ATC140313: Report of the Committee on the Auditor-General on Proposals for the remuneration of the Auditor-General of South Africa
Appointment of the Auditor General
Report
of the Committee on the Auditor-General on Proposals for the remuneration of
the Auditor-General of South Africa
1.
Background
1.1
Section
193(4) of the Constitution, 1996 (hereinafter the Constitution) provides,
amongst others, that the President, on recommendation of the National Assembly,
must appoint the Auditor-General. On 11 September 2013, the National Assembly
[Third Session, Fourth Parliament] adopted a resolution recommending that Mr
Thembekile
Kimi
Makwetu
(hereinafter the nominee) be appointed as
Auditor-General in accordance with section 193(5
)(
b)(i)
of the Constitution.
1.2
This
report contains the recommendations of the
Standing Committee on the Auditor-General (hereinafter the Committee)
to the President pertaining to the intended conditions of employment, including
the salary, allowances and other benefits of the nominee in terms of section 7
of the Public Audit Act 25 of 2004 (hereinafter the Public Audit Act).
2.
Determination
of remuneration
2.1
The
relevant provisions of section 7 of the Public Audit Act read as follows:
7.
Conditions
of employment.
(1)
The oversight
mechanism must consult the person
recommended
in terms
of section 193 of the Constitution 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.
(2
)
The salary, allowances and other benefits of a person appointed as
Auditor-General must
(a)
take
into account the knowledge and experience of the
prospective incumbent;
(b
)
be
substantially
the same as those of the top echelon of the judiciary; and
(c)
be
paid from the funds of the Auditor-General.
(3) The conditions of
employment determined in terms of subsection (1) may not be altered by the
President during the incumbents term of office without the incumbents written
consent or to the incumbents detriment.
2.2
Section
189 of the Constitution provides that the Auditor-General must be appointed for
a fixed, non-renewable term of between five and ten years.
2.3
The
Committee took into account the finding in the Report of the Ad Hoc Committee on
the Appointment of the Auditor-General, dated 10 September 2013 (
ATC, 10 September 2013, p. 3377
) that
the nominee showed:
·
knowledge and understanding
of management of public finances and auditing in the public administration;
·
displayed strong leadership
qualities;
·
good interpersonal skills;
and
·
high
integrity.
2.4
An
updated benchmark exercise was undertaken by Alexander Forbes and used as a
basis for the determination of the salary, allowances and benefits of the
current Auditor-General.
2.5
Upon
scrutiny, the Committee found that the calculation from Alexander Forbes was
flawed based on the following reasons:
·
Wrong inclusion of R60 000 p/m taken as
equivalent to the rental amount of the house occupied by Chief Justice in
Bishopscourt
. Upon enquiry with the Department of Justice,
the Committee found that there is no house in
Bishopscourt
occupied by Chief Justice. The Committee established that the housing allowance
for the Chief Justice is regulated in terms of the Ministerial Handbook and
hence the R60 000 p/m is not applicable. Thus, the Committee resolved to
apply the appropriate amount stipulated in the Ministerial Handbook.
·
Alexander Forbs use basic salary of
R2 525 200 per annum paid to Chief Justice. However, the Committee
could not establish such an amount upon reading a letter sent by the President
to the Speaker, dated 03 January 2014, regarding the determination of
remuneration of Constitutional Judges and Judges
.
2.6
The
latter reason, in particular, prompted the Committee to procure services of an
actuary to review the updated benchmark exercise undertaken by Alexander
Forbes. Following the parliamentary procurement processes, Old Mutual Ltd was
recommended as a preferred service provider to execute such task.
Thus, a report from Old Mutual was used as
the basis for the determination of the current salary of Auditor-General.
3.
Recommendations
on remuneration
3.1
The
Committee recommends:
3.1.1
Mr
Thembekile
Kimi
Makwetu
, receive a total remuneration package of R3,
889,391.00 per annum commencing 1 December 2013, to be adjusted in line with
the annual adjustments to the Chief Justices salary, commencing in 2014.
3.1.2
Mr
Makwetu
is not entitled to an annual performance
bonus, as this could compromise his constitutional independence, but should
receive a termination bonus on the successful completion of his term calculated
as follows:
30 % × average term compensation × years
of the fixed term appointment.
3.1.3
The total remuneration package is structured
by Mr
Makwetu
according to the parameters and
guidelines as are generally applicable to the Office of the Auditor-General.
3.1.4
Membership
of a medical fund is not required.
3.1.5
Contributions
to a pension fund are allowed only as part of the total remuneration package of
Mr
Makwetu
.
3.1.6
Other
conditions of service are in accordance with the parameters and guidelines
applicable to the Office of the Auditor-General.
4.
Term
of appointment
4.1
The
recommendations of the Committee are based on the fact that the President has
appointed Mr
Makwetu
for a 7 year non-renewable
period.
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