Public Audit Bill: deliberations

Public Audit Function

12 November 2003
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Meeting report

AD HOC COMMITTEE ON AUDITING FUNCTION

AD HOC COMMITTEE ON AUDITING FUNCTION
13 November 2003
PUBLIC AUDIT BILL: DELIBERATIONS

Chairperson:
Mr V Smith (ANC)

Documents handed out:
Public Audit Bill - draft of 12 November 2003
Intelligence Services Control Amendment Act 66 of 2002

SUMMARY
The Committee brought deliberations on the Public Audit Bill to a close. The final draft will be approved at the next meeting of 18 November. Matters that were deliberated on, were:
- a legal opinion from Parliamentary Law Advisors on the Joint Standing Committee on Intelligence, in terms of their mandate, and whether they covered the Special Defence Account in their deliberations;
- finance surpluses within the Office of the Auditor General;
- voting on the retention or scrapping of Section 16, with regard to the granting of search and seizure powers to the Auditor General; and
- who would decide on the commencement of the Bill.

MINUTES
The Chair requested that after this meeting the drafters draft the final version of the Bill for distribution to the various political parties. He noted that the tabling of the Bill in the National Assembly has been set for 26 November 2003.

Parliamentary Legal Opinion on Mandate of Joint Standing Committee on Intelligence
Ms D Lenzie (Parliamentary Legal Adviser) noted that Section 2(a) of the Intelligence Services Control Amendment Act (No 66 of 2002) had been amended to include "the administration, financial management and expenditure of the Services", as part of the mandate of the JSCI. The Department of Defence was understood to be a component of the "Services". The provisions of the Act were a lot broader than had initially been imagined.

Dr Woods said that the explanation by Ms Lenzie, along with the extract from the Intelligence Services Control Amendment Act, took the Committee halfway in understanding the issue. It implied that procurement was included within the ambit of the JSCI oversight. However, it was not clear where the Defence Force was included in the mandate of the JSCI.

Ms Lenzie responded that Act 40 of 1994 made provision for an oversight structure over matters of intelligence. The definition section included the Department of Defence, and defined the term "services", which were understood to be defined in the principal Act.

Dr Woods maintained that there was still an interpretation that the oversight of intelligence and counter-intelligence was covered. It was not clarified that procurement by the Defence Force, occurring under the Special Defence Act, and which had nothing to do with intelligence and counter-intelligence, necessarily, was included within the mandate of the JSCI.

The Chairperson stated that the Committee desired that all ambiguity be removed from the issue, and that the matter not be left open to interpretation.

Ms Lenzie offered to have Parliament's Legal Services re-consider their interpretation of the matter.

Parliamentary Legal Opinion on commencement date for the Public Audit Act
Ms Lenzie stated that this decision was the prerogative of Parliament. The President only received the prerogative if it were delegated to him in terms of the provisions within any particular Act. Where the Act was silent on the issue, then the Act became effective on the date on which it was published.

The Chairperson invited members' views on who would decide the date of the Act's commencement.

Dr Woods felt the appropriate date would be 1 April 2004. The Committee was in an advantaged position to propose a date, as opposed to leaving it to the President, who had not had the advantage of considering the implications of any given date of commencement.

The Committee agreed with Dr Woods' proposal, especially since the date coincided with the start of the financial year of the Office of the Auditor General.

Finance surpluses within the Office of the Auditor General (Clause 38(4))
Mr Bell was satisfied with the provision as it stood.

Mr Tarr noted that the provision stated that the Auditor General could retain surplus funds "after consultation with the National Treasury". He was concerned that this would allow National Treasury to impinge upon the independence of the Auditor General. He asked if the provision allowed the Auditor General, after consultation, to apply his own mind.

The Chair confirmed that the Auditor General's consultation with the National Treasury did not require agreement with them. However, he had to reach agreement with the oversight mechanism on a course of action.

Although Dr Woods was satisfied with the provision, he was not sure that it was far-reaching enough. The provision addressed excess funds, which went beyond what the Auditor General had initially required. In attempting to secure the independence of the Auditor General, his was the only institution which did not receive funds through the Appropriation Act, but he was paid by Departments for his services. He might find during the course of the year, that he had gained deficiencies. In over-charging various entities because he had not performed as many services as he had planned, he had built up a surplus, which money would otherwise have been spent on services to people. This meant that the excess funds involved a moral issue, since it could be explained to departments who complained that they were short of funds, that the reason for that was that the Auditor General had taken the funds. For that reason, consultation was important. However, Dr Woods was happy to leave the contents of the provision as it was. It was possible that some individual might contest it at a later stage.

The provision was accepted.


Granting of Search and Seizure Powers (Clause 16)
The Committee did not discuss this matter again but prepared to vote. The Auditor General and his staff members were asked to refrain from speaking during this part of the meeting.

The ANC view, said Mr Tarr, was that this clause should be dropped. In their view, Clause 15, together with Clause 63, should be adequate for the Auditor General's purposes. The ANC had "expressed an open mind" as to whether the penalties in Clause 63 should be increased or not, in order to make them more stringent.

The Democratic Alliance, said Mr Bell, was in favour of retaining Clause 16.

For the IFP, Dr Woods said that he had hoped that discussion would take place on the issue. It had been interesting to hear the views of Justice and Constitutional Affairs Committee. Although he had no doubt that the Office of the Auditor General would use the search and seizure powers responsibly, he had other reservations regarding the matter, which he had previously raised. He was happy to go with the majority of the Committee on the issue. However, in the event that the Committee decided against granting the powers, the Auditor General should be notified that, should he find in future that the lack of powers proved an inhibition to the work of his forensic department, that he could at any time return to Parliament, to argue his case.

Mr Beukman (NNP) did not have a specific position on the matter, stating that even the clause should be removed, the common law position would remain, enabling the Auditor General to approach the Courts.

Mr Nair (ANC) asked if the Auditor General was granted a warrant to perform a search and seizure operation, why would that be unacceptable?

Mr Tarr (ANC) explained that the provisions in Clause 15, coupled with the offences and penalties in Clause 63, were quite extensive, and should be adequate for the purposes of the Auditor General.

Mr Bell (DA) expressed incredulity at that argument, saying it was common knowledge that the courts were "totally blocked up", and it often took up to two years for a case to come to court. The DA was attempting to give permission to the Auditor General to do his job, to complete forensic audits as quickly as possible, without having to resort to taking people to court, and risk jailing them for up to two years. Even if that were to happen, the forensic audit might never be completed.

The Chairperson attempted to explain the rationale of the ANC. In their view, the Auditor General was tasked to perform audits. The Committee had already established that forensic audits were not frequently entered into. The ANC were also mindful of the fact that, should search and seizure powers be granted to the Auditor General, other institutions would respond by requesting the same powers. Already, search and seizure powers had been granted to various other bodies. They felt it was more advisable to make use of the agencies which were in possession of those powers, to assist the Office of the Auditor General.

They were also concerned that the further granting of search and seizure powers could lead to situations where there were "contestation of turf" between different agencies, as is the case between the Scorpions and the South African Police Services presently. That would create an environment in which there would be unnecessary tensions amongst the agencies that had been created to strengthen the country's democracy.

Lastly, they considered that if private auditors were able to conduct forensic audits in the absence of those powers, then the Auditor General should be as well. All of these considerations brought the ANC to the conclusion that the Auditor General could well do without the powers of search and seizure, in performing his task.

On the basis of the majority decision, Mr Kameldien was instructed to remove Clause 16 from the Bill.

Mr S Adhikari (Parliamentary Legal Adviser) asked whether the possibility of summonsing of documents had been considered, as an alternative to seeking powers of search and seizure. Failure to comply with that summons, would invoke the penalty clause in Clause 63.

The Chair pointed out that Clause 15 provides the Auditor General with "full and unrestricted access", and if summonsing was a tool he could use, then he should make use of it.

Dr Woods felt that Ms Adhikari's proposition was an interesting one, saying it would conform with Parliament's powers in Clause 56 of the Constitution. It was less physically intrusive than search and seizure.

The Chair stated that the various parties could consider that idea as an option. He thought the ANC's view might be that because Parliament had the powers to summons, the Auditor General would be free to approach Parliament to make the summons on his behalf. He did not think, with the assistance of Parliament, and with the provisions contained in Clause 15, that the Auditor General would gain access to any documents which he required, without Clause 16.

The Chair said he wished to table the finalised Bill in the National Assembly by 27 November 2003. However, the Committee had not yet finalised their deliberations on Clause 22, and would await further comment from the Parliamentary Law Advisors. He proposed that Mr Kameldien present the Bill with all the proposed changes by the 17 or 18 November.

The Chairperson proposed that Mr Kameldien circulate a new document containing all the amendments, by Monday, 17 November, so that the document could formally come before the Ad Hoc Committee for adoption on Tuesday, 18 November.

Furthermore, in preparing the Committee report, the Chairperson suggested incorporating a document prepared by Dr Woods on the establishment of a structure to oversee the Auditor-General, to further inform the Rules Committee of the thoughts and intentions of the Ad Hoc Committee on the matter.

Dr Woods and the Chairperson would prepare the Committee report together, for the Committee to critique on 17 November.

In the light of the fact that Clause 16 had been voted out of the Bill, the Auditor General said that the Office of the Auditor General would do all it could to fulfil their mandate to the best of their ability. If they experienced any difficulty, they would approach Parliament. He expressed his appreciation for the speedy manner in which the Committee had dealt with the Bill.

The meeting was adjourned.

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