Tame your excitement about the forensic audit

LETLHOGONOLO LAMONG | Monday February 24, 2025 12:50

Naturally, this sparked a firestorm of hope and expectation. And that heightened sense of unbridled anticipation continues to swell, fuelled further by the Vice President’s Budget Speech, which delivered a hard-edged reality; the inevitable yet unwelcome hikes in income and corporate tax rates for targeted income brackets and corporates. Countrywide, an acapella choir has risen, singing in sharp and indignant unison. The chorus for its chant of despair is as deafening as it is gripping. Its clear refrain continues to earworm itself into the minds of riled up compatriots who sing in a hummed undertone of frustration, expressing their exhaustion, discontent and quiet resistance at the wound that won’t heal any time soon; why should any taxpayer irrespective of the quantum of their hard-earned income foot the bill for the sins of those who gorged themselves on public coffers and now sit unscathed atop their ill-gotten wealth? The promise of holding the powerful accountable for their role in draining the state’s coffers is undeniably enchanting. The idea of skeletons buried in the ledgers of bureaucracy suddenly exposed would pull even the stealthiest and heaviest of sleepers among our compatriots from the depth of regenerative delta-wave sleep. While the prospect of a FA is a step towards transparency and accountability, it is imperative to temper the nation’s excitement with a calculated dose of rationality.

The journey to uncover the rot is fraught with complexities that must be carefully managed to ensure the audit delivers tangible value. Far from being a silver bullet, a FA can mutate into a double-edged sword that, if not wielded judiciously, can evolve into a divisive damp squib that yields a poisoned chalice of political instability rather than substantive reform, hence the need to curb our overinflated enthusiasm. Spelled out plainly, FAs are not your run-of-the-mill financial audits. They are more like surgical operations designed to dissect complex transactions, trace illicit flows of money, and hold individuals accountable for their actions. Typically, they are time-consuming and resource-intensive, and for state-orchestrated interventions, even with the best of intentions, they tend to evolve into covertly choreographed political manoeuvres. Are FAs effective? When executed effectively and impartially, they can restore public trust, recover stolen assets, and, to a degree, deter future corruption. The intense euphoria displayed countrywide by politicians and non-politicians alike sends chills down my spine, primarily because it reflects failure to appreciate that the broad scale mania for such audits often overshadow intricate challenges. Much more than a hollow primal truth, it is a law older than language itself that, “even the best-laid plans of mice and men often go awry.” Unchecked enthusiasm could lead to disillusionment if the process is slower or more complex than imagined, while a lack of urgency could stifle the momentum needed for real change. By balancing the fervour for accountability with a measured understanding of the intricacies involved, the new administration can channel its energy into a sustainable force for reform, ensuring the audits yield meaningful results. The government must ensure that all planned FAs are guided by well-calculated strategic probes hinged on objective cost-benefit analyses. Globally, FA firms harbour no qualms about lining the pockets of their partners through perfectly structured, watertight and poke-hole-resistant processes skewed towards bilking firms. What more, if the client is a whole government globally renowned for being awash with the world’s most coveted diamonds! To appreciate the quantum of cost involved, reflect on South Africa’s Zondo Commission. This was a macro-level quasi-judicial process that relied heavily on public hearings and therefore broad in scope and perhaps less intensive, as opposed to our country’s envisaged fully-fledged FA that is bound to be narrowly scoped, more data-driven intensive, and micro-level in nature. Despite this, the financial burden on taxpayers surpassed the whopping R1 billion mark. Furthermore, the prolonged duration of the judicial commission of inquiry, which took over four years to deliver its final report, should impel us to think long and hard about the scope and nature of the envisaged audit. It is in the nature of clueless people holding leadership positions to throw money at problems, especially when it has not been earned through painstaking hands-on sweat. Our government should not fall into the same pitfall.

FAs require highly skilled professionals, advanced technology, and significant administrative support. The cost of engaging top-tier forensic auditors can be eye-wateringly prohibitive, especially when weighed against other pressing priorities. The expense is not just financial; it also includes the consequence-laden opportunity cost of diverting resources from other critical areas. For a country like ours, which is already grappling with economic challenges, a well-intentioned full-blown audit can easily bloom into a blackhole that unrepentantly sucks funding out of primary interests such as healthcare, education, infrastructure, housing and social welfare. Among the many key performance indicators for measuring FA performance, the number of once-powerful or wealthy individuals clad in orange uniform, wholly maintained by taxpayers in their carceral deployment, is irrelevant. Rather, it is the collective impact of asset recovery mechanisms in place, legislative recommendations to close loopholes, time-bound execution to avoid an endless costly process, and the sustained value of deterring corruption that truly matters. Surely FAs require a well-thought-out balance between thoroughness and efficiency. Lest I inadvertently confuse you, the bone of contention is not whether our country should pursue the FA path, but how it can do so in a manner that optimises benefits while minimising pitfalls. The appeal of scrutinising past dealings to hold malfeasance to account is not a matter up for debate. While the temptation to dig deep into history is understandable, it is nonetheless impractical, absurdly ambitious and financially reckless. Time tends to erode qualitative and quantitative evidence, memory failure often creeps up on witnesses rendering them dubious and unreliable, and the statute of limitations may preclude meaningful legal recourse. In light of this, a practical approach would be to focus on the most egregious cases of corruption within a defined timeframe, perhaps carrying out investigations in batches of five years. If the first five-year-batch works, the second is likely to work. This would ensure that all sanctioned audits remain manageable while addressing the most significant instances of malfeasance. Getting carried away and trying to tackle every case simultaneously risks reducing the planned audits into a bottomless pit, consuming resources without delivering meaningful results.

Government-driven FAs can be weaponised for political purposes, targeting opponents, shielding allies, even destabilising the political terrain. Moreover, legal challenges from implicated individuals can throw the process off course and undermine its credibility. To mitigate these risks, the audit must be conducted with full independence, unquestionable transparency, and strict adherence to the rule of law, while maintaining deliberate blindness to political affiliation. But we all know that while words like these flow like rivers, the deeds they promise normally climb like mountains! The terms of reference should be anchored on targeted scope and deliverables with strict time-bound execution to avoid an endless process that would drain the State’s coffers, and must prioritise high-impact areas such as major infrastructure projects, procurement contracts, and revenue collection for government entities including parastatals. Modern FAs rely heavily on data analytics, artificial intelligence, and blockchain technology to trace complex transactions and identify patterns of corruption. The government should invest in these tools and engage reputable firms with proven expertise in forensic auditing. We can draw lessons from countries that have traversed this rugged path. In 2015, the Nigerian government launched a series of FAs targeting recovery of stolen funds, prosecution of corrupt officials, and systemic reform to prevent future malfeasance. One of the most notable cases was the recovery of $322 million in stolen funds from Switzerland, linked to former military leader General Sani Abacha. However, this campaign was fraught with challenges, such as selective prosecution, legal delays, resource constraints, and public skepticism; with many Nigerians feeling that the campaign did not go far enough in addressing systemic corruption. Launched in 2014, Brazil’s Operation Car Wash began as a probe into money laundering at a car wash in Brasília but quickly expanded to uncover a vast network of corruption involving state-owned oil company Petrobras, construction firms, and high-ranking politicians, including two former presidents.

Hundreds of individuals were prosecuted, billions of dollars recovered, and significant reforms in Brazil’s political and corporate sectors effected. However, this unleashed unbidden consequences in the form of impeachment and imprisonment of former presidents, judicial overreach exemplified in the disproportionate targeting of political figures, political polarisation on the back of alleged witchhunts, and widespread erosion of trust in public institutions. The foregoing examples highlight the importance of balancing independence with accountability. Purpose-driven governance demands reserving prosecution for the most outrageous cases while resolving others through financial restitution and administrative sanctions. Risks are always soldered to FAs. Key personnel may resist the planned audits, fearing personal exposure to wrongdoing, especially since most of the senior technocrats of the previous regime still retain leadership positions in the new administration. Selective investigations and bias may ruin the process, particularly where forensic auditors tailor their findings to align with the interests of a select few, thus focusing only on certain individuals while ignoring the mountain of evidence implicating more powerful figures. To protect influential persons, forensic auditors may omit incriminating evidence from reports, destroy key documents, or fabricate evidence to implicate targeted individuals or support a pre-determined narrative. Integrity-starved forensic auditors may use their investigative role to intimidate employees, or exploit their access to sensitive information to position themselves for lucrative consultancy roles post-investigation. It is not uncommon even for well-seasoned forensic auditors to drag out investigations to rack up billable hours, knowing that their fees are based on time spent rather than efficiency. Awareness of the potential for forensic auditors to engage in greed-driven antics, thus compromising the integrity of investigations and chipping away at public confidence in the process, must drive organisations to objectively vet forensic auditors and enforce strict ethical guidelines.

To ensure credibility of FAs, the process should be overseen by an independent body comprising respected figures from civil society, the judiciary, and the private sector. This body should have the authority to monitor the audit’s progress, address complaints, and ensure accountability. Public support, unencumbered by unrealistic hopes, is crucial for FAs to succeed. The hard truth is, not every case will result in a high-profile conviction. And not every stolen pula will be recovered. Managing public expectations is a minefield. Any true or perceived misstep could trigger despondency and undermine trust in the process. Even when malfeasance is uncovered, recovering stolen assets is often a daunting mission. Assets may be hidden offshore, tied up in complex legal structures, or already dissipated. Legal and bureaucratic hurdles linked to asset tracing, recovery, forfeiture, and repatriation, can delay recovery efforts for years, compelling the public to question whether the outcome of the audit warranted expended financial investment. In case the government is oblivious to this fact, allow me to howl it from the rooftops; if the FA is not initiated promptly, culprits will capitalise on this window of opportunity to cunningly ringfence ‘their assets,’ creating an inviolable sanctum of impenetrability that may thwart or inordinately delay any attempts to recover assets. In short, asset recovery is not guaranteed. Nonetheless the government must develop a functional strategy for prosecution, asset forfeiture and repatriation, supported by strong local legal frameworks and enforceable international Mutual Legal Assistance Treaties. To maintain public support, through its oversight structure, the government must transparently and consistently communicate with stakeholders throughout the process, explaining complexities and potential limitations of the audit, and at the same breath, highlighting interim milestone successes. The excitement about FAs demonstrates the public’s desire for accountability. In principle, many have no qualms with that. But few harbour a more temperate stance, keenly aware of the challenges inherent in deliberately ignoring potential blind spots while senselessly sold to the delirium of overwrought optimism.

Their view is moderated by this chilling acknowledgment; though the envisaged process appears promising, it may underdeliver. This warrants thorough preemptive preparation. Nonetheless, while fully conscious of its limitations, these level-headed individuals understand the stimulus behind FAs, and appreciate that with the right strategy, grit and discipline, the rewards can far outweigh the risks. The Greek philosopher Aristotle wisely observed, “Excellence is never an accident. It is always the result of high intention, sincere effort, and intelligent execution.” The government must channel its enthusiasm into a well-planned, well-executed audit that delivers real value. With careful planning, and a deliberate focus on mitigatory measures strategically aligned to the risks involved as well as targeted tangible outcomes, the new administration can turn the promise of FAs into a rewarding reality. Granted, you may not want to impulsively slam the brakes on that FA-stirred excitement, but prudence demands that you should consider taming it.