The Special Investigating Unit (SIU) briefly outlined its background, mandate and current status. It aimed to get
Members asked what the duties of the Acting Head were, and this was something that needed to be raised with the Minister. They asked why the contract with the Department of Transport was not renewed, and asked how entities could be compelled to pay for SIU services, what service level agreements were envisaged, and commented on the concerns of the Minister of Social Development. Tithe progress on the housing situation in Doornkop in
Special Investigating Unit Strategic Plan 2012 – 2016
Adv Nomvula Mokhatla, Acting Head, Special Investigating Unit, outlined the background, mandate and legal scope and some information on the current standing of the Special Investigating Unit (SIU or the Unit) of the SIU, its mandate and legal scope, and some information about the SIU’s current standing.
Mr Zola Ntolosi, Head of Strategy, SIU, outlined the strategic framework, and explained that its vision, mission and values had remained constant. The SIU’s strategy was specifically linked to government outcomes 3, 5, and 12. The SIU aimed to get
Mr Ntolosi then set out the strategic overview for the upcoming three years, pointing out that issues of capacity were brought to the fore by the high level of demand for the work done by the SIU. The SIU was in the process of building capacity through partnerships. Its enormous growth had to be augmented on a short-term basis by bringing in external contractors. A skills transfer initiative was still being assessed. When setting out the SIU’s performance overview, he explained that there was not yet enough internal organisational capacity to predict effectively how much a particular investigation would cost.
Mr Ntolosi also said that an analysis of the SIU’s performance showed the shift in the type of services that were now being performed, with the SIU now dealing with fewer small matters, and more important cases centred on procurement. The focus of the SIU’s investigations coincided with the government’s new priority of looking to close gaps in the procurement process.
Mr Gerhard Visagie, Head of Governance and Legal Unit, SIU, explained that in recent years, the focus of the SIU had been on small multiple cases, such as investigating the instance of fraudulent social welfare grants. An SIU investigation that caused 60 000 non-qualifying beneficiaries to be removed from the South African Social Security Agency (SASSA) database in one year obviously led to considerable savings, which were multiplied over the number of years that the fraudulent claims could otherwise have persisted. It was much easier to predict the amounts involved in those types of matters. However, more recently, the SIU’s focus had moved away from this type of investigation towards a much bigger focus on procurement matters, in which it was much more difficult to predict the amounts that would be implicated.
He noted that a large section of the presentation dealt with operational matters, and it was a pity that the SIU’s Head of Operations was not able to attend the meeting to give that part of the presentation.
Mr Visage explained that, by law, the SIU could only get involved in forensic investigations if the President first issued a proclamation allowing it to do so. Currently, there were seven new proclamations and three extensions to existing proclamations.
He set out some of the challenges to the SIU’s work, and explained that in an adversarial environment, there was usually either a reluctance or an outright refusal on the part of state institutions to institute civil proceedings against wrongdoers, whereas in a cooperative environment it was not a problem. The SIU sought, through amendment of the Special Investigating Units and Special Tribunals Act, 1996 (Act No. 74 of 1996) to be put into a legal position whereby it could step in and institute proceedings on behalf of a state institution. The SIU wished to follow the model of the Auditor–General’s Office (AG), whereby it would be empowered to undertake the investigation in question and then bill the relevant institution according to a scale to be determined by the Minister of Justice of Constitutional Development. Fortunately, the SIU had a good relationship with the National Treasury, but there was still an urgent need for a legislative amendment along these lines, to ensure the sustainability and success of the SIU.
The SIU had sought a legal opinion from Senior Counsel, which found that the SIU was a creature of statute and was therefore obliged to act within the scope of its empowering legislation. Accordingly, there had to be a provision in the Act to allow the SIU to charge for its services in the way that the Auditor–General did. The SIU accepted the legal opinion, and had done everything it could to ensure that it would be compliant with the desired amendment. The amendment was seriously needed, as the SIU’s current funding model required the SIU to hire people temporarily as consultants and contract workers, because its income was insecure. Because the Judicial Matters Amendment Bill [B1– 2012] had not yet been passed, the SIU was facing a crisis whereby contracts with consultants had to be terminated. On the advice of the Chief Financial Officer and the audit committee, and because of its uncertain funding, the SIU had given over 100 consultants notice to leave on 5 May 2012. The SIU was, accordingly, ‘extremely hopeful’ that the Bill would be passed into legislation soon.
Mr Mavuso Shabalala, Head of Human Resources, SIU went through the part of the presentation dealing with personnel information (see attached presentation for figures).
Mr Garth Eliott, Chief Financial Officer, SIU, went through the SIU’s budget growth and projects income, and explained that the adverse legal opinion did not mean that the SIU could not collect from any of its creditors. Even when the amended legislation was finalised, the same challenges in collecting cash from creditors would still exist. The SIU’s funding philosophy meant that internal staff were funded by grant money, whereas external staff were funded by means of partnership money.
The SIU’s goods and services expenditure included an amount of R120 million for forensic external consultants. For these consultants, the SIU relied on a pool of about 150 individuals who charged 50% of the Auditor–General’s rate. As champions of good governance, the SIU had to take the Public Finance Management Act, 1999 into account. It had accordingly implemented budget cuts to bring its expenditure into line with the amount that it had received from the National Treasury. Mr Eliott then listed some of the SIU’s financial constraints.
The Chairperson said that the Judicial Matters Amendment Bill had been tabled in March 2012, and that on 25 April 2012, the Committee would receive a briefing on the Bill from the Department of Justice and Constitutional Development. Advertisements calling for contributions from civil society would be published in the weekend papers.
Mr J Jeffery (ANC) remarked that the name of the Bill was a misnomer because it was essentially a Bill dealing with the SIU. It should be completely processed by the National Assembly by June 2012.
Mr Jeffery asked Adv Mokhatla what her other duties entailed, in addition to acting as the Head of the SIU.
Adv Mokhatla said that she was still multi-tasking in addition to her duties as Acting Head of the SIU. She still had responsibilities at the NPA, but at least there was plenty of support within its senior leadership team. She did however need support in order to continue to multi-task until the current projects at the SIU could be taken over. At the NPA, she handled legal administration, extraditions, and civil litigation, amongst other matters.
Mr Jeffery said that it was an undesirable state of affairs, and the Chairperson agreed that it was something that needed to be raised as an area of concern when the Committee met with the Minister of Justice and Constitutional Development.
Mr Jeffery referred to page 14 of the presentation and asked why the agreement with the Department of Transport had not been renewed.
Mr Visagie said that the matter involving the Department of Transport fell within the SIU’s rationale for the legislative amendments that it sought. The SIU had an agreement with the Department of Transport in terms of which the SIU was paid on a yearly basis, to provide services to the Department. After several years, the Department of Transport had decided that it no longer required the services of the SIU. The SIU’s budget did not allow it to continue with such a sizeable investigation as the one it had already started at the Department of Transport. If the desired legislative amendment were to be passed, it would enable the SIU to continue with that investigation.
Mr Visagie responded that the SIU understood that in terms of the funding model they had in mind, they would be able to charge any level of government or state-owned enterprise for services rendered by the SIU. At the same time, the SIU should not be compelled to charge an entity in a case in which there was good reason not to do so. In every case, the SIU would still recover 66% of the expenses it incurred in terms of the grant from the National Treasury.
Ms Schäfer agreed that it was a good idea to compel entities to pay the SIU for its services, but asked how this would work practically, as, overall, amounts that were spent on investigations were difficult to predict.
Mr Visagie replied that in the past, there had been specific service-level agreements. In future, when the SIU engaged with a government body, lower level service agreements would be entered into to guide the relationship. The SIU did not intend to charge exorbitant amounts for investigations to departments who could not afford to pay.
Mr Swart remarked that Mr Visagie had touched on a key area for concern, and that in such cases, the desired legislative amendment may not be as helpful as was hoped. If a government body refused to pay, or claimed that it did not have funds available, it could obstruct an investigation, and the Committee needed to be aware of that.
The Chairperson said that the Department of Social Development was a case in point, as the Minister of Social Development had said that this department was not a deep well, from which the SIU could continue to draw. There was a need to look at the matter from both sides.
Mr Jeffery said it was a pity that the SIU was not in a position to go into specific details about its actual operations. In terms of its complicated funding structure, there would inevitably be some cases in which the SIU would be unable to recover costs from local authorities.
Mr Jeffery wanted to know the actual figure of the budget cut for the present financial year.
Mr Jeffery noted that whilst the Office of the Public Protector represented itself as an anti-corruption agency, it did not recover money or institute prosecutions. He asked whether problems ever arose in cases in which the Public Protector released information to the public while such information was still under investigation by the SIU.
Ms D Schäfer (DA) asked whether progress had been made in relation to the housing situation in Doornkop in
Mr Visagie explained that the investigation into housing at Doornkop was a massive one, with something like R122 billion worth of funds being spent on housing for the people in that area. The investigation required the SIU to use various investigative tools within its arsenal. Currently, Doornkop was not counted among the SIU’s priority investigations, but they would look into it and keep the Committee appraised.
Ms Schäfer asked for more reasons why the matter was not being prioritised, and for a timeframe within which the SIU would attend to the matter.
Ms Schäfer also noted that the Department of Justice and Constitutional Development’s budget appeared to show a reduction in the amount of funding available for investigators over the upcoming three years, but the SIU budget figures did not appear to reflect that fact.
Mr S Swart (ACDP) commended the SIU for its good work to date, especially considering that it was often done under difficult circumstances. Recently, the Public Protector had indicated that
Mr Swart was not certain whether there was a way to get additional funding from the National Treasury at this time of year. He was concerned about lack of action by government entities that failed to institute civil recovery procedures. Even when the draft legislation was passed into law, it would not be retrospective, which meant that the SIU would not be able to recover some of the amounts it spent on certain investigations. The Committee needed to think of a way to assist the SIU in that regard.
Mr Swart made reference to the South African Police Service (SAPS) lease investigation – which was already in the public domain – in which the SIU had concluded that the SAPS did not have a mandate to build its own police stations. This case was one example of the very important investigations with heavy implications in which SIU was currently engaged. He asked to what degree the work of the SIU was being handicapped by the fact that necessary action was not being taken by certain state organs. Giving the SIU legislative authority to embark on civil actions would help, but the Committee needed to look at ways to assist in the recovery of overdue, and possibly soon-to-prescribe claims.
Ms Pilane-Majake (ANC) said that the SIU was key to
Ms Pilane-Majake noted that the reliance on partnerships for funding, and the fact that two-thirds of SIU salaries were paid for by partnerships, was of concern. The SIU should not reach a place where it was essentially a privately-run entity.
The Chairperson agreed with Mr Swart’s concerns. When Adv Willie Hofmeyr had last appeared before the Committee as the Head of the SIU, the Committee had requested the SIU to present it with a report spanning the period from its establishment to date, on all cases that had been dealt with, what recommendations had been made by the SIU, whether those recommendations had been followed up, in what way, and to what extent. He asked whether that report was in the pipeline, and when the Committee could expect to receive it, as it would assist the Committee to assist the SIU.
Ms M Smuts (DA) referred to the disciplinary action that had taken place at the Department of Public Works, as outlined in the presentation. She asked whether that was a case in which the accounting officer cooperated and agreed to execute the recommendations of the SIU, or whether there were challenges.
Ms Smuts assured the SIU that the Committee would facilitate the adoption of the draft legislation needed by the SIU.
Ms Pilane-Majake asked how the SIU standardised the fees paid to consultants in order to ensure maximum benefit.
Mr Eliott explained that there were checks and balances in place, as well as standardised guidelines to determine the rates that consultants should charge. The SIU was only required to pay 50% of those amounts. Consultants were expensive, but that was to be expected because of the nature of their working conditions.
The Chairperson asked if the SIU put out tenders for consultants.
Mr Visagie replied that, before starting the tender process, the SIU consulted with industry professionals and the National Treasury. It then put out a tender, for which people applied, and suitable applicants were put onto a database. Consultants were then hired from that database.
Ms Pilane-Majake asked what the total amount of money that would be used on one consultant per annum was, and whether the procurement of contractors was in accordance with the Public Finance Management Act.
Mr Eliott replied that the SIU was comfortable that the procurement of contractors fell within the requirements of that legislation.
Mr Swart compared the amounts that were spent on permanently employed staff with external contractors. He said that the consultancy fees that were paid could rather be used to employ 200 extra permanent staff.
Mr Eliott replied that it would be risky to proceed with this, because if the SIU were not able to sustain the necessary funding, those permanent staff would have to be let go.
Mr Jeffery said that while it was not the Committee’s place to micro-manage the SIU, the SIU’s approach to employment was somewhat confusing. He asked why consultants could not be hired on a contract basis, for example, for a three-year period.
Mr Ntolosi explained that the issue of SIU funding was a long-term one, and that the SIU took an incremental approach in that respect. There needed to be a long-term mechanism to ensure sustainable funding for the SIU. There had been an intentional change in the funding ratio used by the SIU. The SIU wanted to see a change in the ratio of partnership funding to grant funding so that the majority of funding came from a baseline funding source. The numbers showed a decrease in permanent staff, but it was not necessarily a case of consultants taking over the places of permanent staff.
Adv Mokhatla assured the Committee that the SIU shared the same concerns that it did. The SIU was currently looking at itself with a view to evaluating its performance. She had been told that the report that the Chairperson requested had been caught up in January 2012, but that it was being worked on. The SIU was also looking at trimming down the number of consultants that it employed, but some consultants were indispensable. Cooperation from government bodies was key. In cases where information was prematurely made public, it prejudiced the integrity of the evidence being uncovered by the SIU. When an institution had completed an investigation, the resultant information had to be guarded, lest the entire case be compromised.
The Chairperson remarked that he hoped that the media was taking note of this information.
Adv Mokhatla confirmed again that the premature release of information in those types of cases could cause deleterious consequences for South African’s faith in the justice system, in the context of prosecutions. It would not be suitable for
Mr Visage addressed the issue of why consultants were not appointed as independent contractors, and explained that the SIU only wanted to use the consultant model for a limited time, and then phase them out. In most cases, the SIU engaged consultants from firms such as Deloitte, KPMG, and Bowman Gilfillan, and those people were not going to leave their permanent positions to work for the SIU. The consultant model allowed the SIU to terminate contracts within 30 days without reasons, which was best, as the SIU was trying to avoid a situation in which a legitimate expectation of continued employment came about as a result of the recurrent renewals of contracts.
Ms Pilane-Majake asked whether the SIU had any binding agreements with the other anti-corruption agencies that could allow them to assist the SIU in its work.
Mr Ntolosi replied that there was a charter that governed cooperation between the SIU and other participating agencies.
The Chairperson asked about the extent to which there was a failure to cooperate on the part of bodies that were being investigated by the SIU.
Mr Ntolosi replied that there were some institutions that approached the SIU for assistance, and that cooperation was not a problem in those cases. The problem arose in cases in which an entity was investigated as the result of a Presidential proclamation.
The Chairperson asked who tasked the Anti-Corruption Task Team (ACTT) and how that process took place.
Mr Ntolosi replied that the Department of Justice and Constitutional Development tasked the ACTT, with the guidance of the ACTT’s terms of reference.
Ms Smuts requested a copy of those terms of reference.
Mr Visagie explained that the Hawks led the ACTT, with the SIU and NPA serving as strategic partners, in addition to a whole range of other state institutions. Matters were introduced to the ACTT by means of its operational team, and might be referred by the South African Revenue Service (SARS), the Public Protector, the SIU, or the public. The matter would then tested to see if it was worth investigating, and screened through an initial phase. When the matter was investigated, it could be put onto the Priority Case (PC) list if that was deemed appropriate. In addition to the operational team, the ACTT had two higher committees, which comprised the heads of the various institutions who were engaged in the task team.
Mr Eliott said that the SIU had made application to the National Treasury for higher grant allocations, but that there had been a decline in the amount of funding from the National Treasury. The figures as reflected in the budgets of the Department of Justice and Constitutional Development should correlate with those of the SIU.
Mr Jeffery asked what was the decline from the previous financial year, when compared to the current financial year, when reflected as a percentage.
Mr Eliott replied that in the previous financial year, the SIU had started out with R200 million, and that, because of the adverse opinion that the SIU had received, the National Treasury had allocated more or less the same amount for the current financial year.
Mr Jeffery remarked that it actually amounted to a decrease, because of inflation, to which Mr Eliott agreed.
Mr Jeffery compared the SIU to the Public Protector, and said that the figures from the Department of Justice and Constitutional Development’s budget showed that the Public Protector was receiving four times as much as the SIU from the National Treasury. The Office of the Public Protector did have an important role to play, in that it often took the first step by uncovering corruption, but that was not the end of the matter. He was uncomfortable with the fact that the SIU had not received any increase, while the Public Protector had persuaded the National Treasury to allocate more funds to it.
Ms Schäfer was also uncomfortable with the lack of an increase in the allocation to the SIU and asked whether the National Treasury had given any reasons.
Mr Eliott replied there was nothing in writing, but that the National Treasury had indicated that it expected the SIU to get its partnership funding back to previous levels.
Mr Swart said that if the Committee had known of this state of affairs in the last year, it might have been able to recommend additional funding then.
The Chairperson said that it was important for the Committee to express to the National Treasury that while the law allowed government to amend the budget, those powers should not be taken for granted in anticipation of recommendations from the Portfolio Committees.
Mr Swart said that it was clear that the SIU was underfunded and was ‘in dire need of assistance’. He asked whether anyone from the SIU could put a number to the extent of corruption and the resultant monetary amount involved.
Mr Toyo Mnqaba, Head of Business Support, said that there was only an estimate, as made by Willie Hofmeyr, which had not yet been revised or reviewed. Part of the envisaged legislative amendment included the revival of a tribunal, which the SIU hoped would address the problems that arose when matters were not suitably dealt with by the government departments in question. The re-establishment of the tribunal would lead to more effective, streamlined process.
Mr Visagie said that the ongoing investigation into the SAPS lease matter was a massive one. It would have been easier if the investigation was limited to a small number of contracts, but the empowering proclamation referred to ‘procurements’ within the SAPS, which opened up a huge field of operation. There was a major focus on the procurement process that had led to the construction of 33 police stations. The SAPS had applied for the devolution of this power, but it had not been granted, and the SAPS had gone ahead with the construction of 33 stations regardless. The procurement process had not been done properly, and the total value at stake was in the area of R1.5 billion. The investigation was ongoing and the SIU was reporting regularly to the President on its progress. To date, definite signs of impropriety had been uncovered. It would be useful if in each investigation, the SIU could deal with a new Accounting Officer, instead of one who might be implicated in its investigation. In cases in which there was a reluctance to institute civil proceedings, the SIU could step in, but only if that authority were specifically included in the empowering proclamation. The problem that the SIU was experiencing with reluctance on the part of Accounting Officers to institute its recommendations was not exclusive to the SIU.
The Chairperson said that many of the problems with corruption and financial irregularities were due to government employees doing business with government bodies and state-owned entities. Many of the SIU’s investigations revealed that people who should not have done business with government had in fact done so, even though they may have used indirect means, by, for instance, entering into agreements in the name of their spouse, partner, or sibling. He asked what it was that the government was failing to do to ensure that government employees did not do business with government, short of criminalising the practice.
Adv Mokhatla said that perhaps there were not enough checks and balances in place. The questions on tender application forms were not always sufficient to ensure proper adherence to best practice.
Mr Visagie added that one of the major focus areas of the Department of Public Service and Administration involved investigations into conflicts of interest. It was a difficult area, and practically, should be viewed as a risk. A zero tolerance approach was the only way that the problem would be stamped out altogether. Often, these types of problems were only discovered after the fact, and conflicts of interest could be difficult to remedy in retrospect. The Accounting Officer at the Department of Public Works had shown a real willingness to address concerns that were raised within that Department.
Mr Jeffery remarked that a comparison of this presentation showed far too much similarity with a presentation in the previous year. Slide 14, for example, was identical to the one shown to the Committee the year before, on 31 March 2011. This situation was unacceptable.
The Chairperson agreed, and politely requested the SIU leadership to ensure that it did not happen again.
The SIU delegation apologised for the failure to update the presentation, and Adv Mokhatla assured the Committee that it would not happen again.
Mr Swart wanted to know who was going to fill the vacuum to deal with smaller cases, now that the SIU was moving its focus to bigger, more complex cases involving procurement. He asked what the motivation for the shift in focus was.
Adv Mokhatla said that those matters would still be attended to by investigators with expertise in those types of matters.
Mr Swart asked whether there really had been a shift away from multiple small matters.
Mr Visagie responded that a few years before, between 80-90% of the SIU’s staff complement had worked on multiple small corruption matters. Now there was a much smaller contingent of staff working on those types of matters. The SIU had received feedback from SASSA that it felt capable of dealing with social grant fraud. The majority of the SIU’s operations staff now dealt with procurement-related cases.
Mr Jeffery said that he thought that the operations section of the presentation should be withdrawn because it was too similar to that of the previous year. Some information from the previous year’s presentation had been re-fashioned in order to appear new. Although the SIU had not actually presented on the operations part that day, its presentation had still been tabled before the Committee.
The Chairperson asked the Committee what it thought of Mr Jeffrey’s proposal, and asked the SIU delegation why Mr Bishop, its Head of Operations, was not present to report on operations to the Committee.
Adv Mokhatla replied that Mr Bishop was in
Ms Pilane-Majake said that if that state of affairs was embarrassing, perhaps those corrections needed to be done.
Mr Jeffery said that there was no need to debate whether the operations section of the presentation should be withdrawn, but that it should be recorded that the Committee was not happy about receiving a ‘recycled report’. The Chairperson said that the Committee was ‘extremely disappointed’ with the repetition, and that it did not expect that to occur again. The Committee would do its best to help the SIU with the challenges it faced.
The meeting was adjourned.
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