the municipality, the officials themselves tell the auditors that they are surprised that the auditors are auditing the contracts without protection. With the accumulative effect of all these experiences, they did not want their names associated with cases, but SAPS was used to provide security.

Nelson Mandela Bay Municipality (NMBM) on findings
Councillor Mkhuseli Mtsila, NMBM Acting Member of the Mayoral Committee (MMC) for Budget and Treasury, stated that he was there in the capacity of the Mayor who was not present at the meeting. He introduced his team and stated that they take the matter seriously. He acknowledged that the threats against the AGSA staff was a novel experience for them and they have adjusted their leadership style appropriately to respond to the issues.

Mr Jackson Ngcelwane, NMBM Senior Director: Budget and Finance Accounting, took the Committee through the chronology of events leading to AGSA terminating audit operations at NMBM. On 19 October 2019, a newspaper article had been dropped in the office which contained an article about assassinations that were happening. The Municipality met with the Eastern Cape branch of AGSA management where the reason for withdrawal of audit services was explained. Thereafter NMBM arranged an alternative venue which was secured till the end of the audit. NMBM communicated the return of the AGSA staff to all the internal role-players via an internal circular and reported it to the Executive Committee through the City Manager’s office. The documents required were availed to the AGSA staff at the secured venue. AGSA maintained control of the keys of the venue until the end of the audit. He went through the actions that still need to be taken for future AGSA audit assignments to improve security measures.

Mr Mlenzana wanted clarification on the killings in the municipality.

Ms Hlonyana asked about Mr Mtsila’s role, besides being there in the capacity of representing the mayor. She wanted the municipality to explain if it believes a threat happened. She expressed her concern at how the Nelson Mandela Bay Municipality is being run due for a person to have such easy access to the building and not be accounted for. This person delivered the threat in the form of the newspaper article and she emphasized the lack of security in the building.

Ms Van Schalkwyk said there is a trend developing on threats to the safety of auditors and it is in that context that the Committee now convenes to address the matter. She emphasized the seriousness of the matter and the need to relay this seriousness to the municipality. It must be taken seriously and there must be clear repercussions because otherwise it could result in worse consequences.

Nelson Mandela Bay Municipality response
Councillor Mkhuseli Mtsila clarified that he is the acting MMC of Budget and Finance. He agreed with Ms Hlonyana in recognizing the seriousness of the matter in a metro where 18 people have lost their lives. The Municipality would be present at the meeting – even if the Mayor was not able to be present which also reflects the gravity of the situation. They are attempting to correct the situation and when they are called to report on their progress, they will have results to present.

Mr Selwyn Thys, CFO Nelson Mandela Bay Municipality, introduced himself to the Committee and stated that as of 10 January, he started as the new CFO in the Metro. He assured the Committee that he had had experience with the audit process for more than 25 years where he had not experienced AGSA feeling threatened in a municipal environment. Since he started, he has worked closely with AGSA to expedite the audit finalization and the audit report was signed off the past Monday. Although it has fallen outside legislated deadlines, he committed to work closer with AGSA to make its job easier in terms of the turnaround times. The environment in the Municipality has only recently been normalized so that they may carry out their duties properly. There is still a lot of work to be done to return the Municipality to an unqualified audit status, but he expressed their commitment to turn around the audit outcome. He acknowledged the importance of good audit outcomes.

In response to the Committee member’s communication concern and clarified that they have ongoing meetings with the AG where they attempt to resolve issues with the audit such as slow turnaround times for submission of information, resolving audit findings, reaching common ground whether they agree on a particular audit finding or not. In that process AGSA is meant to raise concerns if they have received threats. He committed to increasing the frequency of the meetings.

He confirmed that the threat was real and that it was taken with seriousness as reflected by their prevention measures. As noted in the media, the Municipality had administrative instability and the recruitment of senior managers was a challenge. He extended their apology to the Committee to excuse them if they were perceived as not to be taking the issue seriously.

eThekwini Municipality briefing on findings
Ms Belinda Scott, Deputy Mayor: eThekwini Metropolitan Municipality, introduced herself as being newly elected and introduced her team and submitted apologies for the absence of the Head of Security Management who was indisposed. She assured the Committee that they have been imposing vigorous financial oversight tools.

Mr Sikhumbuzo Vilakazi, Senior Manager Internal Audit: eThekwini Metropolitan Municipality, stated that they have an internal and external integrated approach to security management through collaboration with the Metro Police after having received threats emanating from an unknown source. He was personally involved in assisting the process, specifically with ensuring that information is protected. The Internal Audit ensured that there was proper use of municipal funds. They had starting raising awareness amongst their own staff that if they work at a municipality, Auditor General SA has the right of access to come in and report and this needs to be supported at all costs. There is also an integrated security plan with the province Head of Security and the Chief of Metro Police that emanated from the threat which provides for a detailed response when auditors are about to come in. He wanted to highlight to the Committee that with the changes in office, there is a commitment of zero tolerance pledged between the city and the province as well as various awareness initiatives provided to municipality staff to deal with the issue.

The Chairperson thanked eThekwini for the feedback but stated that the Committee’s discussion is limited.

Ms Hlonyana agreed and said this is because they do not have a document from eThekwini Municipality.

Mr Mlenzana proposed they hold off discussion until they receive a detailed report from eThekwini.

Mr Mathafa stated that when an audit is done, there are concerns arising among internal staff. He asked if there is a functional combined assurance model which enables AGSA to pick up the contentions of the staff and if they keep a record of it.

Ms Hlonyana asked when the envelope was delivered as a threat to the room where the auditors were working, were there security cameras which could identify the person who delivered the threat. She asked if the eThekwini Head of Supply Chain Management from 2018 was still there or had changed. In terms of the integrated security plan, has SARS been included in the communication of the AGSA security plan? She proposed an increase to the AGSA security budget to enable more secure accommodation and vehicles.

Ms Van Schalkwyk acknowledged that in the auditing process more information will be uncovered that makes people uncomfortable and they can expect more threats to auditors. They have seen the Nelson Mandela Bay Municipality report and that approach should be taken by other municipalities. She pleaded that they have proper communication with the media to communicate what they expect to happen and to show that government is taking the matter seriously and is dealing with it effectively.

eThekwini Municipality response
Deputy Mayor Scott apologized for the lack of a detailed report and committed to correcting this.

Mr Vilakazi confirmed that the Head of Supply Chain Management in the municipality in 2018 is still the same. He commented that awareness has started from a different angle, from the top down. It has not been implemented with the staff yet, but it is presented as part of the induction. He clarified that they have a legal battle about the security cameras and that they are not provided on every single floor.

Auditor-General response
Mr Kimi Makwetu replied about staff accommodation that they prioritize safety over cost. The culture of each government institution needs to change to ensure accountability to prevent financial fraud from happening rather than after the fact when the audit is done. Such an accountability culture will act as a deterrent. He illustrated this with the example of guns being used as security to prevent a cash heist.

SAPS response
Gen Khehla Sitole replied that they are equally interested in the internal threats and he proposed that they follow-up with the concern outside the Committee meeting. On installation of cameras in the relevant buildings, he wanted to clarify the difference between two types of threat assessments: firstly, a live threat assessment and a security threat assessment and cameras may be installed but will possibly not comply with the security threat assessment. When security installations are placed in buildings, it must be done in consultation with SAPS because they do the assessment. He spoke about internal controls within the public sector and said that there should be disciplinary collaboration.

Closing remarks
The Chairperson emphasized the seriousness of the matter due to the mandate that AGSA fulfills as an institution. Its role requires that auditors go to the audit sites to find justification for state spending and he assured them that this role needs protection. He thanked Auditor-General and his team for their work.

The meeting was adjourned.


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