Declarations of financial interest made by key parastatal officials from 2009 will form the basis of their lifestyle audits, Public Enterprises Minister Pravin Gordhan said on Wednesday. Gordhan, who was reappointed as minister in February after his ...
Pravin Gordhan. Picture: SUPPLIED
Declarations of financial interest made by key parastatal officials from 2009 will form the basis of their lifestyle audits, Public Enterprises Minister Pravin Gordhan said on Wednesday.
Gordhan, who was reappointed as minister in February after his dismissal by former president Jacob Zuma in 2017 for his stance against state capture, has vowed to clean up state-owned entities and restore their viability.
The government has been tightening the screws on corruption and has mandated the Special Investigating Unit (SIU) to probe allegations of malfeasance, fraud and corruption in various parastatals including Eskom and Transnet.
Lifestyle audits will also form part of the investigations.
Eskom was in a severe financial crisis in late 2017 after lenders turned off the taps due to state capture and corruption allegations. The company has a debt burden of R350bn‚ increasing by about R70bn a year.
Eskom's under way
Gordhan said the lifestyle audits were set to be completed by the end of March 2019. Eskom had already commenced work on the audits, he said.
The first phase of the audits would cover board members, executives, company secretaries and prescribed officers that have served in state-owned institutions since 2009.
"The SIU’s mandate will be extended to commence lifestyle audits that will cover all six [parastatals] under the Ministry of Public Enterprises. This second phase of the lifestyle audits will focus on officials in supply chain management, auditors, as well as past and present officials in the Department of Public Enterprises [political and administrative offices]," he said.
The audits would be used to hold accountable those who unduly benefited from the state’s resources and procurement opportunities, and to recover monies the state lost due to the abuse of these resources, Gordhan said.
Steven Powell, a director and head of forensic services at law firm ENSafrica, said the government was "clearly taking lifestyle audits more seriously" and using them to hold people accountable and as a deterrent.
Forensic auditors looked out for an excessive lifestyle featuring properties or motor vehicles of which the monthly repayment exceeded what would be reasonably affordable to the employee concerned.
"Often the properties are bond free, which begs the question as to how the capital was raised for the acquisition. Many fraudsters accumulate portfolios of properties and launder the stolen funds by purchasing properties and renting these out, thereby generating ‘clean’ money," he said.
Powell said the results of the lifestyle audit were an indicator that something may be amiss, but could not be regarded as conclusive proof of illicit activity without more evidence.
David Lewis, executive director of Corruption Watch, said lifestyle audits were a useful instrument and could deter corrupt practices.
"These are not difficult things to do … anyone with the right search engine can look at who owns what properties and vehicles," he said. However, this had to be done fairly and people had to be given a chance to explain how they had accumulated wealth with the salaries they earned, Lewis said.
Lifestyle audits had to be based on risk, he said. A chief financial officer, CEO or anyone in charge of procurement in government would likely be seen as high risk for bribery, Lewis said.
lifestyle audits,parastatal corruption,eskom,pravin gordan