The Standing Committee on Public Accounts interrogated the reports given by the Special Investigations Unit in respect of investigations into the South African Social Security Agency and the Department of Correctional Services. The South African Social Security Agency (SASSA) and the Department of Social Development (DSD) responded to questions about the level of fraud in SASSA, the breakdown of the cases involved and what corrective measures SASSA was undertaking to staunch the flow of irregular payouts. Members also asked about the role of the Department of Social Development in relation to SASSA, the long process to stop payouts, the current IT infrastructure and the need to overhaul the systems, which were exacerbated by the Departmental budgetary constraints and the pivotal role of human resources. Members noted that SASSA was in the process of finalising a new service delivery model. Members took note of the current status and numbers of disciplinary cases against officials, for the period between 2005 and June 2010, how many cases had been successfully prosecuted, and how many acknowledgements of debt had been signed. Members enquired whether the money recovered under the acknowledgement of debt could be used to fund the Department’s IT rollout. Members questioned whether the Department needed an agency in order to perform the functions.
Members questioned the Department of Correctional Services (DCS) whether it had implemented the recommendations of the Special Investigations Unit (SIU) in relation to the Bosasa tenders and the involvement of the former Chief Financial Officer, Mr Gillingham. embers were dissatisfied with the response from the DCS that no information could be released because matters were sub judice, and noted that the Department could always request a closed meeting in which to answer questions, or persuade the Committee why the matters should be treated as confidential. The Department was asked to provide further information around the categories and the number of people involved by the following week. Members sought specific confirmation that, at the time when the Bosasa tender was renewed for 2009, nobody was aware of the investigation by the SIU. Members were critical of the apparent contradiction between the Department, on the one hand, bringing disciplinary measures against Mr Gillingham, while at the same time defending a court action relating to alleged tender irregularities in which Mr Gillingham had been involved.
Special Investigations Unit (SIU) reports:
South African Social Security Agency (SASSA) matters
The Chairperson noted that the meeting would interrogate the reports submitted by the Special Investigations Unit (SIU) in respect of the South African Social Security Agency (SASSA) and the Department of Correctional Services (DCS). He acknowledged that the Department of Social Development (DSD), in relation to the SASSA matter, and the DCS had taken the initiative to call in the SIU for assistance and to recognise the quality of the SIU‘s work in this regard.
Mr M Malale (ANC) asked what had been uncovered, in relation to SASSA, about public servants receiving grants unlawfully, and what criminal action had been taken against these people
Mr Coceko Pakade, Acting Chief Executive Officer, SASSA, said that 51 248 disciplinary cases were identified involving public servants who had been receiving illegal grants. However, not all these matters could be taken to Court. Between 2005 and January 2010, 9 212 individuals had been formally charged in court, and there had been 7 582 convictions. 23 644 individuals were not formally charged in court, but had to pay back the money.
Updated figures were then given up to June 2010. These showed that a total of 79 416 disciplinary cases were involved. Of these, 15 921 had resulted in formal charges being laid in court, and 15 060 cases were finalised, with 13 814 convictions. 36 000 people had signed an acknowledgement of debt. Civil servants did not qualify for the amnesty offered by former Minister Skweyiya.
Mr Pakade noted that when he had asked for a more detailed breakdown of the figures, the Head of the Fraud Unit of the SIU had said the report was a consolidated report and covered all aspects, not just social grants.
Members asked Mr Pakade to provide the detailed figures by the following Thursday.
Mr Malale asked why people who had to be removed from the system were still on it.
Mr Pakade said SASSA and the Department of Social Development (DSD) were engaging with the SIU to “unpack” the information. Inactive beneficiaries referred to people who were deceased or whose grants had lapsed, but by law their records had to remain on the system. Beneficiaries were given three months to verify that they still deserved a grant, failing which a letter of suspension, indicating that the grant would no longer be offered, would be sent to them. Once the notification had taken place, the DSD could suspend the grant. The relevant legislation did, however, provide for a three month period within which a former beneficiary could make application and re-activate the grant. It thus took a total of six months to suspend a grant, and nine months for a grant to lapse. Mr Pakade said that he personally believed that this notice period was too long
Mr M Mbili (ANC) said that there were 300 000 inactive beneficiaries. He asked how the SASSA data matching tool was picking up inactive records.
Mr Pakade said the SIU work was work done after the fact of the fraud. He explained that ideally, SASSA needed to have entry point control and prevention of fraud. He wanted to implement the Integrated Grant Application Project (IGAP). However, there were 40 million records, and so this could not be done manually but must be done electronically. SASSA was currently piloting a project in the Free State and wanted to roll it out to the rest of the country
A SASSA official added that this was not a live system. “Data dumps” would be performed every five days and then data would be compared. He said that since the inception of SASSA, requests had been made for funding to upgrade the systems, and if the funds were granted, then SASSA had a plan to implement the revised systems in two years
Mr Mbili asked why there were 300 000 inactive members
Mr Pakade said the Archives Act required that records be kept for five years
Mr Mbili asked how large was the phenomenon of collusion in SASSA, and whether this had arisen because of a skills shortage.
Mr Pakade said the bulk of the officials involved were at local offices and at grade level 5. They were not well paid, and this encouraged corruption. He confirmed that there had been lack of supervision, but this had now been addressed in the action plan drawn up by SASSA. SASSA also wished to strengthen the grade level 7 employees. Management had approved a complete new service delivery model as part of a holistic solution which would be forwarded to the DSD.
A Member asked if Mr Pakade could quantify the amount involved for the 23 644 debtors who had signed acknowledgements of debt. He asked if there was an increase or decrease in grant fraud. He also asked whether DSD and National Treasury could consider ploughing back recovered monies to improve fraud prevention systems in SASSA.
Mr Pakade said the amount for which acknowledgements of debt had been signed was R119 million. He said there was a slight decrease. He also stated that it was not possible to use that money for administration or improvement of systems.
A National Treasury representative said that the budget of SASSA should not be seen in isolation. Over the last three years the DSD had had budgets of between R3.8 and 5.6 billion. He suggested that the DSD should prioritise SASSA.
Mr Pakade said the cost of establishing SASSA had been underestimated. The IT rollout and physical structures needed to be targeted and ring fencing of funds for this would be welcomed.
Mr S Thobejane (ANC) said it appeared that the focus of SASSA had shifted as it seemed to be spending most of its time tackling procurement irregularities.
Mr Pakade said the initial agreement with SIU concerned social fraud. Subsequently, SIU had also been requested to look procurement and IT forensics. He noted that his appointment as Acting CEO followed on the suspension of the previous CEO for fraud relating to property acquisition.
Ms M Matladi (UCDP) said that every year the Auditor-General (AG) had given a qualified audit report, and that most of the irregularities giving rise to the negative opinions arose within SASSA. SASSA was an agent of the DSD. She asked whether the DSD really needed an agency that was responsible for the payments of grants, as SASSA had subcontracted out that job to another company. She also wondered if the amount of R2.5 billion was really needed to do the Department’s work. She was also concerned about the over-expenditure of R1.2 billion because of poor administration.
Mr Vusi Madonsela, Director General, DSD, said the Department did need SASSA, as DSD was a policy department and was not configured to do outreach to far-flung places. DSD only had a small staff of 700. SASSA was set up in terms of legislation passed by Parliament. The DSD had had 13 years of unqualified audit certificates. He conceded that the dual accountability did pose service risks, and there was continuous debate over whether SASSA should have a Board. DSD was also concerned by the three step process to disburse grants.
The Chairperson asked why the payment model was taking so long to implement.
Mr Madonsela said it took three yeas for SASSA to be established, and it was still even now in the establishment process, due to staffing and financial constraints. There were a number of impediments that delayed the establishment and there had been resistance to implementing certain measures, even culminating in court actions being launched by some service providers.
Ms Matladi asked that copies of the proposed new service delivery model be provided to the Committee Members.
Mr M Steele (DA) said R 2 billion were being lost to irregular grant payments every year. This had been known by the DSD and he said that surely the priority had to be the management and security of data and the elimination of fraud. He wanted a detailed plan of how this was to happen.
Mr Pakade said there was a plan and that requests would consistently be made to National Treasury.
The Chairperson said the employees at grade level 5 were an area of high risk. The problem was that any IT system was a function of the trained, capacitated human beings staffing it. He said the real challenge was therefore with human resources. Non compliance and the lack of supervision in SASSA also required the urgent attention of the Acting CEO.
Department of Correctional Services (DCS): discussion of SIU report
Mr Tom Moyane, National Commissioner, Department of Correctional Services, informed the Committee that a preliminary report from Kimberley prison indicated that a riot on the previous day, during the visit by the Portfolio Committee for Correctional Services, had broken out over lack of medical attention and inmates not being given food. The Head of the Kimberley Correctional Facility was allegedly not paying attention to the complaints.
Ms T Chiloane (ANC) asked if the Department of Correctional Services (DCS or the Department) had acted on the recommendations of the SIU.
Mr Moyane said that he was appointed only two months and twenty days prior to this meeting, and for this reason he would not be able to answer questions with personal knowledge. However, the DCS had complied with all recommendations. Mr Gillingham had been the acting Chief Financial Officer, and the DCS was in the process of instituting disciplinary action against him.
Ms Chiloane wanted to know the breakdown of the officials involved in fraud and corruption who were still employed. She also asked if the monies involved had been recovered.
Mr Moyane said he would send those details to Committee. He agreed that the matter seemed to point to inadequate control mechanisms. There was a human element in systemic problems and lack of compliance, but ultimately the problems in DCS had arisen through the human element of corrupt officials.
Mr Malale asked how many of the recommendations from SIU that resulted in disciplinary cases being instituted had been finalised and how many had been dismissed.
Mr Matome Malatsi, Head: Legal Services and Anti-Corruption Unit, DCS, said that he could confirm that quite a number had been finalised, although he did not have the detailed figures at hand.
Ms Chiloane questioned how it had happened that DCS had approached SIU to assist it, but the report had been given to Parliamentary Members rather than DCS.
Mr Thobejane asked if the SIU had discussed the matters with DCS.
An SIU official confirmed that SIU provided quarterly reports, so the various recommendations were in a number of reports, although the particular report being presented was a consolidated report. The SIU had made the document available to DCS officials that morning.
Ms Chiloane said there had been four focussed tender investigations for catering, fencing, access control and TV, and two irregular extensions. She enquired if there had been any progress on that matter.
Mr Moyane said all the tender investigations referred to the company Bosasa. The matter was being attended to and was sub judice. He indicated that the Gillingham case would be heard on 6 September.
The Chairperson asked if the former Commissioner of DCS was also being investigated.
A Ministerial Legal Advisor said that following on the various SIU recommendations, the DCS had laid charges against Mr Gillingham, and the National Director of Public Prosecutions (NDPP) was now considering the matters. These were therefore now out of the hands of the Department, and with the police and NDPP.
A representative from the National Prosecuting Authority (NPA) noted that the NPA would do an independent investigation on matters arising from the report. The DCS had cooperated fully in information gathering.
The Chairperson asked about the civil case against the Department.
Mr Malatsi said the complainant had complained of procurement irregularities regarding Royal Sechaba catering. The SIU report had not been drawn up at the time, so the Department filed notice to defend. After meeting with the SIU, the latter advised the Department not to defend the matter so the Department withdrew its Notice to Defend. However, after taking further legal advice, it was decided to proceed with the defence of this matter. The DCS had accepted that there were some irregularities, but noted that other issues were also at stake that still required adjudication by the Court. However, in the absence of any other contingency plan, instructions were given to cater for the provisioning of food in the event of the contract being cancelled. The DCS believed that, from a procedural point of view, the DCS’s view on this matter should be presented to the court. If the DCS had not been represented, then it ran the risk of being sued by other service providers for tenders issued, and had thus had participated.
Mr Malale said the sub judice rule did not apply to Parliament. He asked for an indication – confidentially, if necessary - as to how many contracts were to be set aside, how many disciplinary cases involving officials’ corrupt contraventions of the law were involved and how many officials had been dismissed. He stated that a glib excuse of sub judice could not be relied upon by DCS, but it must, if it felt strongly about the matter, argue its case that it was prevented from disclosing this information to Parliament.
Mr P Pretorius (DA) asked if any public officials were implicated. He also asked how the former Acting Chief Financial Officer was appointed, and if this had followed a vetting procedure.
Mr Malatsi said only as far as he was aware, only the former Chief Financial Officer (CFO) and former Accounting Officer had been implicated. The former CFO had already been in the Department as a regional commissioner of Mpumalanga prior to his redeployment to the post of CFO, and, because this was a re-deployment, no further checks were needed.
Mr Moyane said the current processes for appointments required specific advertising for the skills set required, a security background check, an academic background check and Cabinet approval. The previous incumbent had been approved by the then-Minister.
Mr Steele said the contract had been awarded to Bosasa in July 2007, then renewed and then extended. At the beginning of the next financial year, the contracts were re-awarded to Bosasa, despite the fact that by this time the SIU was investigating the initial award in 2007 of the contract. He asked which officials had authorised a re-award of the contract, at a time when Bosasa was under investigation by the SIU.
Mr Malatsi said these matters were not in the quarterly reports, because they were dealt with at a very high level. When the contract was awarded for a second time in 2008, the report from SIU was not yet available.
Mr Steele wanted confirmation that nobody in the Department knew that Bosasa was being investigated by the SIU in 2008, at the time when the adjudication for the following year’s contract occurred.
Mr Malatsi said there was knowledge of an investigation but that no briefing as to the contents of the investigation had been given.
Mr N Singh (IFP) said there should be archive material which could bring to light certain issues. The memorandum by the person who had redeployed Mr Gillingham could be traced, and so could the Bid Adjudication Committee’s recommendations and minutes. He said he understood that no disciplinary measures would be taken against those who had passed away. However, Mr Singh enquired if there were any officials of the DCS who had unlawfully enriched themselves, and whether the money was to be recovered through civil cases. He wanted a categorical assurance that DCS had learnt lessons regarding the irregularities identified by the SIU and that it now had systems in place to avoid a repeat of these circumstances.
Mr Malatsi said the DCS had put systems in place and there was a continuous education process of members of the DCS. There were cases where money had been paid back, even where the person concerned had not personally been enriched.
The Chairperson asked who had signed off on the contracts.
Mr Malatsi said it was done by the accounting officer or a person to whom that authority had been delegated.
The Chairperson enquired how the DCS could discipline the Chief Financial Officer, when at the same time the Department was defending a corrupt tender in which he had been involved. This was a contradiction. The Department should be taking the lead in the fight against corruption.
Mr Malale said the President, Ministers and officials must also have an input in that decision, in view of the implications of the cancellation of the contract.
The meeting was adjourned.
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