CHINAMORA
J:
Introduction:
This is an application brought in terms of s3(1)(a) as read with s4
of the Administrative Justice Act [Chapter
10:28]
(“the
AJA”); as read with ss26 and 27 of the High Court Act [Chapter
7:06],
together
with the common law.
The
applicant alleges infringement of his fundamental right to
administrative conduct that is lawful, prompt, efficient, reasonable,
proportionate, impartial and both substantively and procedurally fair
as enshrined in s68(1) of the Constitution.
The
applicant seeks before this court relief sought set out as follows:
“IT
IS ORDERED THAT:
1.
The forensic audit of the National Social Security Authority [“NSSA”]
for the period 1 January 2015 to 28 February 2018 produced on behalf
of the Auditor General of Zimbabwe by BDO Chartered Accountants be
reviewed and set aside in all those respects that pertain, whether
directly and/or indirectly to the applicant.
2.
Costs of suit shall be borne by the second respondent on the higher
sale of legal practitioner and own client.”
The
first and second respondents opposed the application.
A
brief chronology of the events culminating in the present application
is provided by way of background.
Background
The
facts of the matter are discernible from the affidavits filed by the
parties. Where matters are contentious, I have set them out under
separate headings.
It
is common cause, however, that the applicant was board chairman of
NSSA from 12 July 2015 to 27 March 2018. When he left, the first
respondent appointed the 2nd respondent to conduct a forensic audit
of NSSA, which culminated in a report with findings/conclusions some
of which relate to the applicant.
The
report was served on the applicant on 2 August 2019.
Subsequently,
he was given a questionnaire to which he gave some responses. The
applicant advised that his responses to the questionnaire should be
read together with the consents of a dossier dated 11 May 2018 and
housing transaction supplement (and annexures) dated 16 July 2018,
which he had prepared.
I
will now set out the respective submissions of the parties, beginning
with the applicant's case.
The
applicant's submissions
The
applicant asserted that he was aggrieved by the adverse findings and
conclusions relating to him that were made in auditor general's
report. In summary, he identifies the matters of concern as follows:
1.
Metbank investments were not above board and had yielded losses to
NSSA.
2.
The off-take agreements were irregular and had resulted in losses to
NSSA.
3.
The applicant caused agreements between NSSA and Housing Corporation
of Zimbabwe (Private) Limited (HCZ) to be concluded, and they caused
losses to NSSA.
4.
The conduct of interviews for people recruited into senior management
was shrouded in mystery, with no accountability.
5.
Board fees were overpaid. The report recommended: “NSSA
should seek legal counsel on how to deal with the involvement of the
former board chairman in the overpayment of board fees”.
6.
The applicant interfered in management issues.
The
detailed grounds of challenge
Elaborating
the basis of application, the applicant stated that he was unhappy
with both the forensic audit's processes and conclusions. The
grounds which found the challenge to the report are detailed below:
Acting
beyond remit of powers
The
applicant asserted that the first respondent exceeded the powers
given to her by s9(2) as read with paragraph 10 of the Sixth Schedule
to the Constitution, as read with s2(1) of the Audit Office Act
[Chapter
22:18].
He stated the respondent's constitutional function as being to
audit accounts, financial systems and financial management of public
accounts, and concluded that any audit beyond this remit was
unlawful.
The
report is not a forensic report
For
the applicant, it was argued that public power cannot be exercised
for a purpose other than that for which it has been given. Once the
decision was made by the first respondent to conduct a forensic
investigation, it was that investigation that had to be undertaken.
The applicant submitted that, to the extent that none of the people
who produced the report are qualified or accredited as forensic
investigators, the report is invalid and could not be relied on by
the first respondent.
The
report is incompetent
The
applicant averred that the report was incompetently prepared as it
relied on wrong or speculative information. He cited the figure of
US$4,968-00 used to show that board fees were unlawfully paid, yet
there was an actual approved sum. Also disputed was the conclusion
that board fees were not approved, because same were approved by the
permanent secretary and implemented by NSSA's management.
In
relation to the Africom issue, the applicant disputed the alleged
loss to NSSA of $300,000-00, and said a profit restatement of $15,5m
to NSSA was ignored.
He
disagreed with the sum of $104 million given as potential loss to
NSSA on the HCZ issue, as the auditors wrongly assumed that the
completed houses would have no takers.
He
argued that, had he been given a right to be heard, he would have
cleared any concerns and obviated reliance on the arbitrary figures.
The
applicant submitted that conclusions were reached on unjustified
comparisons between the HCZ and NBS housing schemes without
considering key significant differences. It was contended that a
forensic report would have noticed this.
My
attention was drawn to the judgment in Housing
Corporation of Zimbabwe (Pvt) Ltd v Zimnat Assurance Company (Pvt)
Ltd
HH579-18,
delivered on 22 February 2019.
The
applicant averred that, the second respondent released the report
disregarding that the judgment affects the conclusions in the report.
In
that case, NSSA had demanded that Zimnat pays it under the
performance bond alleging breach by HCZ for failing to deliver
housing units in terms of the off-take agreement. In response, HCZ
sought an interdict against the payment on the basis that NSSA's
demand was fraudulent as it had delivered some housing units. The
interim interdict was granted pending the outcome of arbitration
proceedings. In due course, an award was made to HCZ.
In
light of the High Court judgment and subsequent arbitral award, the
applicant contended that no basis, other than incompetence and
malice, existed for the second respondent's negative finding and
conclusion.
The
applicant complained that the report was never updated to reflect the
judgment and the award.
In
addition, he asserted that no evidence was shown of any meeting
between him and HCZ representatives to substantiate the conclusion
that he caused the agreements between NSSA and HCZ to be concluded.
Contrary
to the conclusion that HCZ was a week old company which had obtained
a US$304 million contract without tender, the applicant argued that
it was a subsidiary of Housing Africa Corporation (HAC). He added
that HAC approached NSSA as early as February 2017, and that HAC
incorporated HCZ as a special purpose vehicle for its housing
projects in Zimbabwe.
Bias
on the part of the auditors
The
applicant averred that questions put to him via a questionnaire were
framed in a biased way. When he provided answers, he submitted that
no reasons were given in instances where the auditors disagreed with
him. He argued that his responses were either ignored or his
explanations not followed through.
Additionally,
the applicant stated that no attention was paid to 3 dossiers of
information that he provided, without any reasons for ignoring them.
He
argued that the process was tainted and compromised and that his
answers were not considered, and he surmised that this was because
they did not tally with the auditors' desired outcome.
The
applicant argued that the information he provided confirmed there was
board approval for the projects allegedly not properly approved. He
added that collective responsibility was taken by the board, as
appears from supporting minutes and e-mail correspondence. If his
explanations been taken into account, the applicant stated that they
would have affected the conclusions arrived at in the report.
He
also highlighted the undesirability of Mr Kudenga's continued
involvement in the audit despite attacks on him by a member of
parliament since he was owing the applicant money.
The
applicant argued that the allegation of bias or its likelihood made
it imperative for Mr Kudenga to recuse himself from the audit
process. The argument continued that everything he did beyond the
point that he should have recused himself is invalid.
To
demonstrate the second respondent's double standards or
discriminatory approach, the applicant referred the court to notable
events which happened during the period covered by the audit. These
are as follows:
(i)
Former minister, Ms Petronella Kagonye, against resolutions of NSSA
and NBS boards, appointed one Lameck Danga as managing director of
NBS, after coming second in the interviews. He pointed out that the
report did not criticize Ms Kagonye for this.
(ii)
The second one relates to the permanent secretary, Mr Ngoni Masoka,
who directed Mr Danga's salary to be paid at a rate higher than
that of his seniors in NSSA. Again, the applicant argued that the
report did not condemn this.
(iii)
A third one involves an amount of US$598,000-00 ascribed to cost of
“unfair dismissals” in the report. The applicant stated that the
report omitted to mention that former minister, Mr Patrick Zhuwao,
forced NSSA, against a board resolution, to pay a Mr Chikuni Mtiswa
the sum of US$400,000-00.
(iv)
Next is the issue of Ms Petronella Kagonye who forced the termination
of Mr David Makwara's contract of employment as general manager of
NSSA on the ground that he was too close to the applicant.
He
complained that the losses arising from these decisions were
unjustifiably blamed on the applicant.
(v)
The additional case involved Ms Petronella Kagonye forcing NSSA to
sponsor a sum of US$200,000-00 to a disability conference in her
Caledonia constituency, and another US$200,000-00 to a school in Ruwa
before the 2018 elections.
The
applicant lamented that the auditors did not criticize the minster
for the abuse of pensioners' funds for “vote buying” for a
private benefit.
(vi)
A final issue raised by the applicant is that the report unfairly
criticized him for decisions taken before he joined NSSA.
As
further proof of bias, the protested that the report incorrectly
ascribes to him loss of US$4 million in a debt swap deal involving
Metbank's property, and US$2 million through properties bought from
Metbank at inflated prices before his appointment.
The
applicant argued that the second respondent was not an impartial
auditor and drew the court's attention to the agreement letter
dated 15 May 2018 where the following appears:
“We
understand that the results of our work may be used in disciplinary
hearings or criminal proceedings. If you wish to retain us as an
expert witness in connection with this matter, those services will be
billed separately based on the actual time spent at our standard
hourly charge out rates”.
If
the second respondent was a neutral auditor, the applicant wondered
how it would give objective testimony in any subsequent proceedings
arising out of the report.
Inaccurate
and inconsistent report
The
applicant contended that the report is inaccurate to the extent that
it alleges that some investments were made without board approval.
He
referred to a board resolution of September 2012 which authorized
management to implement decisions of the Board Investment Committee.
Additionally,
he submitted that the report was inconsistent, particularly, with
regard to the HCZ issue where it gave loss figures varying from US$16
million to US$104 million then to US$304 million. He argued that, at
any rate, the amount of US$16 million paid by NSSA to HCZ was secured
by a Zimnat insurance guarantee of US$16 million and a land bond of
US$32 million.
The
applicant stated that the board's view was that offtake agreements
did not require to go through a tender board, and a Mr Charles Nyika
employed to ensure compliance with procurement regulations did not
raise any alarm. He therefore argued that the suggestion that he
pushed the projects without tender approval was malicious.
The
applicant also denied authorizing Metbank to utilize US$37.75 million
of NSSA treasury bills in their custody, since the authority was
granted in the name of the General Manager, Ms Liz Chitiga, but a
letter in her name had been signed by her Executive Assistant, Mr
James Chiuta. Even so, he submitted that the criticism was
unwarranted since NSSA had the Reserve Bank of Zimbabwe clearance on
the good standing of Metbank.
Conflict
between the Auditor General and the Accountants
The
applicant submitted that the auditors' findings conflict with the
first respondent's earlier work. In this regard, the applicant
contended that if a loss of US$104 million existed, it would have
been flagged in the December 2018 results as a contingent liability
and published in her annual report. The argument continues that, the
second respondent's figure is arbitrary and false.
The
respondents' submissions
The
respondents raised some points in
limine.
(i)
The first is that the report was not a decision, but contained
factual findings and, consequently, was not reviewable.
(ii)
Secondly, it was argued that the second respondent was not an
administrative authority whose decision can be subject to judicial
review.
It
was further argued that the grounds relied on by the applicant did
not constitute grounds for review contemplated by s27 of the High
Court Act.
On
its part, the second respondent submitted that the application did
not comply with r257 insofar as the grounds of review were not stated
in the application but in the founding affidavit.
It
further contended that no adverse action has been taken against the
applicant on the basis of the report and, as such, the process
leading to the issuance of the report is not reviewable.
A
further preliminary point raised was that there had been a material
misjoinder of the second respondent as it was a private party which
had been engaged by the first respondent.
It
denied exercising any public power and should not have been joined to
the proceedings as it was a mere agent of the first respondent who
was the principal.
The
second respondent argued that it was not covered by the definition of
administrative authority in s2(1) of the AJA, and urged the court to
dismiss the application.
Thus,
the respondents urged the court to dismiss the application on those
preliminary points.
In
respect of the merits, the first respondent submitted that it had no
knowledge of the averments set out in the applicant's detailed
grounds of challenge.
Regarding
the attack on the forensic investigation process, the first
respondent deferred to the second respondent “as
the party better placed to respond”.
She
stated that the audit process was conducted lawfully and that no
valid basis existed for setting aside the report.
The
first respondent asserted that it was NSSA which was being audited
and not the applicant. Additionally, it contended that the
applicant's remedy lay in suing for damages for defamation if he
perceived that the report unfairly cast him in bad light.
The
second respondent denied that there was anything irregular,
unreasonable, incompetent, biased, malicious or unfair about the
report.
It
maintained that it exercised its discretion reasonably when it dealt
with information received from the applicant and others implicated in
the audit.
With
respect to the contract of US$304 million, the second respondent
argued that its magnitude required that it should have gone to
tender.
On
the issue of board fees, the second respondent submitted that it had
no reason to take into account an increase which had been improperly
approved by the permanent secretary at the instance of the applicant.
In
conclusion, the second respondent urged the court to dismiss the
application as it had carried out its mandate in terms of its brief
from the first respondent, arguing that the report was factual and
impartial.
Issues
for determination
The
issues that confront this court for determination are as follows:
1.
Whether, when the second respondent acted under the authority of the
Auditor General, it exercised administrative or public power.
2.
Whether the forensic investigation constitutes reviewable
action/conduct or decision.
3.
Whether grounds for review exist.
The
relevant law
It
is not in doubt that in terms of s26 of the High Court Act, this
court has power to review proceedings and decisions of inferior
courts, tribunals and administrative authorities.
The
grounds upon which a review may be brought are set out in the High
Court Act, in particular, s27 thereof which, in the relevant part,
reads:
“27
Grounds for review
1.
Subject to this Act and any other law, the grounds on which any
proceedings or decision may be brought on review before the High
Court shall be –
(a)
absence of jurisdiction on the part of the court, tribunal or
authority concerned;
(b)
interest in the cause, bias, malice or corruption on the part of the
person presiding over the court or tribunal concerned or on the part
of the authority concerned, as the case may be;
(c)
gross irregularity in the proceedings or the decision.
(2)
Nothing in subsection (1) shall affect any other law relating to the
review of proceedings or decisions of inferior courts, tribunals or
authorities.”
See
Ndlovu
N.O. v CBZ Bank & Anor
SC27-17.
Essentially,
the applicant's complaint is that there were gross irregularities
in the manner the forensic investigation was carried out by the first
respondent acting through the auditors she had appointed.
The
appropriate place to begin is the Constitution which, through s68(1),
entitles everyone to just administrative action which is carried out
in a lawful, reasonable and procedurally fair manner.
The
section, inter
alia,
provides:
“68
Right to administrative justice
(1)
Every person has a right to administrative conduct that is lawful,
prompt, efficient, reasonable, proportionate, impartial and both
substantively and procedurally fair.
(2)
Any person whose right, freedom, interest or legitimate expectation
has been adversely affected by administrative conduct has the right
to be given promptly and in writing the reasons for the conduct”.
The
constitutional right enshrined in s68(1) has been mirrored and given
effect in terms of the AJA.
Thus,
s3(1) of the AJA provides that an administrative authority which
takes action which may affect the rights, interests or legitimate
expectations of any person shall act lawfully, reasonably and in a
fair manner and give reasons for its action.
Section
3(2) merits quoting in extenso,
as it states:
“(2)
In order for an administrative action to be taken in a fair manner as
required by paragraph (a)
of subsection (1), an administrative authority shall give a person
referred to in subsection (1) –
(a)
adequate
notice of the nature and purpose of the proposed action; and
(b)
a
reasonable opportunity to make adequate representations; and
(c)
adequate notice of any right of review or appeal where applicable”.
In
addition, section 4 of the AJA provides:
“4
Relief against administrative authorities
1.
Subject to this Act and any other law, any person who is aggrieved by
the failure of an administrative authority to comply with section
three
may
apply to the High Court for relief.
1.
Upon an application being made to it in terms of subsection (1), the
High Court may, as may be appropriate —
(a)
confirm or set aside the decision concerned;
(b)
refer the matter back to the administrative authority concerned for
consideration or reconsideration;
(c)
direct the administrative authority to take administrative action
within the relevant period specified by law or, if no such period is
specified, within a period fixed by the High Court;
(d)
direct the administrative authority to supply reasons for its
administrative action within the relevant period specified by law or,
if no such period is specified, within a period fixed by the High
Court;
(e)
give such directions as the High Court may consider necessary or
desirable to achieve compliance by the administrative authority with
section three.
(3)
Directions given in terms of subsection (2) may include directions as
to the manner or procedure which the administrative authority should
adopt in arriving at its decision and directions to ensure compliance
by the administrative authority with the relevant law or empowering
provision”.
It
is not debatable that there is adequate authority for this court to
deal with this application.
Analysis
Whether
BDO Accountants exercised administrative power
I
identified the first issue for determination as whether, when the
second respondent acted under the authority of the Auditor General,
it exercised administrative or public power.
In
dealing with this application, I have to define the legal status of
the second respondent vis-a-vis the audit process. It is only through
doing so that the jurisdiction of this court is engaged. I am mindful
of the point in limine
challenging this court's jurisdiction.
The
first respondent's functions are set out in 309(2) of the
Constitution as follows:
“2.
The functions of the Auditor-General are -
(a)
to audit the accounts, financial systems and financial management of
all departments, institutions and agencies of government, all
provincial and metropolitan councils and all local authorities;
(b)
at the request of the Government, to carry out special audits of the
accounts of any statutory body or government-controlled entity;
(c)
to order the taking of measures to rectify any defects in the
management and safeguarding of public funds and public property; and
(d)
to exercise any other functions that may be conferred or imposed on
him or her by or under an Act of Parliament”.
As
an agency government, NSSA is subject to audit by the first
respondent.
By
virtue of s8(1) of the Audit Office Act, the first respondent's
powers can be delegated.
Section
9 permits the first respondent to carry out contracted audits, which
are defined as follows:
“9
Contracted audits
(1)
The Comptroller and Auditor-General may, by notice in the Gazette,
appoint a person registered as a public auditor in terms of the
Public Accountants and Auditors Act [Chapter
27:12]
to inspect, examine and audit the accounts, records or stores that
are required by this Act or by any other enactment, to be inspected,
examined or audited by the Comptroller and Auditor–General and
report the results of the inspection, examination or audit.
(2)
The person appointed in terms of subsection (1) may carry out an
economy, efficiency and effectiveness audit of the operations, or
specified operations, of a designated statutory body, and report the
results of the audit to the Comptroller and Auditor-General”.
It
is common cause that the second respondent was contracted to carry
out an audit of NSSA under the statutory framework described above.
In
this regard, the AJA defines administrative authority to include:
“(d)
any other person or body authorized by any enactment to exercise or
perform any administrative power or duty; and who has the lawful
authority to carry out the administrative action concerned”.
From
the foregoing framework, I find it beyond argument that the second
respondent performed a public function and made findings and
recommendations in this regard.
It
follows that by carrying out the forensic audit, the second
respondent fell squarely within the definition of administrative
action contemplated by the AJA.
It
can hardly be open to dispute that the decision to recommend vested
in the second respondent, while the decision to accept the
recommendations lay with the first respondent. However, what is
particularly relevant to the issue before me was articulated in Adv
Mpofu's
submission that upon being adopted, ownership in the recommendations
shifted to repose in the first respondent. Once that happened, it is
naive of the auditors or the Auditor General to deny that the second
respondent effectively exercised administrative power.
I
dismiss the point in
limine
raised for lack of merit.
Whether
the audit constitutes reviewable action/conduct or decision
The
second issue was whether the audit constitutes reviewable
action/conduct or decision.
This
question cannot be answered without looking at the architecture of
s3(1) and (2) of the AJA. Those provisions make it evident that the
exercise of public power should not be arbitrary, but must conform to
the principles of legality, fairness and reasonableness.
I
agree with Adv Mpofu's
submission that what is reviewable is not merely a decision of an
administrative body, but administrative action. There are a number of
cogent reasons which render it a woeful folly to conflate
administrative action with administrative decision:
(i)
Firstly, s2(1) of the AJA is clear that the two concepts are
different, and should be so treated, since it defines “administrative
action” to mean any action taken or decision made by an
administrative authority. Clearly, the use of the elective
conjunction suggests that this court can review either an action or a
decision of an administrative functionary.
(ii)
Secondly, it is instructive to consider the purpose of the AJA, whose
preamble provides a clue to why action and decision should neither be
confused nor be used interchangeably. It is in the following terms:
“AN
ACT to provide for the right to administrative action and decisions
that are lawful, reasonable and procedurally fair; to provide for the
entitlement to written reasons for administrative action or
decisions; to provide for relief by a competent court against
administrative action or decisions contrary to the provisions of this
Act; and to provide for matters connected with or incidental to the
foregoing”. [My
own emphasis]
That
this court can examine the purpose of legislation to aid statutory
interpretation has judicial precedent. NCOBO J in Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs and
Tourism and Others
2004 (4) SA 490 (CC) at para 89 eloquently stated the position thus:
“…
the
words and expressions used in a statute must be interpreted according
to their ordinary meaning is the statement that they must be
interpreted in the light of their context. But it may be useful to
stress two points in relation to the application of this principle.
The first is that 'the context', as here used, is not limited to
the language of the rest of the statute regarded as throwing light of
a dictionary kind on the part to be interpreted. Often of more
importance is the matter of the statute, its apparent scope and
purpose, and within limits, its background.” [My
own emphasis]
(iii)
Thirdly, s68(1) of the Constitution, though using the word “conduct”,
confirms that action is different from, and was not intended to mean
decision. It provides that every person has a right to lawful,
prompt, efficient, reasonable, proportionate, impartial and
procedurally fair “administrative conduct”.
Similarly,
s68(2) gives anyone who has been adversely affected by
“administrative conduct” the right to be given reasons in writing
for such conduct.
The
word decision was avoided (I dare say, deliberately), buttressing the
argument that a decision per
se
is not a causa
sine qua non
for the remedy of judicial review to be tenable.
(iv)
Fourthly, the Constitution provides a further rationale for not
construing action to mean decision, and s46(2) is a must read. It is
couched as follows:
“When
interpreting any legislation, and when developing the common law or
customary law, every court, tribunal or body must promote and be
guided by the spirit and objectives of this Chapter”.
It
must be borne in mind that s46(1) enjoins this court to give full
effect to the rights and freedoms enshrined in this Chapter.
It
follows, in my view, that the best way to achieve this is to
interpret the definition of “administrative action” in the AJA in
a way which does not subsume action and decision into one. Such an
approach would enhance the process of review by not confining it to
decisions to the exclusion of examining the process and actions taken
in the lead up to those decisions.
In
fact, the use of the formulation “administrative conduct” as
opposed to decision, in s68 of the Constitution, makes it imperative
for a wider interpretation to be given. In this respect, the
Cambridge English Dictionary defines “conduct” as meaning “to
organize and perform a particular activity”, while the Collins
English Dictionary has a similar meaning.
At
any rate, this issue was settled in the South African case of
Oudekraal
Estates (Pty) Ltd v City of Cape Town
2004 (6) SA 222 (SCA), which held that recommendations constitute
administrative action which remains valid until reviewed and set
aside.
In
the jurisprudence of this court, the obiter
dicta
remarks in Kazingizi
v Dzinoruma
HH106-06, are persuasive as MAKARAU and PATEL JJ (as they then were),
appositely stated:
“The
integrity of the order lies in the procedure used to reach that order
and the reasoning employed to opt for that particular result.”
In
view of the foregoing, contrary to the position taken by the
respondents, my view is that the forensic investigation undertaken by
the second respondent and report produced by that exercise are
reviewable.
Accordingly,
the preliminary objection has no basis and is dismissed.
Whether
grounds for review exist
The
question that must now be resolved is whether valid grounds for
review have been established.
I
will now examine the grounds advanced in the application, but not in
any particular order.
(i)
The applicant submitted that the second respondent was not neutral
and that the lack of impartiality affected its approach to the audit.
If
substantiated, this issue is material to the credibility and validity
of the entire forensic investigation and findings culminating from
that process.
I
turn to the letter of engagement signed between the Auditor General
and the auditors on 15 May 2018. While the second respondent asserted
that it was an impartial auditor, in that letter it intimates
willingness to testify for a fee in criminal proceedings or
disciplinary hearings which might arise from the report it prepared.
That
caused me concern.
It
is trite law that one need not establish actual bias but an
appearance of bias. This was the test set by Supreme Court, in
Leopard
Rock Hotel (Pvt) Ltd v Wallen Construction (Pvt) Ltd
1994
(1) ZLR 255 (S) at 273G-H and 274 A-C.
In
Foya
& Mutimba v R & Jackson N.O.
1963 R & N 318 (FS), it was stated that:
“…
what
the applicants had to show was not necessarily personal animosity
towards them. If they showed that the position was such that a
reasonable man in their position would have thought that he would not
have a fair trial in the circumstances and that there was nothing in
further acts disclosed to indicate that there was not a real
likelihood that would be enough”.
I
note that the engagement letter suggests an understanding between the
parties that the audit may result in disciplinary or criminal action
being taken.
Thus,
a reasonable person in the position of the applicant would be
forgiven for thinking that the auditors were compromised as they were
essentially touting for business relating to proceedings to future
proceedings to either prosecute him or dismiss him from his job.
The
applicant did not end there.
He
argued that the second respondent displayed bias against him in that
the audit report is silent on cases of abuse of NSSA funds by former
ministers Petronella Kagonge and Patrick Zhuwao. He submitted that
the discriminatory approach was a manifestation of bias in the
investigation.
I
observe that these specific allegations by the applicant were not
answered, the second respondent (in para 42 of its opposing
affidavit) preferring to provide the following reply:
“Some
issues picked by the applicant herein were clearly outside the scope
of our mandate although they in the same vein do come across to me as
an indirect admission by the applicant of not following laid down
procedures just like the individuals he refers to. Be that as it may,
since this fell outside our instructions, it may probably be of
interest to the first respondent in respect of other proceedings, not
necessarily investments, which is what we had been tasked to deal
with”.
I
must say that I find the above response disingenuous (if not,
dishonest).
An
examination of the terms of reference contained in Attachment “A”
to the engagement letter does not support the stance adopted by the
second respondent. It is obvious that the audit extended to human
resources and “any
other issue that may arise”.
Indeed,
the issue of board fees and promotions to senior positions which the
audit dealt with are not investment matters.
It
is apparent that the allegations were not denied.
More
relevantly, the auditors did not say that the issues did not come to
their attention. Rather, their attitude was that they were not part
of their remit, so they had no business looking at them.
I
find that somewhat cavalier.
Consequently,
the failure to address this complaint seriously undermines the second
respondent's claim (in para 48 of Opposing Affidavit) that:
“Applicant
seems to miss the point that this is an impartial report which states
facts supported by evidence. It is not meant to celebrate individual
victories or punish individual mistakes. This is an audit of an
organization”.
The
law is clear on the consequences of failure to deny a specific
allegation of fact.
For
the avoidance of doubt, an unrefuted allegation is taken as having
been admitted. See Fawcett
Security Operations v Director of Customs & Excise
1993
(2) ZLR 121 (SC).
Not
addressing the alleged financial indiscretions of ministers Kagonye
and Zhuwao necessarily means that the differential treatment of the
applicant and these officials remained unrebutted.
The
circumstances which implicate a breach of s56 of the Constitution
have been the subject of discussion by the Constitutional Court in
this jurisdiction. In this context, in Nkomo
v Minister of Local Government, Rural & Urban
Development
& Ors
2016
(1) ZLR 113 (CC) at 118H-119B by ZIYAMBI JCC (as she then was)
asserted:
“The
right guaranteed under s56(1) is that of equality of all persons
before the law and the right to receive the same protection and
benefit afforded by the law to persons in a similar position. It
envisages a law which provides equal protection and benefit for the
persons affected by it. It includes the right not to be subjected to
treatment to which others in a similar position are not subjected. In
order to found his reliance on this provision the applicant must show
that by virtue of the application of a law he has been the recipient
of unequal treatment or protection that is to say that certain
persons have been afforded some protection or benefit by a law, which
protection or benefit he has not been afforded; or that persons in
the same (or similar) position as himself have been treated in a
manner different from the treatment meted out to him and that he is
entitled to the same or equal treatment as those persons.”
Inevitably,
I am satisfied that the applicant has established that there was
unequal treatment between him and the ministers.
In
the absence of a rational explanation or the differentiated
treatment, is inescapable to conclude that the applicant established
the ground of bias.
Further,
the question of alleged inflated payments in respect of Metbank
properties and loss of US$4 million in a corrupt debt swap deal was
not addressed.
The
applicant's complaint was that the inflation of prices and swap
arrangement had nothing to do with him as he had not joined NSSA when
this occurred.
No
cogent reason was given for not providing an answer.
In
face of such a damning indictment, the following response (in para 44
of the second respondent's opposing affidavit) is dumbfounding:
“The
challenge bewitching the applicant is that he is taking this report
personally. This is a wrong approach. As highlighted before, this
report is not a personal attack on the applicant nor directed at him.
The report is an audit of NSSA for the period set in the mandate and
it is simply backed by evidence”.
Quite
clearly, the allegation called for a rebuttal beyond glossing over
it.
After
electing not to dispute the averment which can be paraphrased; “I
did not do it as I was not there”,
I can see no conceivable basis for the second respondent to depose
that the report was backed by factual evidence.
On
the principle that what is not denied is deemed to have been
conceded, the applicant's claim would carry the day.
This
court is compelled to make one of a few inferences. Either the
auditors were biased against the applicant, or they did not apply
their mind to the facts before them when conducting their forensic
audit. On the extreme end, the court is compelled to conclude that it
was case of incompetence.
This
issue has previously confronted this court.
In
Ramilewa
v
Secretary
of the Public Service Commission
1988
(1) ZLR 257 (H) at 262 B-F; GREENLAND J quoted with approval from SA
Defence and Aid Fund and Anor v
Minister
of Justice
1967
(1) SA 31 (C), where Corbett J at 34H-35D CORBETT J (as he then was)
said:
“The
court can interfere and declare the exercise of the power invalid on
the ground of a non-observance of the jurisdictional fact only where
it is shown that the repository of the power, in deciding that the
pre-requisite fact or state of affairs existed, acted mala
fide
or
from ulterior motive or failed to apply his mind to the matter. See
eg Minister
of the Interior v
Bechler
and Others supra
[1948
(3) SA 409 (A)]; African
Commercial and Distributive Workers' Union v
Schoeman
NO and Another
1951
(4) 266 (T); Sachs 1953 (1) SA 392 (A).”
In
casu,
no plausible reason has been availed for making a finding of fact or
conclusion without an evidential foundation.
The
second respondent had all the facts before it, more so, relating to
NSSA's investments. It is simply unreasonable and irrational to
make that kind of conclusion.
In
my view, reasonable administrative action is intrinsically linked to
the principle of rationality. I can do no better that agree with the
learned author, Cora Hoexter, in Administrative
Law in South Africa,
(1st ed) at 307, who gives the meaning of rationality as follows:
"This
means in essence that a decision must be supported by the evidence
and information before the administrator as well as the reason given
for it. It must also be objectively capable of furthering the purpose
for which the power was given and for which the decision was
purportedly taken."
This
means that an administrative decision which has been taken on an
accurate factual basis is both unreasonable and irrational. In other
words, if the decision has been made in ignorance of the true facts
material to that decision or not considering relevant material, such
a decision is reviewable. Whichever inference this court makes, it
establishes a gross irregularity within the contemplation of
s27(1)(c).
I
therefore find that the applicant has established this ground of
review.
Assuming
that the second respondent chose to reject the position put across by
the applicant in the questionnaire, at the very least, reasons ought
to have been given for such a stance. See
Kazingizi
v Dzinoruma supra,
where MAKARAU and PATEL JJ aptly proffered the rationale for
providing reasons:
“The
absence of reasons for the judgment gave great cause for concern. It
is trite that very trier of fact has to give reasons for his or her
decision. A judicial decision that is not explained easily lends
itself to criticisms of being arbitrary and/or capricious. Where the
litigants have presented their competing facts and arguments before
the trial court, they have a legitimate expectation to know whether
their version of facts and their argument have been received and if
not, why…One could very well argue that the failure to give reasons
for judgment is a gross misdirection on the part of the trial court
and one that vitiates the order given at the end of the trial…The
integrity of the order lies in the procedure used to reach that order
and the reasoning employed to opt for that particular result.”
I
endorse the self-compelling logic of this judgement and respectfully
state that it applies with equal force to administrative
decision-making.
Reasons
are invariably linked to the concept of rationality.
I
take the view that a finding or a decision will be considered to be
reasonable when there is a material connection between the evidence
and the result. Such a connection is explained in the decision
maker's reasons.
Also
worth mentioning is that the apparent out of hand rejection of the
applicant's answers in the questionnaire effectively means that he
was denied the right to be heard in violation of the rights
guaranteed by s3 of the AJA.
In
this respect, PATEL JA succinctly explained what constitutes acting
in a fair manner in Attorney-General
v Leopold Mudisi & Ors
SC48-15,
in the following terms:
“The
obligation to act in a fair manner is further expanded in s3(2) of
the [Administrative Justice] Act to require the giving of 'adequate
notice of the nature and purpose of the proposed action' and 'a
reasonable opportunity to make adequate representations' as well as
'adequate notice of any right of review or appeal where
applicable'.”
In
light of the conduct exhibited by the second respondent above, the
applicant did not get a fair hearing in breach of his rights. This
obviously triggers his right of review in terms of s27(1)(c) of the
High Court Act.
Finally,
I would add that insofar as the integrity of the order lies in the
procedure used to reach that order, it cannot be gainsaid that the
process giving rise to an executive decision is reviewable.
The
point in
limine
that there are no grounds for review has no foundation and is
dismissed.
Conclusion
As
I have found that they the investigation leading to the report was
biased and that the auditors did not apply their minds to issues
before them, I do not propose to deal in detail with the other
grounds raised by the applicant.
At
any rate, I believe that they have been sufficiently covered in my
judgment.
It
is worth emphasizing that the inaccuracies in the report speak to
failure to apply one's mind to the issues for determination before
it.
In
respect of costs, the conduct of the second respondent warrants
censure.
The
record shows that it was within its power to eliminate some of the
failures which undermined the applicant's rights. For example, the
period the applicant joined the NSSA board could have been easily
verified from information in its possession. Again, it would not have
been difficult to consider the answers given by the applicant and
provided reasons for discounting them. In respect of the alleged
financial improprieties of ministers Kagonye and Zhuwao, the court is
not convinced by the reason given for not confronting them in the
report. It is evident to me that they fell within the second
respondent's brief, but were unexplainably avoided.
In
the exercise of my discretion, I have decided to award punitive costs
against the second respondent. As no costs were sought against the
first respondent, I will grant the order as prayed in the draft
order.
Disposition
The
Court is empowered in terms of section 28 of the High Court Act to
issue a range of orders if it is satisfied that the conduct
complained of falls foul of the provisions of the Administrative
Justice Act or the Constitution.
In
the result, I make the following order:
IT
IS ORDERED THAT:
1.
The forensic audit of the National Social Security Authority [“NSSA”]
for the period 1 January 2015 to 28 February 2018 produced on behalf
of the Auditor General of Zimbabwe by BDO Chartered Accountants be
reviewed and set aside in all those respects that pertain, whether
directly and/or indirectly to the applicant.
2.
Costs of suit shall be borne by the second respondent on the higher
sale of legal practitioner and client scale.
Rubaya
& Chatambudza,
applicant's legal practitioners
Civil
Division of the Attorney General's Office,
first respondent's legal practitioners
Sawyer
& Mkushi,
second respondent's legal practitioners
