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Presentation Presentation toto

Portfolio Committee Portfolio Committee onon

Justice & Justice & Constitutional Constitutional DevelopmentDevelopment

20 February 200820 February 2008

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SummarySummaryThreats to DepartmentsIntegrated forensic solutions About the SIUSIU mandate and legal scopeBudget growthProject profile Major project successesPerformance reviewProject successesKey success driversBuilding capacityChallenges

Threats to DepartmentsThreats to DepartmentsDepartments facing combined threats of fraud, corruption and maladministrationAlso challenge to protect integrity of systems and processes, eg social grants, service delivery, issuing drivers’ licences, procurement, tax collectionBoth opportunistic and more organised exploitation of system gapsMaladministration as much of a challenge as purposeful fraud / corruptionMajor problem of legislative compliance often resulting in loss and weak delivery, eg PFMA, MFMA complianceAccording to AG, 30% of Departments had expenditure-related qualifications

Integrated forensic solutionsIntegrated forensic solutionsInitial detection of fraud, corruption and maladministration as a result of escalating lossDealing effectively with the problem requires interface between key agencies and Departments eg AG, SARS, DGs, SCOPA, Law Enforcement Agencies (LEA)Critical part of cleaning up problem is a complete forensic solution: Forensic audit and investigations Remedial legal action: civil, criminal and disciplinary Systemic improvements

Traditionally forensic solution primarily provided by private accounting firmsResult in outsourcing of forensic services by Departments at great cost – not effective In recent years, SIU able to provide complete forensic solution to State Institutions – major counter to private sector

About the SIUAbout the SIUStarted out: Heath Commission 1995Early years: primarily criminal investigators and lawyers – strong LEA cultureLast 5 years: developed multi-disciplinary forensic capability: Forensic investigators, lawyers, forensic accountants, cyber

forensics experts, data analysts and project management professionals

Guided by a vision, mission, strategic objectives and key organisational valuesDefinite focus on corruption, fraud, maladministration, misconduct causing losses to StateSuccess defined through statistical and systemic impact

SIU mandate & legal scopeSIU mandate & legal scopeMajor functions of the SIU: investigate corruption and maladministration institute civil legal action to correct any wrongdoing

Primary purpose of SIU: enable state to recover money lost as a result of unlawful or corrupt actionSIU also able to: use civil law to prevent huge losses and facilitate systemic improvements eg set aside contractsSpecial powers: subpoena, search, seizure and interrogate witnesses under oath – NOT power of arrestCooperation: SAPS, DSO and NPA when encounter criminal conductProvide: complete forensic service and facilitate criminal legal action to Departments

BudgetBudget increasesincreases

Past years Est

MTEF period

Audit Audit Audit Est Est Est

04/05 05/06 06/07 07/08 08/09 09/10 10/11R’m R’m R’m R’m R’m R’m R’m

Total Income

59.2 101.5 142.7 229.8 257.6 299.5 316.9

Govt grant37.2 48.9 55.6 103.1 116.3 149.4 158.4

Projects income 22.0 52.6 87.1 126.7 141.3 150.1 158.5

0

20

40

60

80

100

120

140

160

180

04/05 05/06 06/07 07/08 08/09 09/10 10/11

Govt Grant

Project Income

Govt grant vs project IncomeGovt grant vs project Income

Funding growthFunding growthOver past 4 years, client Departments’ contributions have funded most of SIU’s growth (from 1% to over 61% in 06/07)

SIU able to build good track record of performance and delivery through partnership funding

Now also a four fold increase in treasury allocation from R37.2 to R158.4 over 6 years

NT investment indicates SIU’s emerging role as forensic investigation service provider of choice for the state. Proposed amendments to PFMA Also reverses accounting firms’ hold on public sector

Project profileProject profile

Project Focus Area

Basic Service Delivery

Systemic Problems

Process Abuses

Other Service Delivery

Project

Social grants Special pensions Housing Procurement Tax fraud

Municipal forensic matters Provincial gov’t department

Drivers’ licences Medical Aid fraud

Major project successes Major project successes April – December 2007April – December 2007

DOT – audited 317 221 licences and found 32 066 non-compliant

DSD – saved R298 million; R3.1 billion in preventative savings; R38 million in recoveries; facilitated 3 386 prosecutions and 2 861 convictions

DCS –recovery of R5.6 million in 1 matter; 10 systemic recommendations

DOH – identified over 31 259 Govt officials irregularly receiving subsidy

SPF – completing audit of 13 343 beneficiaries

ProcurementProcurement36 procurement investigations referred to SIU nationally by National Departments Provincial government – EC, MP, LI, KZN, WC Parastatals – ie MEGA Local Government

Range of investigations Fraud – cover-quoting, BEE fronting, other fraudulent misrepresentations

made by service providers Breach of contract Corruption

Challenges Procurement investigations complex and time consuming Building sufficient capacity to deal with volume of investigations referred

Provincial mattersProvincial mattersSIU offices in 7 Provinces 12 regionally based investigations Local government investigations in 4 provinces

Key achievements Mpumalanga: MEEC / MEGA KZN: Irregular investment of Municipal funds; DOT cost centres; WPU safe

houses; Housing Subsidy Scheme Fraud; Procurement irregularities and ghost workers in Health; Stationery / textbook procurement irregularities in Education.

Free State: 5 new Proclamations – provincial and local govt Eastern Cape: Ongoing Department of Local Government investigation and 17

provincial department referrals

SIU achievementsSIU achievementsENE targets and achievements for 06/07ENE targets and achievements for 06/07

PerformanceMeasures

2006/07 2007/08

Target Actual Target Actual (31 Dec)

Evidence prepared for use in civil litigation (AODs)

Evidence prepared for use in criminal prosecutions

Evidence prepared for use in disciplinary proceedings

Evidence prepared for use in other remedial actions

5 025

2 000

2 300

45 000

4 829

3 302

7 551

95 846

10 000

4 000

7 000

150 000

7 197

3 670

6 664

99 127

ENE targets & achievementsENE targets & achievements

PerformanceMeasures

2006/2007 2007/08

Target Actual(Audited)

Target Actual (31 Dec)

Savings

Preventions

Cash Recoveries

R 80m

R1 250m

R 20m

R 231m

R 1 759m

R 34m

R 160m

R 2 000m

R 40m

R 316m

R3 100m

R 48m

Totals R1 350m R2 024m R2 200m R3 464m

Key success driversKey success drivers

Innovation in delivering services, eg Focus on widespread small to medium corruption Delivering a integrated service to departments Obtaining funding from Depts. for investigations

Excellent relations with other law enforcement agenciesAn effective national presenceProject management approach to drive excellent delivery HR Development through innovative programmes Tough internal integrity program – ‘clean’ staffEmphasis on good governance – clean audit report

Building capacityBuilding capacityKey challenge is building sufficient capacity without overburdening support structures

Attracting experts from private sector and reverse public sector ‘brain drain’

Setting benchmark for new type of forensic investigator who can tackle complex investigations in multi-disciplinary organisation

Implementation of Organisational Development (OD)

Establishing Centres of Expertise in legal, accounting and computer forensics

Training and development – model is being looked at for possible wider roll-out in future

Investigative capacityInvestigative capacity

0

200

400

600

800

1000

1200

01 02 03 04 05 06 07 08 09 10

StaffNumbers

Employment equityEmployment equity

0102030405060708090

Staff 03 Staff 08 Mngt 03 Mngt 08

All EE

Black

African

Women

CooperationCooperation

SIU provides range of forensic services but:

fight against corruption is not preserve of a single entity

works with other law enforcement agencies, leverages legal capacity and reaches targets as part of a wider team

also maintains partnerships with Provincial and National Departments, SAPS, NPA, AG, DSO and SARS

Overall challengesOverall challenges

Rapid growth

Some key investigations present unique challenges

Lack of movement on proposed legislative changes

Proclamation process cumbersome

SIU – excellent year in demanding circumstances delivered outstanding results on existing projects – savings

of R 374 million; systemic improvements in key departments effective implementation of ambitious new projects

OD process caters for future growth – foundation for bigger and more effective organisation Partnership collaborations key to successful SIU profileReturn on investment supports greater govt investment through increased budgetNegotiate legal hurdles through legislative amendmentsVital to proliferate success of SIU model

ConclusionConclusion

Thank you