Former AG Terence Nombembe: Cleaning up SA one accountant at a time

Former Auditor General Terence Nombembe is regarded by many as the commercial equivalent of Public Protector Thuli Madonsela. In this fascinating interview with’s Alec Hogg he discusses why there are so few “clean” Public Sector audits – and, more importantly, what’s being done to address it. – AH

ALEC HOGG: This special podcast is brought to you by Sanlam Investments. The former Auditor General (now, Head of Saica) Terence Nombembe is with us in the studio. Terence, one of the icons of the South African society… It was quite a surprise to people when you decided to move away from the AG’s office to Saica, but let’s start at the beginning. What drew you to that line of work?

TERENCE NOMBEMBE: Well, the attraction to the commercial line of work and especially the governance line of work of late, was mainly as a result of my conviction to truth and my conviction to doing things right. Therefore, the job of the AG was very comfortable for me because it was about educating people about how to do things right.

ALEC HOGG: But where did that come from? Did you have people in the family who guided you in that direction?

TERENCE NOMBEMBE: I think it did come from the parental guidance and for me, that discipline I got when I was growing up, I never saw it as torture, and neither did I see it as a burden, but I saw it as something that was grooming me to be a useful personality in society.

ALEC HOGG: Were your parents particularly religious?

TERENCE NOMBEMBE: Yes, they were and they were educators, too.

ALEC HOGG: So you had the double stream – discipline and integrity – and it’s something, which has stayed with you through your life.

TERENCE NOMBEMBE: Gladly so, and it’s something I’m trying to instil in my children as well.

ALEC HOGG: What about what you saw as the Auditor General? You’ve been very outspoken – almost a Thuli Madonsela of the commercial field, if you like. At any time, did it make you depressed or discontented about the way things are going in our country?

TERENCE NOMBEMBE: Neither of that. Instead, it made me have a lot more endurance and courage to want to educate more. For me, that job was an opportunity to really, help the Government leadership/Government officials to understand why things had to be done in a particular way. Remember, that there, the audit office, had one of the biggest privileges in that it had access to all the transactions of Government. In fact, when we conducting a survey early in 2000/2001, one of the biggest feedbacks we ever got was that this office knows what should be done but it’s not willing to share and help us to do the right thing. That stuck with us and we did everything to respond to that survey and that response.

ALEC HOGG: You mentioned (and we’ll move onto other issues in a moment)…but we have to touch on Nkandla because it’s been in the news for the last week, that some of the documentation in that instance was not handed over to the Auditor General. Is that accurate, from your knowledge?

TERENCE NOMBEMBE: That can never be accurate. Remember, the audit office has access to all the documents. The only documents that could not have been handed over could be the documents that were either not available or not appropriately captured. That’s why, in many instances, Government departments get these disclaimers of opinion. It’s not that they’ve not transacted, but their ability to keep proper records or their ability to sometimes conceal those records is something that has given rise to that concern. That could be the only reason for that situation. Remember, by that time this department had a very bad audit opinion, which, amongst other things did not result solely from the Nkandla issue but from many other transactions involved in building State assets and coordinating those State transactions.

ALEC HOGG: So was it just a question of perhaps, a lack of competence?

TERENCE NOMBEMBE: Lack of competence, lack of proper due care, and maladministration, which transcends that entire department. When the Minister spoke about that as being one of the biggest vulnerabilities of the department, in my view that was true. Yes, the Nkandla issue was one of them but it affects many other buildings that Public Works had and one needs to build that department from scratch. I would support the Minister’s conviction to actually, do just that.

ALEC HOGG: So it’s more a question of a lack of capacity rather than outright dishonesty.

TERENCE NOMBEMBE: You’re right. Capacity is one big issue because remember, it’s a huge department. It also has the responsibility to coordinate the workings with the provincial structures as well. The handover points between national and provincial are not easy…they’re not managed best, and I think those are the issues one needs to deal with. Actually, it doesn’t only affect Public Works, by the way. It affects almost every other national and provincial department that is big, whether it’s education, health, or public works. I want to say that we take our hats off to the Department of Social Development because as big as it also is, they listened to the guidance and advice of the audit office.

ALEC HOGG: That’s so interesting because one of the big stories at the moment in the media involves social development and involves the social grants. We’ve had the one party saying ‘but we’re doing everything right’ and another party saying ‘but you guys are all corrupt’. Sometimes, the media does get the cat by the braces. It does like to sensationalise and dramatise things, but almost every time the AG’s report came out, it was about headlines of funds being misappropriated. If I hear you correctly then sure, funds are being misappropriated but a bigger problem is capacity.

TERENCE NOMBEMBE: Historically, that was the case with social development, but the moment they started listening… I remember very well, the meeting I had with the Minister about four or five years ago, in her office in Cape Town. She was there with the Head of SASSA and the Director General then, really committed to do the right thing because they understood that their fundamental vulnerability was the ability to keep the right documents and manage them properly. The moment they took heat off that guidance, that department (last year and I think, even this year) came with a clean audit.

ALEC HOGG: What about generally speaking within the public sector? The perception that’s been created is that it’s rotten to the core.

TERENCE NOMBEMBE: It is a perception, which we as professionals, need to respond to responsibly. That is why we adopted an approach in the audit office of saying ‘let us talk to you. Let us give you the fundamentals of what you need to get right at a basic level’. That’s the first thing. One of the issues we identified was the fact that skills-wise (and I listened to the Auditor General in the last week expressing, very passionately, that sentiment of ‘let’s get the basics right. Let’s get the skills right. Let’s get the issues of governance right’. However, that won’t happen until such time as we flood the public service with people who have a professional outlook on life. That comes to the issue of, or the job we’re currently doing at Saica.

ALEC HOGG: So it’s almost like a progression, if you like. You’ve seen what needs to be done from inside at the AG’s office and you’re off to Saica to help build capacity.

TERENCE NOMBEMBE: You put it very eloquently and very accurately. That’s the only reason I took this job at Saica. I could see that I would do it personally, but the institution is predisposed to doing and being part of the solution to what Government is currently struggling with.

ALEC HOGG: How much progress have you made? You’ve been there since the beginning of this year.

TERENCE NOMBEMBE: The only progress we’ve made so far has been to engage with the Government leadership, amongst many other stakeholders whom we’re talking to. We would like to cement our presence and our footprint in Government because we do know that it’s a big stakeholder and it has the biggest need for professionals, especially professionals who have that administrative flair, such as accountants and commercial people. We have the privilege of being an institute that serves them but we have two approaches for that, Alec. One is to say invest in highly qualified professionals, such as Chartered Accountants. In order to do that, over the past ten years, Saica has launched the Tutuka Bursary Fund. It’s a simple approach and an answer to transforming the profession.

You put money into it. Saica administers the development of those Chartered Accountants in partnership with the Universities, in partnership with Government or business, and in partnership with the students themselves. We’ve project managed that thing very tightly. If you put your money into it, you know your money will not be lost.

ALEC HOGG: I can’t let you go without referring to something that was posted on my Facebook page last night (of all places). It was by a gentleman who is most aggrieved. He said he used to work at PwC. Clearly, it would be easy enough to track him down. At the time that he was there as a black Qualified Accountant, the partners at PwC (in his words) made young white kids, who simply had matric, check the work of the black accountants. Firstly, the fact that he’s saying these things (and being a black professional) is horrifying enough, but for a major firm to perhaps have acted in that way (if he is correct) is quite astonishing. Is there any semblance of reality there? Is racism as prevalent as this correspondent of mine would suggest it is?

TERENCE NOMBEMBE: It would be interesting to understand when that happened. There is a lot of truth. In fact, that is 100 percent true. That is one of the reasons, which gave rise to the formation of the Association of the Advancement of Black Accountants. There were – exactly – incidents like those, which never respected or gave black professionals an opportunity to be treated equally, which never gave sufficient space for black accountants to acquire the experience that they needed. If that happened 10/20/30 years ago – true. If that happened yesterday, that would be very, very unfortunate and is something that does need to be looked into and addressed, and we need to make sure that it does not become a norm in the profession, because it’s something that ought not to happen in this day and age.

ALEC HOGG: Indeed. I guess that if it did happen in the past, he also needs to get over it as we all need to get over it, and get into our new future…but never forget and never let it happen again.

TERENCE NOMBEMBE: Alec, we all went through that. Personally, I can tell similar stories about that kind of experience, but it’s not an issue now. We’ve moved on. We’re now in a position where we’re making sure that future accountants are never subjected to that. In fact, one of the issues at Saica, which we’ve undertaken to do going forward, is to have much closer interaction with the training officers, which is all the firms as well as all the enterprises that are registered as training offices for Saica. Not only talk to the training officers, but talk to the trainees as well, to make sure that those experiences are detected and prevented, going forward.

ALEC HOGG: Just to close off with, any regrets….well, not ‘any regret’s because there are regrets from society that you moved away from AG’s office. From your perspective, any regrets that you maybe did it a little early?

TERENCE NOMBEMBE: I have no regrets at all. In fact, when I left the office I made on unusual statement. I said ‘I’m not going to miss this office and I don’t want anyone to miss me’, simply because the work we did together was so progressive. I left that office with a team of professionals, starting with the trainees that understood the purpose of that office.

ALEC HOGG: And do you feel optimistic, given what an important building block that is for the future of our country? Even though we get things like Corruption Watch this week, saying our corruption levels are still too high according to the Transparency Report… Are you looking ahead at a glass that is half-full?

TERENCE NOMBEMBE: I’m very optimistic. Those perceptions and those indicators are good for us to give us an indication of where we are in terms of our progress. Had it not been for institutions like the AG office, the Public Protector, and many other institutions that are part of the Chapter 9, we would be worse off. For me, that’s what gives me the courage and the optimism, going forward. We just need to cement that courage and that resilience so that over time, we can turn the ship in the right direction.

ALEC HOGG: Terence Nombembe, the former Auditor General (and now with Saica). This special podcast was brought to you by Sanlam Investments.

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