BSR: Judicial Review of the Auditor General’s Reports

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Introduction

When the Auditor-General, Mildred Chiri appeared before Parliament’s Public Accounts Committee (PAC), she was asked why names of companies and individuals had been omitted from her audit report for 2019[1]. There was concern that the report had been censored to remove and protect names of powerful elites or entities associated with them.

Mrs Chiri explained the reason for the omissions. “This [the omissions] was done to minimise the risk of potential litigation. There have been comebacks from some of our suppliers in the past. Normally when you name and shame organizations in public documents like our annual reports, you must have evidence that is watertight and sustainable at law,” she told the PAC.

It was the fear of litigation that prevented her from naming and shaming persons who might have been involved in dubious dealings with the state and its entities. If the committee had probed her further on this point, it might have drawn more specific detail from her. This is because her office is currently battling litigation arising from the 2018 audit report which was published in 2019. The AG lost the battle at the High Court, but an appeal was recently heard by the Supreme Court.

A teachable moment: public power and individual rights

The statement by the AG and this case presents a good opportunity to analyze the rules about the functions of the AG and their impact on the rights, interests, and legitimate expectations of individuals and entities that are implicated in her reports. The public audit function is a critical part of the architecture of the modern state. It is the eyes and ears that identify improprieties in the use and management of public funds. The AG is a sentinel against the abuse of public funds and property. As an institution, it can advance and amplify the constitutional values of transparency and accountability.

Nevertheless, the public audit function is also the exercise of public power, and it goes without saying that the exercise of public power must always be carefully watched because of the potential for abuse. The law has in-built mechanisms to minimise the abuse of public power. One of these important mechanisms is called judicial review. It is a principle by which courts of law can intervene and set aside decisions, actions, or omissions in the exercise of public power where other persons demonstrate that their rights, interests, and legitimate expectations have been injured.

This article critically analyses the reviewability of conduct of the AG and its private contractors. The hope is that it will contribute to the construction of guidance for not only the AG but also other public authorities that perform public functions directly or through private entities. It may also be useful to private entities that are contracted to perform functions of a public nature by public authorities. Finally, it should be useful to individuals and entities that are impacted by the exercise of public functions, either by public authorities or by private entities. To provide context, I will start with a summary of the litigation in which the AG is involved.

The case of Robin Vela and the AG

The case against the AG and its private contractor, BDO Zimbabwe Chartered Accountants was brought in 2019 by Robin Vela, a former Chairman of National Social Security Authority (NSSA) between 12 July 2015 and 27 March 2018. The lawsuit followed the publication of the AG’s 2018 audit report which included findings of a forensic audit report into NSSA’s financial affairs.

The AG had appointed BDO Zimbabwe to carry out a forensic audit of NSSA’s investments. Objections had been raised over the involvement of Ngoni Kudenga, the managing partner of BDO Zimbabwe, based on a previous relationship that had soured and which meant that he could not be impartial and fair in the conduct of the forensic audit. The forensic audit resumed after Kudenga was supposedly cleared. Although the firm said Kudenga had stepped down from the forensic audit, it carried on with the exercise. With hindsight, the AG should have taken a different route once she became aware of the perceptions of bias concerning the firm. The forensic audit report produced by BDO Zimbabwe was adopted by the AG who proceeded to publish the outcomes in her 2018 audit report which was submitted to Parliament.  

Vela took great exception to and was aggrieved by the contents of the forensic audit report which he believed were false, malicious, and injured his reputation. In his view, the forensic audit showed a lack of competence, contained false information, and besmirched his reputation grievously. He argued that BDO was not fit to conduct the forensic audit not only because it lacked the professional qualifications to perform that specialized function but also because it was biased and lacked the impartiality and fairness required for that task.

Normally, an aggrieved person might let the matter go. They might weigh the costs and benefits and conclude that it is irrational to challenge such a report. Litigation comes with risks of unpredictability and costs. You have no control over how courts might rule, even if you are right. Furthermore, there is always a risk of the law of unintended consequences: when legal action that you are pursuing ends up exposing your privacy. Therefore, an applicant who has the proverbial skeletons in the cupboard would be better advised to avoid litigation as that might lead to the revelation of those things that are best kept in the closet. This, at any rate, did not apply to Vela who was so aggrieved by the audit report that he was determined to set the record right. He must have weighed the risks of litigation and concluded that his professional standing and integrity were worth the sacrifice. 

Application for a review

Vela filed an application at the High Court for a review of the AG’s audit report as it related to him. He cited the AG in her official capacity as the administrative authority responsible for the forensic audit report which he found offensive and injurious. BDO Zimbabwe was also cited as the contractor that produced the report on the basis that it was carrying out the public function on behalf of the AG. The application was filed in terms of provisions of the Administrative Justice Act (AJA) and the High Court Act (HCA).

Under both the AJA and the HCA[2] an aggrieved person can approach the High Court seeking judicial review and the High Court has the power to review proceedings of lower courts or administrative authorities. Vela was suing the AG as an administrative authority responsible for producing and publishing the audit report. In this case, the forensic audit report had been produced by the AG via a private contractor, BDO Zimbabwe.

Under the HCA a review proceeding may be brought on various grounds. One might argue that the lower court or administrative authority lacked jurisdiction (legal power to handle the matter); that there were gross irregularities in the handling of the matter or that the court or administrative authority was biased, conflicted, malicious, or corrupt[3]. Vela relied on these grounds to challenge the conduct of the forensic audit report. He argued that the AG had exceeded her powers; the forensic report was incompetent and lacked a factual basis; the forensic auditor was biased; his right to be heard was not fulfilled and generally that the process was tainted with gross irregularities.  

BDO opposed the review application by raising several preliminary and substantive objections. The essence of the preliminary objections was that the forensic audit report was not reviewable. It argued that the forensic audit report was not an administrative decision but just a report of findings. It also argued that as a private party that was contracted to carry out a forensic audit BDO Zimbabwe was not an administrative authority whose decisions could be reviewed by the court. It further argued that in any event, no adverse action had been taken against Vela following the forensic audit report and therefore there was no cause for the review. This was at odds with Vela’s view that the publication of the report was an administrative action that affected his rights, interests, and legitimate expectations and, therefore, warranted a review.  

The High Court upheld the application for review and ordered the forensic audit report to be set aside “in all those respects that pertain, whether directly and/or indirectly” to Vela. However, BDO Zimbabwe appealed to the Supreme Court, arguing that the High Court was wrong to hold that the forensic audit report was reviewable. It is this appeal that was recently before the Supreme Court. This article does not intend to get into the finer details of the matter. It suffices that the matter raises critical questions regarding the reviewability of the work of the AG and work produced on her behalf by private contractors. The significant point to be made is that under the new constitutional architecture what matters in review proceedings is not so much the identity of the person but the nature of the function that the person is performing. Even if that person is not a public officer, if they are performing a function of a public nature, their work is subject to judicial review. 

Why Judicial Review Matters

It is important to begin with an account of why judicial review of executive powers is a critical part of a constitutional democracy that is based on the rule of law. It ensures that the judiciary checks and balances the exercise of power by the executive. Judicial scrutiny of the exercise of public power is designed to ensure that the exercise of public power is legal (the principle of legality) both in terms of being within powers and concerning procedure. If a public officer exceeds his powers, the action or decision can be set aside on review. The review procedure is designed to ensure that the conduct of public authorities complies with the law and that procedure conforms to principles of natural justice.

Take, for example, the letter that was recently circulated in which the so-called Provincial Development Coordinator for Harare Metropolitan Province asked non-governmental organizations to attend a meeting with him and to submit certain information and documents. The most important question is whether his demand has any legal basis: what is the source of his authority to make such a demand? This is because the exercise of public power must be founded on law, and it must be within the terms of that law. As eminent scholar Professor Geoff Feltoe has written“All administrative authorities, no matter how high-ranking, are obliged to obey the law. If an authority acts unlawfully, any person affected must surely have the right to approach a court of law for a ruling that the action is illegal and of no force and effect. This is the essence of the rule of law and the protection of the law.”[4]

Another example is where a state-controlled entity is awarding a tender for a major project. The normal procedure is that the parastatal floats a tender and contractors submit bids. The state-controlled entity then conducts a tender adjudication process, before deciding and awarding the tender to the winner. If some of the bidders discover that the process was unfair for whatever reasons, they can apply for judicial review to have the decision set aside. The reason for unfairness might be that the adjudicator was biased toward the winning bidder. The merits of the decision are not the issue. The issue would be that the adjudicator did not comply with the principles of fairness. The decision can therefore be set aside based on this procedural irregularity.

Things get more complex and interesting where the state-controlled entity outsources its public function to a private contractor: can the function performed by the private contractor be subject to judicial review? This is one of the issues that has been placed at the centre of the Vela v AG and BDO dispute. I say “placed at the centre” because it is not really at the centre: what was being reviewed was the AG’s function, not BDO Zimbabwe’s. Nevertheless, as will be shown, under the new constitutional scheme, the conduct of private contractors is reviewable if it is performing a function of a public nature.    

Constitutional Right to Judicial Review

The constitutional foundation for administrative justice is found in section 68 which states that “Every person has a right to administrative conduct that is lawful, prompt, efficient, reasonable, proportionate, impartial and both substantively and procedurally fair.” Whereas judicial review has traditionally focused on procedural fairness, section 68 explicitly expands judicial review to include substantive fairness. This is an important feature that was purposefully and deliberately included by the framers of the constitution. It means administrative justice is not merely about procedural fairness, but it is also about substantive fairness of the decision, a matter that requires judicial interpretation.

To give meaning to the section 68 right, the term “administrative conduct” is defined in section 332 of the Constitution to “include any decision, act or omission of a public officer or of a person performing a function of a public nature, and a failure or refusal of such a person to reach such a decision or to perform such an act”. This definition has three significant features:

       i. First, the definition is so broad that it includes both acts and omissions as “administrative conduct”. In other words, doing something and not doing anything both qualify as administrative conduct for purposes of judicial review. A person can go to court and successfully argue that a public officer did not do a particular act, which omission, therefore, invalidates the outcome. It would be different if section 68 merely referred to “administrative acts”.

      ii. Second, the definition means a decision and action or omission are not the same thing. This means a review can apply to an “action” even if it does not involve a clear decision. On this view, an investigation and the writing of a report are both “actions” that might not include clear decisions, but they would still be reviewable. This matters where a litigant says the issue is not reviewable because there is no decision.

     iii. Third, the definition includes the conduct of “a person performing a function of a public nature” as administrative conduct. This amplifies the modern view of administrative justice, namely that what matters most is not the identity of the person or their source of authority but the nature of the function being performed. In the UK case of Holmcroft Properties Ltd, R (On the Application Of) v KPMG LLP[5] although the Court of Appeal held that the conduct of a firm of accountants, KPMG was not reviewable in that specific case, this was because in its view the scheme under which the firm had been appointed was a private arrangement to settle private rights and therefore, did not have a sufficient public flavour. More significant for purposes is that the Court of Appeal confirmed that “the fact that the decision emanates from contractual arrangements does not mean that public law principles are inapplicable. The question is whether the body is carrying out a public law function”[6].

The core issue is that the court is guided by the nature of the function, not the source of authority or identity of the actor. This means it is perfectly possible for the conduct of a private contractor that is performing a function of a public nature to be classified as administrative conduct that is amenable to judicial review. It puts to bed any notion that judicial review can only be applied to the conduct of a public officer[7].

As the Constitution is the supreme law of the country, sections 68 and 332 provide the guiding campus when interpreting any other law regarding the reviewability of administrative conduct. Although it is correct that where there is legislation that seeks to implement section 68 rights any review application must be founded upon that legislation, the guiding effect of the Constitution must be accorded its place in the scheme of interpretation. The statement by Deputy Chief Justice Malaba (as he then was) that section 68 “takes a back seat” in the presence of legislation like the AJA is only accurate to the extent that it refers to making a claim. However, with respect, it cannot be true that section 68 “takes a back seat” in interpretation. It remains the campus by which judges interpret the relevant legislation that seeks to promote administrative justice.

If there was any doubt about the omnipresence of section 68 in matters of administrative justice, section 46(2)[8] provides clarity. It requires that any court, forum, or body that is interpreting any enactment or developing the common law “must promote and be guided by the spirit and objectives” of the Declaration of Rights. This means the interpretation of the AJA and the HCA regarding judicial review must conform to and promote the “spirit and objectives” of sections 68 and 332 of the Constitution.

Interpretation guided by the Constitution

Applying these constitutional provisions, the AG is a public officer and, therefore, her acts are administrative conduct which is eligible for judicial review. Likewise, as the forensic audit was performed on the AG’s behalf by her duly authorized agent BDO Zimbabwe, both the audit process and the publication of the report are the AG’s administrative conduct based on the ordinary principles of agency. BDO was the agent, and the AG was the principal. It is trite that whatever the agent does is attributed to the principal unless it was unauthorized.

In any event, in the spirit and objectives of sections 68 and 332 of the Constitution, what matters is not that BDO is a private contractor, but that it was “performing a function of a public nature” when it carried out the forensic audit into NSSA’s affairs. The AG delegated her public function through the Audit Office Act. Since it was a public function, there can be no doubt that the conduct of BDO is reviewable either directly as its conduct or indirectly as the conduct of the AG. The lesson here is that whenever the AG commissions a private contractor to perform a public function on its behalf, it constitutes administrative conduct that can be subjected to judicial review. It would be absurd if a public function performed by the AG is regarded as reviewable, but the same public function becomes unreviewable just because it has been outsourced to a private contractor. It would defeat the purpose and protections of judicial review and violate section 56 right to protection and benefit of the law.

But the above is based on the Constitution. It is useful to consider the question of reviewability under the legislation. It will be noted that although the route is different, it still leads to amenability of the audit function to judicial review. Significantly, from a policy perspective, it demonstrates why the current legislation falls short of constitutional standards and needs alignment with the Constitution.  

Review under legislation

As already intimated above, the two pieces of legislation that deal with judicial review are the AJA and the HCA. Section 2(1) of the AJA defines “administrative action” to mean “any action taken or decision made by an administrative authority and the words “act”, “acting” and “actions” shall be construed and applied accordingly”. What is immediately apparent is that the words of the AJA do not mirror the words sections 68 and 332 of the Constitution. First, section 68 of the Constitution refers to “administrative conduct” while section 2(1) of the AJA refers to “administrative action”. The term “conduct” is broader than “action”. This means the AJA must be amended to reflect the broader constitutional wording.

The second difference is that the constitutional definition specifically includes omissions as administrative conduct, whereas the AJA’s definition only refers to “action taken or decision made” both of which refer to positive conduct. One way around this is to argue that omissions are implied but to prevent any doubt, the AJA should adopt the constitutional definition of administrative conduct. After all, the purpose of the AJA is to give full effect to the rights in section 68(3) of the Constitution.

The third difference is that the constitutional definition of administrative conduct includes the conduct of “a person performing a function of a public nature”. This, as we have observed, makes it far easier to include private parties that are contracted to perform functions of a public nature. The AJA on the other hand has an elaborate definition of what constitutes an “administrative authority” This is vague and may be interpreted as not specifically including a person who is performing a function of a public nature. This misalignment between the Constitution and the AJA needs correction. There is a strong argument to be made that where existing legislation fails to give effect to the full rights in the Constitution, an aggrieved person should be entitled to bring a claim of constitutional infringement[9]. This is the case with the AJA, which was enacted in 2004, 9 years before the new Constitution was adopted in 2013, which 8 years later has not been amended to give effect to the new constitutional rights. An applicant can justify the constitutional application by demonstrating these deficiencies in the existing legislation.

The misalignment between the Constitution and AJA is, however, of no consequence in the case of Vela v AG and BDO Zimbabwe because the application for review was under the legislation and was in respect of the AG’s administrative action, not against BDO as a private contractor. Vela’s lawyers did not make it a constitutional application and must have observed the difficulty of classifying BDO as an administrative authority under the AJA (because it is not aligned to the Constitution). They, therefore, correctly directed the application at the AG in her capacity as an administrative authority. The High Court order setting aside parts of the forensic audit report relating to Vela is also directed at and is binding upon the AG. It is, therefore, the AG who had the primary responsibility and right to appeal the High Court order.  

Nevertheless, as it is, there is an absurdity where according to the Constitution, the conduct of BDO would be directly reviewable because BDO is a person who was performing a public function, whereas, under the AJA, BDO’s conduct might not be directly reviewable because BDO does not qualify as an administrative authority. As it stands, the definition under the AJA is unconstitutional to the extent that it is inconsistent with the definition under section 332 of the Constitution. There is sufficient ground to challenge the constitutionality of the AJA, which is why sections 68 and 332 of the Constitution are still very much in the front seat[10]. For its part, the government must move quickly to align the AJA to the Constitution. Other parts of AJA fall short of the new constitutional standards but they are outside the scope of this analysis.

As already argued, the reason why BDO Zimbabwe’s conduct is reviewable is when it is attributed to the AG because the AG is an administrative authority. This attribution is possible under the principle of agency whereby the agent’s conduct is attributed to the principal. The AG adopted and published the forensic audit report, making this its administrative action for purposes of the AJA and the HCA. It would be absurd if work that has been outsourced and is adopted and published by the AG is not regarded as her administrative action. It is its work, and it ought to be accountable for it. A lot of the work is not done by the AG’s office directly. It is done through audit firms to whom functions are delegated under the Audit Office work. Those public functions are reviewable considering the objects and spirit of the Constitution.

Concluding Summary

This is an important area of law that encapsulates various issues: transparency, accountability, use of public power, and the rights, interests, and legitimate expectations of individuals and organizations that are impacted by the exercise of public power. It is complex, I know, but it is much food for thought for an audience that is interested in administrative justice. Everyone is affected by the exercise of public power, therefore, understanding the role of judicial review is important. Here is a summary of the takeaways:

Whether the forensic audit process and report is amenable to judicial review?

This question depends on either the identity of the person or the nature of the function being exercised.

Under the current AJA, it is reviewable if it is an “administrative act” and it is performed by an “administrative authority”. The AG’s acts are reviewable because she is an administrative authority, and her acts are administrative acts.

Where the AG’s work is outsourced to a private party, that work belongs to the AG under the principles of agency. What is done by her agents is as if it has been done by the AG, especially when she has adopted and published or presented it in her name.

Under the Constitution, the answer turns on whether the person is a public officer or if not a public officer, whether the person is performing a function of a public nature. As the forensic audit process and report are public functions, they are the administrative conduct of both the AG and BDO and are amenable to judicial review. It is important to align the AJA with the Constitution. 

Does the review of the AG’s functions affect the fight against corruption?

Some might think the judicial review of the AG and her contractors’ conduct might impact the performance of her constitutional mandate. The cautious approach she adopted in the latest audit report and the fear of litigation that she expressed might give the impression that the AG’s work is under threat. However, the biggest threat to the AG’s work does not lie in judicial review. It is that the government has never taken her reports seriously and its recommendations have not been implemented. If the AG’s reports had been given the seriousness they deserve over the years, perhaps more could have been achieved in curbing corruption and promoting transparent and accountable governance.

Protection and benefit of the law

The purpose of judicial review is to prevent the abuse of public power and is, therefore, designed to secure the rights, interests, and legitimate expectations of aggrieved persons. This is consistent with the fundamental right to the protection and benefit of the law[11]. Every public officer, including the AG, knows that they must uphold administrative justice, and if they fail, they will be held accountable.

The notion that the threat of litigation against the AG will derail her work is unfounded. Judicial review applies to the AG just as it does to all other public offices that exercise public functions. If anything, it will encourage the AG and its staff to ensure that they comply with the Constitution, the principles of natural justice, and fundamental rights and freedoms.  

Private Contractors and Public Functions

Private companies will also benefit from clarity regarding administrative justice. When private contractors are engaged by the AG or indeed, by any public officer, they must know that by performing a function of a public nature they are exercising public power and their conduct will be amenable to judicial review. They must, therefore, familiarise themselves with the Constitution and with the Declaration of Rights. They must know that their performance of public function will be regarded as administrative conduct which is subject to judicial review.

Public law scholars and practitioners will be watching intently how the Supreme Court judges the appeal brought by BDO Zimbabwe against the decision of Justice Chinamora at the High Court. The appellate court has a great opportunity to develop the law regarding administrative justice considering the new constitutional dispensation which guarantees the right to administrative conduct. Section 46 of the Constitution requires courts to interpret legislation in a manner that advances the objects and spirit of the Declaration of Rights. Meanwhile, the government must move more swiftly to ensure that the relevant legislation is properly aligned with thenstitution.

WaMagaisa

Kent Law School

Notes

[1] The 2019 audit report was delayed due to the COVID-19 pandemic

[2] Section 26 of the HCA states: “Subject to this Act and any other law, the High Court shall have power, jurisdiction, and authority to review all proceedings and decisions of all inferior courts of justice, tribunals, and administrative authorities within Zimbabwe.”

[3] For detailed grounds of review, see section 27 of the HCA

[4] Geoff Feltoe, Aligning the Administrative Justice Act with the Constitution https://zimlii.org/content/aligning-administrative-justice-act-constitution ZIMLII (2019)

[5] [2018] EWCA Civ 2093 (28 September 2018)

[6] A critical authority in this regard is R(o/a Datafin plc) v Panel on Takeovers and Mergers [1987] QB 815 in which the court held that the Takeover Panel was amenable to judicial review even though the legal source of its power was private and contractual and its functions were both public and private.

[7] Probably the most succinct summary of the modern approach to judicial review regarding private companies (which is reflected in section 332 of our Constitution) is the following passage by Dyson LJ in R(Beer) v Hampshire Farmers’ Market Ltd [2004] 1 WLR 233 “… the law has now been developed to the point where, unless the source of power clearly provides the answer, the question whether the decision of a body is amenable to judicial review requires a careful consideration of the nature of the power and function that has been exercised to see whether the decision has a sufficient public element, flavour or character to bring it within the purview of public law. It may be said with some justification that this criterion for amenability is very broad, not to say question-begging. But it provides the framework for the investigation that has to be conducted.”

[8] Section 46(2) states as follows, “When interpreting an enactment, and when developing the common law and customary law, every court, tribunal, forum or body must promote and be guided by the spirit and objectives of this Chapter.”

[9] This challenges the view of Deputy Chief Justice Malaba (as he then was) when he said in the Zinyemba case “There cannot be an allegation in terms of s 85(1) of the Constitution of administrative conduct violating the fundamental right to administrative justice enshrined in s 68 of the Constitution when there is an Act of Parliament which validly gives full effect to the requirements for the protection of the fundamental right against the provision of which the legality of the administrative conduct must be tested.” The fact is that the AJA does not give full effect to the rights. 

[10] This is not inconsistent with what Deputy Chief Justice Malaba (as he then was) said in the Zinyemba case that section 68, “Unless there is no Administrative Justice Act or the complaint is that the provisions of the Act do not give effect to the fundamental rights guaranteed under s 68(1) of the Constitution in the terms required by subs (3), s 68 cannot found a complaint of its violation in terms of s 85 of the Constitution.”

[11] Section 56(1) of the Constitution says: “All persons are equal before the law and have the right to equal protection and benefit of the law.”