SIU Presentation to 20 April 2012 SIU Presentation to Portfolio Committee: Justice and...

SIU Presentation SIU Presentation toto

Portfolio Committee: Justice and Constitutional Development

20 April 201220 April 2012

20 April 2012 1SIU presentation to PC on Justice and Constitutional Development

Summary

1. Introduction to SIU, mandate and legal scope

2. Strategy overview

3. Building capacity

4. Working with other government initiatives

5. Overview of performance

6. Operations detail

7. Challenges in dealing with corruption

8. Current SIU model

9. Finance overview

10. Conclusion


SIU mandate and legal scope

• Started out: Heath Commission, 1995• Set up in terms of the SIU Act 74/1996

– still function much like commission of enquiry – current SIU established by Proclamation R118 of 2001– separate from law enforcement agencies but work closely together

• Major functions of the SIU:– investigate corruption and maladministration (ie not just crime)– institute civil legal action to correct any wrongdoing

• Investigations mandated: by a Proclamation from President• Special powers:

– subpoena, search and seizure, interrogate witnesses under oath – institute civil litigation to recover monies lost– not power of arrest, prosecution – can assist and facilitate – not power to take disciplinary action – recommend and assist


About the SIU

• Facilitate: concrete legal outcomes to investigations – ie– criminal (prosecutions) working with SAPS and NPA – civil litigation to recover and – disciplinary action

• Last 5 years: massive expansion involving development of multi-disciplinary forensic capability comprised of: – forensic investigators, lawyers and accountants – cyber forensic and data analysis experts and – project management capacity

• Mixed funding model: – baseline funding from National Treasury allocation - not sufficient– additional funding secured through partnerships with departments (currently

subject to an amendment to the SIU Act)• build capacity in state and reduce reliance on the private sector

• Compete: – with forensic firms to provide more cost effective service to the state


About the SIU cont...

• Cooperation: developed close working relationships with: – law enforcement: SAPS (especially the Hawks), NPA – National Treasury bodies: Accountant-General, SARS, FIC – oversight bodies: Auditor-General, DPSA, PSC, Public Protector, Scopa, etc– individual departments, provinces and other institutions

• Focus areas:– large scale fraud and corruption where multiple small cases – increasing focus on procurement related fraud and corruption– Assist with improving systems and processes to prevent corruption – use of government data to indentify potential irregularities pro-actively

5SIU presentation to PC on Justice and Constitutional Development20 April 2012

Vision: • Working together to rid society of corruptionMission: • We are a state body that fights corruption through quality

investigations and litigation.Values: • integrity, cooperation, professionalism, drive and effectivenessImpact: • To contribute to the reduction of corruption and the perceptions of

corruption

20 April 2012 SIU presentation to PC on Justice and Constitutional Development 6

SIU strategy framework

Outcome 3: All people in South Africa are and feel safe

• Output 3: Corruption eradicated, including bribery, by officials within the JCPS as one of the major contributors of ongoing criminal activity as well as lack of trust and confidence in the system by the community – Compile a baseline report with detailed data for the 2009/10 financial year

• Output 5: Investor perception trust and willingness to invest in South Africa is improved and by taking corruption related action in a defined number of highly visible cases– Successfully convict 100 people who have assets of more than R5 million obtained

through illicit means

Outcome 12: Efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship

• Output 4 – Corruption tackled effectively.– An improvement in the TI corruption index from position 55 of 180 to 40 of 180.


Links to government outcomes

Strategic Goal

1. To increase impact of the SIU’s forensic services in the public sector

Strategic Drivers (Externally focused)

1. To achieve optimum institutional form2. To ensure excellent cooperation with our law enforcement partners and

stakeholders

Impact• Strengthen our strategic partnerships • Increase the scope of operations for the SIU• Contribute directly to:

– Outcome 3: South Africans are and feel safe– Outcome 12: Efficient, effective and development oriented state


Strategic Goal & Drivers

Strategic Drivers (Internally focused)

1. To secure appropriate capacity and funding2. To align and improve systems and processes3. To invest in appropriate technology capacity4. To build an engaged, diverse and competent SIU5. To develop effective, accountable and engaging leadership

Impact• Enables the SIU to achieve its strategic goal


Strategic Goal & Drivers cont…

Strategic Overview – 3 years

2009/10• Environment uncertain with recession and large dependence on partner funding • Concluded most of an intensive OD process to better capacitate the SIU• Adopted a 3 to 5 year approach to strategic planning• Key focus on positioning the SIU as the forensic service provider to the state

– and increasing projects and funding 2010/11• SIU becomes part of new government initiatives on corruption

– ACTT, MAWG, DPSA– significant increase in impact, workload and funding– focus of investigations shift to procurement

• Align strategic plan with the Results Based Management and Outcomes Management approach of government and develop a Logic Model that links the work of the SIU to Outcome 3 (Outputs 3 & 5) and Outcome 12 (Output 4)

2011/12• The major priority is to improve the organisations’ capacity as well as its culture.

– Initiated legislative amendments which seek to address funding constraints along with other constraints.– Developed a people centred strategy to further improve the organisational climate and ensure an appropriate culture.

• Consolidation of impact in the areas of focus with the aim of improving impact and contribution to the overall government outcomes.

1020 April 2012 SIU presentation to PC on Justice and Constitutional Development

Building capacity through partnerships

• The major focus of the SIU has been to build more capacity in the state to deal with corruption investigations:• has grown from about 67 to 600 staff in 10 years • had a trainee investigator program to address EE challenges in the industry

• The new operating model is designed for scalability – will allow for rapid increase investigator numbers in response to the increased demand

• SIU has also sourced additional forensic investigators from the private sector• intended as short term intervention and skills transfer initiative.• allow time to recruit and develop staff• cater for some of the uncertainty from our funding model

• The recruitment and development initiatives intended to provide long term capacity that is sustainable and helps to transform the industry


ACTT (Anti Corruption Task Team) in the Justice Cluster• Task team set to fast-track high priority corruption investigations and prosecutions,

– and to co-ordinate efforts with other bodies. • Consists of the Hawks, SIU, and NPA (including prosecutors and the AFU)

– supported by SARS, the FIC and the Accountant-General in Treasury• SIU has committed considerable resources to this process

MAWG (Multi Agency Working Group on procurement) in the Finance cluster• To deal with irregularities in the government procurement system, focusing on closing

systems gaps and detecting and investigating irregularities• The Accountant-General, SARS, FIC, DPSA and SIU – supported by Hawks and NPA• SIU has played a significant part in the development of strategy and implementation

Wasps (Special Anti-Corruption Unit in DPSA) - in the Governance cluster• Focus on investigation and prosecution of disciplinary cases against senior public servants

involved in corruption to ensure that effective action is taken, working with Departments. .• The SIU has committed to provide it with the investigative and legal support

1220 April 2012

Participation in other initiatives

SIU presentation to PC on Justice and Constitutional Development

SIU performance overview


07/08 08/09 09/10 10/11 11/12

Q1 – Q312/13 13/14

Cash Recoveries (Rm) R61m R72m R69m R80m R127m R35m R40m

Savings for financial year (Rm) R301m R202m R12m R450m R12m R35m R40m

Prevention of future losses (Rm) R2 672m R4 917m R197m R4 000m R116m R210m R220m

Evidence prepared for:

– criminal action 4 495 5 545 5 350 5 500 1 910 2 000 2 000

– other remedial actions (cancelling of social grants) 139 331 198 052 50 357 200 000 3 280 2 000 2 000

– disciplinary action 8 627 4 750 3 870 8 000 1 347 3 500 4 000

– civil litigation (AOD's signed) 9 696 11 177 9 843 11 400 3 786 3 500 4 000

Contribution to completed investigations for JCPS output 5 0 0 1 0 8 30 30

Value of procurement matters where irregularities found (Rbn) n.a. n.a. n.a. n.a. R1.9bn R25bn R30bn

Analysis of performance

• There has been a significant change in focus in service delivery, from multiple small cases to fewer complex, long term investigations into procurement matters.

• Essentially it will mean the SIU deals with fewer but more important cases.• This coincides with the new focus of government on procurement irregularities - Social grants: shift from grants to procurement issues. - Housing: shift from illegal subsidies to housing contracts. - Transport: Agreement with Department not renewed.• The impact on performance as measured currently is that financial indicators will

decrease in the short term as delivery will take longer, whilst number indicators will also decrease but not as significantly.

• 2 new indicators have been added to measure impact - contributing to completed investigations for JCPS output 5 - value of contracts where irregularities found.


New Proclamations 2011 /12

• 7 new Proclamations this year :1. Midvaal Local Municipality (Gauteng)2. Former Dept of Roads & Transport (Eastern Cape) 3. Kopanong Local Municipality (Free State) 4. Eskom (National)5. Swellendam Local Municipality (Western Cape) 6. CoGTA: Water For All Project (Mpumalanga)7. Limpopo Province Intervention (National Treasury)

• 3 Proclamations to extend ongoing investigations: – SAPS, Dept of Education (Mpumalanga), Human Settlements


Challenges to SIU work

• PFMA – powers of Accounting Officers – control over investigation, disciplinary action, civil litigation, referral for criminal action, recommendations not implemented– Another is the need for better coordination of the many new initiatives

• Can SIU model be made more effective and sustainable?– AGSA type model where Depts have to pay for work to be done – perhaps NT can assist where insufficient funds are available– Approaches to SIU are often not pursued for ostensibly financial reasons –

although lack of funds may just be an excuse • Amendments to SIU Act – in Judicial Matters Amendment Act

– Unable to use civil litigation effectively as envisaged in Act - deal with locus standi and other issues

– Delays have restricted impact of SIU


Urgent need for a legislative amendment

• Legal opinion received to the effect that the SIU cannot bill state institutions for its services, unless its empowering Act specifically empowers it to do so.

• The SIU previously, with full knowledge and consent of key stakeholders, including NT and AGSA, received payment for its services on the strength of SLA’s entered into with state institutions.

• The SIU is dependent on this additional funding to make a meaningful impact in fulfilling its mandate to investigate corruption and maladministration. Close to 35% of its planned budget for the current financial year is dependent on this funding.

• The JMA Bill currently under consideration fully addresses the issue by making provision for the SIU to charge for its services, but the fact that it is not yet passed, is a serious financial constraint and has necessitated the SIU to dramatically reduce its investigative capacity by terminating the services of more than a hundred forensic consultants.

• Public comment on this bill closes on 11 May 2012 and the SIU is hopeful that it will become legislation soon.

31 March 2011 SIU presentation to PC on Justice and Constitutional Development 17

Personnel information

• Establishment is 668 funded posts.– expect to grow to 706 in next 3 years – about 40% is dependent on project funding which make permanent

employment risky– have tried to mitigate somewhat by using consultants, contract and temporary

staff • Permanent posts filled decreased due to uncertainty about project funding

– 594 in 2007/08 to 522 in 2010/11• Challenges due to cumbersome process of salary approval on which implementing

the new organisational structure depends • SIU has negotiated an innovative agreement to in-source forensic investigators

from the private sector to assist with workload as 50% of AG rates (currently at risk pending legislative amendments)


Budget growth and projects income

01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12R’m R’m R’m R’m R’m R’m R’m R’m R’m R’m R’m

NT grant

21 23 26 37 49 56 103 116 155 171 293

Projects 0 0 15 22 53 83 129 132 114 142 150

Total 21 23 40 60 102 138 232 248 269 320 443

Projects as % of Total

0% 0% 37% 37% 52% 60% 55% 53% 42% 44% 34%


• Huge overall growth in income from R21m in 2001/02 to R443m in 11/12 • Increase in funding proportion from projects to 60% of total income, then decline• SIU objective is to fund:

• internal capacity (permanent staff and assoc operational infrastructure) from grant funding

• variable capacity (insourced forensic consultants + associated overheads) from Partnership (project) Funding

Financial Information


Statement of financial performance Revised

Audited outcome estimate Medium-term estimate

R thousand 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

Revenue

Sale of goods and services other than capital assets 131 622 114 120 141 151 150 259 175 000 225 000 275 000

Other non-tax revenue 9 692 7 733 1 435 1 438 1 525 1 616 1 600

Transfers received 116 297 154 737 171 089 293 191 307 310 298 229 286 564

Total revenue 257 611 276 590 313 675 444 888 483 835 524 845 563 164

Expenses .

Current expense 260 675 282 821 336 851 442 591 483 835 524 845 563 164

Compensation of employees 164 292 182 060 182 142 203 256 263 204 294 550 322 723

Goods and services 85 142 84 802 144 756 219 323 203 677 213 340 223 486

Depreciation 5 443 10 859 9 936 20 012 16 954 16 954 16 954

Interest, dividends and rent on land 5 799 5 099 17 – – – –

Transfers and subsidies – – – – – – –

Total expenses 260 675 282 821 336 851 442 591 483 835 524 845 563 164

Surplus / (Deficit) (3 064) (6 231) (23 176) 2 297 0 0 0

Financial constraints

21

The SIU sources a significant portion of its funding by invoicing other state institutions directly (aka Partnership Funding) – 34% of total revenue for 2012/13, R175m in amount.

All of the above revenue (R175m) is budgeted to be spent on:1. Insourced forensic consultants – R120m2. Internal operational costs (staff costs, overheads) – R55m

Grant funding of R307m covers balance (64%) of internal operational costsDelays in legislative amendments have significant effect on revenue inflows

from Partnership Funding. Thus budget cuts have become necessary pending legislative amendment enactment.

Effect of budget cuts are primarily:1. All forensic consultants2. All new appointments (headcount growth)3. Significant portion of training and other consultants4. Significant portion of travel and expenditure

Above budgets will be re-instated as legal ability to invoice is restored and to the extent Partnership Funding inflows are realised.

Operations

South African Police Service• This investigation is divided into four focus areas:

• Midway Two Holdings who were the service providers in respect of labour, cleaning, security services and the construction of 33 police stations.

• Tender irregularities: Kingsgate, Intenda , TetraNet and provision of Solar panels at Boschkop Police Station.

• The Forensic Science Laboratories (FSL)• Conflicts of interest

• FSL: Relates to alleged procurement irregularities in the FSL division of the SAPS. One investigation is also being done in conjunction with ACTT , the SIU is assisting from a forensic investigation point of view through the PIT system, financial analysis, etc . The value of this case is estimated at R20 million. Other matters are also being investigated by the SIU. The value of this aspect is approximately R12 million


Operations

SAPS (cont)

• Intenda: No findings of criminal conduct or unauthorised, fruitless and wasteful expenditure, but recommendations relating to disciplinary action have been made (Members from the police failed to report for training which had already been paid for). This was a transversal contract to the value of R18 million.

• Kingsgate: No findings of criminal conduct or unauthorised , fruitless and wasteful expenditure , however systematic recommendations will be made to cover risk areas that were identified during the investigation. The value of the contract is R287 million.

• TetraNet: Investigations have been nearly completed and a criminal case will be referred to ACTT for further investigation. Recommendations for disciplinary actions against 2 SAPS members will also recommend. Several members who were implicated in this matter have since left the SAPS.


Operations

SAPS (cont)• In relation to the investigations into the 33 police stations a comprehensive report on the devolution of

power for the SAPS to build its own Police stations has been completed and is ready for handing over to the client. In terms of the findings, Police had no legal mandate to build its own police stations and should have referred it to DPW for building, thus making the entire expenditure for the building of the police stations irregular

• The conflicts of interest matters deal with members of SAPS who have registered themselves on the SAPS database as service providers. The investigation is currently ongoing and is envisaged to be completed by end May 2012 subject to receipt of documentation from SAPS.193 files will be handed to the SAPS with a recommendation for possible disciplinary action. Possible value of R38 million

• National Police day: Documentation was recently received and is currently being analyzed. Members are currently busy conducting interviews with relevant SAPS members. Value involved over R48 million.

• Midway Two Holdings: Interviews have commenced in this matter. Currently information has been received indicating the existence of SAPS members receiving of undue benefits. Investigations are ongoing. Total value of this contract is over R1.5 billion.

• Boschkop Police Station: The investigation deals with the installation of solar panels at the police stations with out the proper SCM procedure being followed. The investigation in this matter has been finalised and a report is currently being drafted for the client. The vale of the contact is R503 000.


Operations

Department of Public Works (National)• The investigation focuses on a wide range of vulnerabilities in the supply chain

management (SCM) environment of the DPW and includes leases, prestige portfolio and capital works projects

• To date five DPW officials suspended, including one Deputy Director-General (DDG) and disciplinary action instituted. Disciplinary action recommended against a further eight DPW officials for SCM related misconduct

• Criminal action instituted against current and ex DPW officials and service providers for fraud and corruption involving approximately 32 contracts with a combined value exceeding R400 million

• Civil recoveries in excess of R70 million recommended as a result of overpayments and/or non performance of service providers


Operations

DPW (cont)• Recommendations for the overturning of lease agreements with a total value in

excess of R700 million due to non compliance with SCM processes and prescripts• Disciplinary action recommended against four DPW officials found to have direct

interests in companies contracting to the DPW. • Consistent abuse of SCM delegations and non compliance with SCM prescripts

identified throughout the SCM value chain.• Poor controls and lack of proper governance clearly evident


Arts and Culture• Misuse of funds ring-fenced for 2010 Soccer World Cup (SWC)

– Unauthorised expenditure - R26 million moved from earmarked SWC budget– Unauthorised expenditure – R16 million not used for SWC related projects– This matter is to be referred to the National Prosecuting Authority

• Irregular expenditure for 17 Investing in Culture (IIC) contracts totalling R94 million– Unauthorised expenditure - R4.5 million moved from earmarked IIC budget– Irregular expenditure – R67 million not procured in terms of the required DAC

procedures and policies– Fruitless and wasteful expenditure


Operations

DAC (cont)• Possible civil recovery in respect of 39 matters with a value of R22.5 million and 6

other matters (non-IIC related)– It was recommended that payment of R8.5 million should not be effected and

the relevant contract should be cancelled– 2 AOD’s signed to the value of R351,000– 7 criminal cases relating to theft and fraud registered with SAPS– 2 criminal matters totalling R3.8 million referred to SAPS

• Possible civil recovery for duplicate payments to the value of R709,424– Service provider not registered with SARS claimed VAT to the value of

R390,439. This matter has been referred to SAPS and SARS– R200,000 not procured in terms of DAC policies and procedures


Operations

DAC (cont)• Misspending of funds where contracts valued at R13 million were entered into with

one service provider– The final payment of R1 million should not have been made because the

service provider did not deliver, but the payments were made in terms of a valid agreement. No criminal action was taken

National Heritage Council• Investigation focused on irregular expenditure and contracts, conflicts of interest

and the compliance of the utilisation of expenditure in relation to the National Lottery fund

• Irregular expenditure totalling R53.4 million including lottery funding of R35 million was identified

• 2 criminal cases were registered at the Serious Economic Offences Unit and referred to the Anti-Corruption Task Team (ACTT)


Operations

SABC• Matters to be investigated were from the AGSA findings and specific referrals from

the SABC Board• 42 potential conflicts of interest matters were investigated with a value of R2.6

billion. 23 disciplinary files were prepared for the SABC. Potential VAT fraud was identified and reported to SAPS and SARS

• 4000 business interests investigated. 400 disciplinary files to be handed to the SABC. 15 possible criminal prosecutions for non-compliance with the companies Act. Serious deficiencies in the control environment reported to the SABC

• R35 million in potentially untaxed fringe benefits reported to SARS• 20 revenue contracts investigated to the value of R798 million. All non-compliant

with policies. Severe corporate governance deficiencies identified. 9 disciplinary files to be handed to the SABC and 1 possible criminal prosecution valued at R1.5 million.


Operations

SABC (cont)• 131 procurement matters investigated to the value of R932 million. Irregular

expenditure to the value of R152 million and fruitless and wasteful expenditure to the value of R35 million identified to date. This number will increase because the investigation is ongoing. Serious corporate governance deficiencies identified

• Data analytical techniques employed across various SABC business areas to assist the SABC Board to identify possible “red flag” areas in their operations

• Worked jointly with the Brixton Commercial Crime Unit on 8 criminal matters resulting in the finalisation of 7 dockets with the remaining dockets nearing completion.

• SIU involvement resulted in 4 arrests and 1 warrant of arrest being issued


Operations

Tshwane Metro• Identified 65 officials who have conflicts of interest to the value of R185 million. The

investigation has been finalised and reports have been submitted. Charge sheets have been compiled for further disciplinary action

• 8 procurement investigations have been finalised. The investigations included gross negligence, irregular expenditure, unauthorised expenditure, tender irregularities and fraud

• 330 deviation investigations were approved. To date 87 have been finalised– 43 matters are to the value of R430 million– Preliminary findings in respect of 21 matters include R4 million for irregular and

unauthorised expenditure and loss of income to the value of R9 million• Preliminary findings in respect of the CCTV investigation to the value of R140 million have

revealed unauthorised expenditure and fraudulent invoices• 212 employees were identified with fraudulent drivers licenses. 60 of these have been

finalised and cancellation recommended


Operations

TMM (cont)• Non declaration of interest matters have been referred to ACTT and joint

investigations are underway. An official was identified with links to 6 companies that have defrauded the municipality of R100 million. A disciplinary charge sheet has been drafted and presented for further action

• 5 senior officials were identified who submitted fraudulent qualifications which resulted in their appointments. 2 of these officials have already been found guilty and dismissed

• 1 official was arrested and convicted of fraud because he had a stolen ID number• Criminal investigations have been finalised against 164 Metro police officials with

convictions• AOD’s have been signed to the value of R723,024 for fraudulent social grants• Total savings to date of R502,777 have been made in respect of 3G cards


Operations

Ekurhuleni Metro• Reviewing 11 waste management contracts to the value of R530 million

– 5 officials have been suspended. 1 resigned and 1 has been dismissed. 3 are pending– R1.8 million of fraudulent invoices were submitted and paid out for the refuse bins

contract.– R10 million was claimed for escalations in respect of this contract despite no

escalations being approved. A criminal docket has been registered and R400 million recommended for recovery.

– R8.9 million payment was made for invoices for the Waste Removal contract but no service was rendered. A criminal case has been registered against the official and the service provider

– The R20 million budget of one department was moved to another department in respect of the Tembisa Pilot project without council approval. Fraudulent invoices have also been submitted but the amount is still being quantified


Operations

EMM (cont)• ICT contracts

– The investigations in respect of Meropa have been completed. All suspects were arrested and have pleaded. An AFU order was obtained and assets to the value of R32 million have been seized

– 1 senior official was suspended for fraudulently signing invoices to the value of R12.5 million. A criminal investigation is underway

• Security contract– The budget was exceeded by R15 million and the service provider admitted

that the contract was awarded based on a bid document not completed by him– Stock to the value of R4 million was invoiced, paid but cannot be accounted for.

The total losses are still being quantified but the owner has since died and the SIU is in consultation with the trustee of the estate


Operations

EMM (cont)• 2010 contracts

– R35 million paid for the upgrading of 30 sports fields but no work was done– R20 million was paid for the upgrading of a stadium parking lot but the work

has not been completed• EMPD (joint investigation)

– 8 officials were identified with fraudulent matric certificates. They have since been dismissed and criminal cases have been registered

– 1993 officials with criminal records have been identified, verification continuing. 219 were identified with possible criminal convictions.

– 136 vehicles were identified with excessive fuel usage. EMM suffered losses to the value of R35 million.


Operations

EMM (cont)• Water Meter Contract (value of R279 million)

– Invoices for Sept and Nov 2011 were paid in May and July 2011.– R38 million was paid for 17,421 meters and tokens but only 5,804 meters and 5,796

tokens were procured from the contractor• Valuation Roll Investigation (value of R205 million). Preliminary findings show:

– The service provider was not recommended by the BEC and there was a possible conflict of interest with the Executive Director

– Payment was made in full but the service was not rendered and there were discrepancies with the invoices submitted

– Non-compliance with Sec 33 of the Municipal Financial Management Act (MFMA)– R3 million irregular expenditure for software that was procured from another

municipality with following the correct SCM process


Operations

EMM (cont)• Database investigations

– 5,469 employees and 3,064 spouses have entities registered and 12 are doing business with the municipality

– 101 ghost employees have been identified– 3,708 employees and 4,848 spouses are receiving social grants – 126 have invalid driving licenses


Operations

Midvaal Local MunicipalityThe investigation has focused on:• Human Resources (HR)

– The investigation has now been concluded and an allegation relating to irregularity in a salary grading process, has been proven

• Irregular debt collecting processes– 129 officials were identified with 3 month arrear rates and taxes to the value of

R354 805. – Through our intervention, R34 565 is currently being deducted on a monthly

basis from the officials salaries to repay the amounts owed– 100 debtor accounts were identified to the value of over R56 million. To date

over R31 million has been recovered.


Operations

Midvaal (cont)• Indigent database and grants

– 2020 applications were identified where people failed to comply with the indigent policy and who benefitted from indigent grants

– 53 applications are currently being received and assessed• 54 criminal convictions have been identified. These names have been given to the

municipality and a report is to be drafted and presented for further action– 24 have schedule 1 offences– 12 identified with violent offences– 18 have traffic related crimes


Operations

Rural Development and Land Reform• Proclamation, requested by the Minister, covers the following areas:

– The application for and award of grants and funds and the administration thereof by the Department, under the land reform programme, in a manner that was contrary to legislation and guidelines, or fraudulent

– The incurrence of irregular expenditure; fruitless and wasteful expenditure; and/or expenditure not due, owing and/or payable in relation to beneficiaries, consultants, and/or service providers in relation to the land reform programme of the Department.

• Approximately 30 investigations finalised to date and SIU is working closely with the Hawks and AFU resulting in:– 4 officials and a KZN businessman being arrested on fraud and corruption

charges relating to the irregular awarding and administration of land reform grants totalling R51 million

– Seizure of KZN farms and assets worth approximately R51 million to date


Operations

DRDLR (cont)• A further six matters referred to the Hawks and AFU, totaling R86 million, for

criminal action and seizure of assets as proceeds of crime• Civil recoveries of approximately R28 million recommended as a result of the

irregular awarding and administration of land reform grants• Disciplinary action against a number of officials recommended• Numerous instances of maladministration and non-compliance with policies

identified


Operations

Operations

Department of Human Settlements• Focus is on low cost housing construction contracts. 59 contracts were identified

and 42 have been completed. 17 are still ongoing• The investigation relates to housing projects approved up to 29 Feb 2012 with

some investigations relating to projects approved as early as the 1996/1997 financial year. The total value of the 59 contracts is R4 billion

• 17 low cost housing contract investigations are currently ongoing in 7 provinces• High level systemic findings include

– Non-compliance with the National Housing Act and National Housing Code– Non-compliance with the Public Finance Management Act (PFMA), specifically

in respect of Sec 38 which deals with document retention and the safeguarding of departmental assets

– Non-adherence to Sec 217 of the Constitution and other procurement related legislation in respect of the procurement of goods and services


Operations

DHS (cont)• Other findings include

– Fruitless and wasteful expenditure amounting to almost R28 million for 3 investigations

– Potential losses suffered by the provincial departments to the value of almost R72 million for 5 investigations

– Potential recoveries amounting to over R100 million identified in respect of 3 investigations

– Disciplinary matters (misconduct) in respect of departmental officials for 8 investigations. Transgressions relate to the National Housing Act, the National Housing Code and the PFMA


Operations

DHS (cont)– Section 86 of the PFMA. Criminal referrals have been made in respect of the

previous and/or current HODs of provincial departments identified in respect of 5 investigations

– Evidence of potential criminal activity identified and referred to SAPS in respect of 6 investigations

• People’s Housing Process (PHP) investigations are underway in the Western Cape province– 29 investigations have been finalised in respect of 44 referred matters– Various systemic inadequacies have been identified and reported on– 8 matters have been referred to the provincial offices of the DPP for potential

criminal activity which was uncovered• The WC Department of Human Settlements has implemented various

recommendations made by the SIU and implemented a revised PHP policy to ensure legislative compliance


Operations

Department of Health - Gauteng• Matter referred to the SIU by National Treasury• Ten specific matters were identified for investigation. These matters all pertain to

contracts that were entered into by the Dept and various suppliers• The total value of these matters is over R1 billion• Preliminary findings include:

– 3 cases of fraud have been registered at the Johannesburg Central Police Station for irregularities to the value of over R17 million.

– Recommendations were made to institute a claim for damages against the former HOD, former DDG, Director of SCM (current Acting CFO), Director of Finance and Director Special Projects for the loss of R15.3 million which was identified.

– Duplicates payments were identified to the value of over R13 million


Operations

Limpopo Intervention – National Treasury• In Jan 2012 the SIU was approached to investigate allegations of procurement

irregularities, fraud, corruption, financial mismanagement and misconduct relating to 5 Limpopo provincial departments including the Dept of Health and Social Development, Dept of Education, Dept of Roads and Transport, Dept of Public Works and the Limpopo Provincial Treasury. The investigation is mandated by Proclamation R21 (signed 23 March 2012).

• The SIU was specifically requested to assist in the gathering and analysis of information pertaining to– Any alleged non-compliance with policies, directives and legislations in relation

to supply chain management in the 5 provincial departments– Any alleged irregular or illegal conduct by any official of any of the 5

departments– Any losses suffered by the 5 departments


Conclusion

• SIU has made considerably more impact in the past few years • There is a massive increase in demand for assistance to address corruption from

government and state institutions • Capacity to deal effectively with investigations remain a challenge • Partnerships with other government institutions through initiatives like ACTT,

MAWG & Wasps have started to improve coordination

4820 April 2012 SIU presentation to PC on Justice and Constitutional Development

Finally

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