Special Investigating Unit on its Strategic & Annual Performance Plans 2013

Meeting report

The Chairperson welcomed all present and invited the Special Investigating Unit (SIU) to commence its presentation.

Briefing by the Special Investigating Unit on its Strategic & Annual Performance Plans 2013

Ms Nomvula Mokhatla, Acting Head: SIU, commenced the presentation with an overview of the SIU’s mandate, vision, mission and strategy statement (see document). The strategic objective of the SIU was also briefly highlighted.  A situational analysis on the challenges which the SIU faced, with corresponding responses, was discussed. Challenges included the diverse mandates of various agencies, pre-proclamations work, the fact that the current structure was not optimal to current delivery needs, the funding model of the SIU, the inability of the SIU to recover all project generated funds from departments who were unable to pay invoices, limited specialist skills in forensic investigations and the misinterpretation of the SIU mandate by state entities. The presentation highlighted proposed responses to each of these challenges. Also highlighted was the gender representation at the executive level of the SIU - nine males and four females- as well as the composition by functions. The budget programme of the SIU was divided into three:

(a) a Business Management Unit, which led, guided and managed the organisation in line with a clear strategy;

(b) a Business Support Unit, which acted as an internal service provider to create a fully enabled organisation; and

(c) a Business Operations/Civil Litigation Unit, which was a new unit established to deliver the core business of the SIU in an integrated and multi-disciplinary way.

Mr Paul Modipa, Acting Projects Director, continued the presentation with an in-depth discussion on the business operations of the SIU. The unit currently had 25 active proclamations - 10 from national government, seven from provincial government, six from local government and two from state-owned enterprises. 67% of the focus of the investigations was on procurement and irregularities in supply chain management (SCM), 17% a combination of procurement and compliance processes, 8% process based, 4% on audits and 4% on other compliance issues. Due to the concerns expressed on the length of time the SIU took in completing investigations, it had put in place a plan - seven proclamations had been finalised in the 2012/13 financial year, 15 were proposed for finalisation in the 2013/14 financial year and 10 in the 2014/15 financial year. It was important to note that the SIU had an open-ended proclamation and so was not rolling up after 2015. The presentation further discussed in detail the performance targets for the 2013/14 financial year (see document). The SIU had multi-agency collaborations which it leveraged upon in the fulfilment of its mandate.   These included the Anti-Corruption Task Team, the Multi-Agency Working Group and the Public Service Special Anti-Corruption Unit.

Ms Mokhatla spearheaded the discussion on the Business Support Unit of the SIU. The SIU had a total of 668 funded posts, but had managed to fill only 583 of the posts. There were 85 current vacancies in the unit and it was expected that the staff complement would grow up to a total of 706 personnel. There were 463 staff employed in the Business Operations Unit, 101 staff in the Business Support Unit, 17 staff in Business Management and only two staff in Civil Litigation.   The Civil Litigation Unit was recently formed and was still in the process of recruiting staff. The presentation provided statistics on the employment equity of the staff complement of the SIU on race and gender representation (see document).

Ms Thobeka Njozela, Acting CFO, discussed in brief the proposed budget for the 2013/14 financial year. Unaudited income and expenditure figures for the 2012/13 financial year were highlighted in the presentation (see document). The estimated total income for the 2013/14 financial year was R532.475m and estimated expenditure R495.692m, giving a surplus of R36.783m. Estimated capital expenditure for the 2013/14 financial year was R36,7m.

Mr Gerhard Visagie, Corporate Legal Counsel, anchored the presentation on the Civil Litigation Unit of the SIU. By virtue of recent amendments to the SIU Act in October 2012, the SIU was now empowered to institute civil litigation in the name of state institutions following investigations which it had carried out. Civil litigation has thus become a primary outcome of SIU investigations, and this had led to an amendment of targets and indicators in the Annual Performance Plan of the SIU.  The establishment of the Civil Litigation Unit was still underway; the unit currently had a staff complement of two staffs and was in the process of recruiting advocates, attorneys and administrative staff. The presentation highlighted the new performance indicators derived from the establishment of the Civil Litigation Unit (see document).

Ms Mokhatla concluded the presentation with a discussion on the Business Management Unit of the SIU.  Monitoring and evaluation of the SIU’s strategy was to be done through the governance structures in place, which included an organisational scorecard to be administered through an executive committee, a Business Unit scorecard to be administered through a management committee and the Functional scorecard to be administered through the Operation/Support Management Committee. The presentation was concluded with a brief highlight on the high-level delivery plan that had been put in place by the SIU (see document).

The Chairperson thanked the SIU for the presentation and invited comments and questions from Members on the presentation.

Discussion

Mr S Swart (ACDP) noted with concern that the estimated yearly value of corruption was R30 billion, and while the constraints which the SIU faced were understood -- mainly due to its funding model -- its targets seemed inconsequential in the light of the estimated yearly value of corruption. Was the SIU making an impact in the fight against corruption? Although the move from targeting several cases to more complex cases had been explained, there should be a corresponding increase in value. If the target of R35million was overshot and R179million recovered, then the proposed target for the new financial year should be over R100million.

Mr Gerhard Visagie, Corporate Legal Counsel, explained that it was important to take into account that the SIU investigated only matters referred to it. However, the investigated cases sent a message to the citizenry and led to a deterrent effect, which unfortunately was difficult to quantify in savings on corruption. A good example was the investigation on the social grants in the Department of Social Development (DSD), which had led to a huge increase in the number of grants that were voluntarily submitted.  This could be attributed only to the deterrent effect of the investigation.

Mr Swart, while appreciating the explanation, remarked that if the deterrent effect theory held true, then there should be a corresponding decrease in the level of corruption and irregular expenditure reported by the Auditor General (AG), but the reverse was the case. Generally, the concern was that there was a need for more drastic action to address corruption.

Ms Mokhatla replied that the SIU was currently carrying out an exercise with the office of the AG, where agreements and MOUs on the conduct of its business had been entered into.

Mr Swart highlighted the concerns with regard to the funding model of the SIU.  It was of concern that a major part of the SIU’s budget was tied to departmental funding. What impact would this have on the SIU where departments did not pay?  Funding of the SIU should come mainly from the National Treasury.

Mr Modipa replied that the SIU from time to time was frustrated with departments who defaulted in payments. The amended SIU legislation provided for exemption for departments which were unable to pay.  While a move to a National Treasury budget was preferred, a total move was not practicable because the SIU was unable to anticipate how many proclamations it would have for each financial year; hence the mixed funding model was more ideal.  The dependency on departmental budgets by the SIU could be reduced by additional funding from National Treasury, however.

Mr Swart asked why there was a sharp reduction in the proposed performance indicators for evidence prepared for use in civil litigation. The explanation on concentrating on more complex cases still did not explain this massive drop.

Mr Modipa responded that the previously high numbers of indicators had been a result of the process- driven investigation of the Department of Social Development (DSD) for persons receiving social grants. Further, there had been a number of criminal actions linked to the social grants investigation, as well as other disciplinary issues. Now that the investigation had scaled down considerably, the numbers of performance indicators had dropped. Further, the SIU had taken a strategic decision to pursue mainly high value cases, as against pursing many small value cases.

Mr J Jeffery (ANC) questioned what the impact indicators were for the proposed focus on high value cases.

Mr Modipa replied that civil litigation, evidence collected to be forwarded to the NPA, cash recovered, as well as systemic recommendations to departments, were all examples of impact indicators.

Mr Jeffery remarked in response that while it was understood that the DSD proclamation gave rise to the high value in terms of number of indicators, if the new proposed emphasis was on value, then the potential recoverable as a target should also increase significantly.

Mr Visagie explained that there was a difference in previous indicators and current indicators. Previous indictors were related to investigations of procurement, whereas the current indicators shifted the emphasis from the amount under investigation to the amount where irregularities were found.

Mr Jeffery noted that the explanation given by Mr Visgaie was contrary to the information in the APP.

Mr Visagie noted that this was the new direction of emphasis on investigation, so corrections would be made to the APP to reflect this appropriately.

Mr Jeffery criticised the content of the SIU’s presentation to the Committee, noting that the Committee had not been given sufficient information in the presentation to review the budget. To properly consider the annual targets reflected in the presentation, performance over the last three financial years and projections for the next two ought to have been reflected in the presentation. The presentation did not have sufficient details on performance indicators and targets.

Ms Mokhatla explained that the presentation was a mere summary of the details provided in the Annual Performance Plan and it was the understanding that the APP would augment the presentation, hence the lack of details.  Details requested would be forwarded to the Committee.

Mr Jeffery noted with concern that the presentation had indicated there were 668 funded posts for staff and yet not all had been filled.  This same figure had been presented to the Committee in the SIU’s presentation last year. If the vacant posts were funded, why were they yet to be filled one year later?

Mr Jeffery highlighted the challenge on pre-proclamation work as indicated in the presentation, and asked whether empowering the SIU through legislation in this regard might be a solution.

Mr Jeffery requested that the SIU forward to the Committee a report on the number of proclamations the SIU had received over the last three financial years, the immediate past year and the Medium Term Expenditure Framework (MTEF) period.

Ms D Schӓfer (DA) agreed with Mr Jeffery’s observations on the lack of detail in the presentation of the SIU, and requested that the Committee be provided with details of the investigation into the Pretoria leases, the corruption in the Department of Public Works, the SABC investigation, and the investigations in the George, Stellenbosch and Swellendam municipalities. Why had the MEC of the Swellendam municipality been denied a report by the SIU on the outcome of the investigation?

Mr Modipa stated that the SABC investigation and the investigation into the Swellendam municipality had been finalised. The SIU was in the process of finalising submitted recommendations and the consolidation of the progress reports was being discussed.

Mr Mike Leaser, Regional Head Western Cape, provided the Committee with further details on the Swellendam municipality investigation. The investigation was about irregularities in the Supply Chain Management process, financial irregularities, asset verification and one other specific investigation, the details of which could not be discussed yet. The investigation confirmed a number of violations had occurred; the investigation was complete and writing of the report was to commence shortly.

Mr Swart questioned the alleged leaking of interim reports that had appeared in court proceedings. What steps had been taken to address this in the SIU?

Mr Visagie responded that in the Swellendam municipality case, it was not the interim or progress reports that had been leaked, but the preliminary report prepared at the outset of the investigation.  There had been no findings in this preliminary report, only plans mapped out for the investigation. The SIU, upon discovery of the leak, had written to the attorneys in charge of the case, raising objections on the ethics of the use of the document in court proceedings, and had even sent representatives to court to ensure these documents were not tendered in court.

Mr Modipa added that with regard to the alleged leaking of information, the problem was with the several stakeholders to which the SIU reported in the course of its investigations, and not necessarily from an SIU source. However, an internal investigation was being conducted to determine if there had been any leak internally. Further it appeared as though there had been a leak in instances where departments had tried to action court orders to stop corrupt practices from recommendations in interim reports.  In reality there had been no leak, although the report was yet to be finalised.

Mr Jeffery remarked that from the response, it did appear the leak was from the SIU.  It was a worrisome trend and undesirable for corrupt officials to have a lead on investigation plans. Did members of the SIU undergo a security clearance?

Mr Modipa replied that screening and declaration of assets was a requirement for all staff of the SIU. Furthermore, the SIU had recently resolved that all members of staff  be submitted to security clearances, and the process had commenced with senior management and would cascade to all levels of the organisation.

Mr Jeffery requested that a report on the security clearances be forwarded to the Committee.

Mr Swart stressed the need to prevent information leaks in the SIU and to ensure that criminal and civil litigation was not compromised by details included in progress reports. He asked if there was a specific investigation in the SIU on the leak of the Swellendam interim report.

Mr Jeffery asked what steps had been taken to investigate the Swellendam leak.

Ms Mokhatla replied that the investigation was underway and a report was expected by the end of the month.

Mr Jeffery further asked if it was a general investigation, or an investigation into the Swellendam leak specifically.

Ms Mokhatla replied that the Swellendam leak was one of the issues being investigated under a general investigation.

Mr Jeffery requested details of when the investigation into the Swellendam leak had commenced.

Ms Schӓfer further asked if it was incorrect that the report on the Swellendam municipality was completed last year in August. What was the SIU’s relationship with the Provincial Minister?

The Chairperson asked when the proclamation on the Swellendam municipality was made.

Mr Leaser replied that the proclamation was made in February 2011. The SIU was currently in the process of writing up the report and on conclusion it would be presented to the President, after which it would be made public.

Ms Schӓfer asked for a time frame on when it was expected the report would be sent to the President.

Ms Mokhatla replied that it was one of 20 other reports due for submission to the President at the end of the month.

Mr Jeffery requested that the SIU provide the Committee with details on its reporting procedure. Did the SIU produce interim reports? Why did the SIU provide progress reports and to whom were the progress reports provided?

Ms Mokhatla replied that the provision of progress reports was part of the operational procedures of the SIU. In terms of what government departments had to do, based on recommendations, the SIU was in engagement with the Presidency to ensure there were no transgressions of applicable laws. Yet a balance was struck to ensure that government departments were assisted in tackling corrupt practices timeously. The SIU did not issue interim reports, it issued only progress reports.

Mr Visagie added that further details on the reporting measures of the SIU would be sent to the Committee.

Ms Schӓfer questioned who progress reports were issued to.

Ms Mokhatla replied that progress reports were issued to heads of departments of affected departments and the Minister of Justice.

Ms Schӓfer further questioned why no progress reports had been sent to the MEC of Swellendam municipality, and asked that the SIU discuss its processes on reports over the last few years in jurisdictions similar to Swellendam municipality.

Mr Modipa committed to engaging with the office of the MEC of the Swellendam municipality to sort out misunderstandings on the provision of progress reports.

Mr Dumisani Mahole, Projects Portfolio Planner, briefed the Committee on the developments in the Stellenbosch investigation. The investigation had been concluded and the report drawn up; the report had gone through the quality control process and was to be made available at the end of the month.

Ms Schӓfer asked when the report had been finalised.

Mr Modipa responded that a report was technically finalised only after it had been signed. The report had been sent, but needed additional information upon review.

Ms Schӓfer asked why the MEC had not been informed of progress of the report.

The Chairperson questioned whether any of the contents of the report required the MEC to be provided with a progress report.

Mr Jeffery remarked that the processes seemed unclear. What was the process with regard to the provision of progress reports?

The Chairperson noted that there was a perception that the SIU was more receptive to and cooperative with certain provinces compared to others based on political affiliations, and this needed to be addressed by ensuring consistency in processes.

Ms Schӓfer remarked that the reason why a progress report had not been given to the MEC of Stellenbosch also impacted on the consistency of the SIU in its relations with government officers.

Ms Mokhatla promised to review the matter, as she was not aware of the details.

Ms Schӓfer asked how many complaints had been lodged by members of the SIU with the Office of the Public Protector, and what the nature of the complaints were.

Ms Mokhatla replied that the Public Protector had not officially written to indicate this, so the SIU was unaware of any complaints.

Ms Schӓfer insisted that the SIU had been unofficially informed of the developments, and asked for comments.

Ms Mokhatla replied that she was unable to comment on the issue, relying on media reports which had not been confirmed to be official.

Mr Jeffery objected to Ms Schӓfer’s line of questions and noted that they were best directed to the Public Protector.

Ms Schӓfer asked why there had been a drop in the proposed reduction in the budget on investigative consultants. How did the SIU plan to conduct its investigations with the reduction?

Ms Schӓfer referred to the target on procurement matters, set at R1billion, and noted with concern that the SIU’s presentation to the Committee two years ago had set the target at R30billion. How did the SIU justify this?

Mr Modipa responded that there had been no indication that R30billion target had been set.  In the 2012/13 financial year, a target of R1billion had been set and the SIU had exceeded this target by achieving R2.6billion instead.

Ms Schӓfer remarked that the 2011/12 presentation had indicated a target of R30billion.

Ms Mokhatla explained that the new indicators which had been put in place were the reason for the disparity. Previous indicators had been based on processed investigation and now the basis was only for evidence prepared for civil litigation.

Ms Schӓfer asked on what basis the SIU had entered into an agreement with NEHAWU to pay junior forensic consultants R20 000 lump sum pay-outs and a 5% increase in salaries from 1 December. Why were senior forensic consultants excluded from the agreement, and where did the SIU get the funds to pay in the light of its financial constraints?

Mr Jerome Wells, SIU Corporate Lawyer, explained that the matter was yet to be settled, and had been referred to the Labour Court. The cause of the action before the Labour Court was unfair discrimination. The SIU was opposing and defending the action. Payments made to the junior forensic consultants were for duties which they had performed in the past and not adequately compensated for - the payments were ex gratia.

Ms Mokhatla further explained that the event had taken place as far back as 2007/08, and the funds had been available to make the payments.

Ms Schӓfer remarked that the ex gratia payments related only to the R20 000 lump sum payments. In addition, the consultants had received a 5% increase in salaries effective 1 December.  Was this in accordance with the provisions of the Public Finance Management Act (PFMA)?  It had also been alleged that only four people had benefited from this increment - how true was this?

The Chairperson cautioned that this was a matter that was currently before the CCMA for consideration and it was inappropriate to reveal details on the matter.

Ms Schӓfer asked whether the allegations that the SIU monitored both internal and external e-mails of its staff were correct.

Ms Mokhatla replied that these allegations had been made through a newspaper article and was untrue. It was illegal to engage in such activities and the SIU did not monitor the e-mails of its staff.

Ms Schӓfer asked what the SIU was doing to employ and retain forensic investigators.

Ms Mokhatla replied that the SIU ensured a mentorship program was in place for staff in areas of necessary skills, such as forensic accountants and forensic lawyers.

Ms Schӓfer referred to the number of acting positions, particularly in senior management, and asked how many appointments had been made in the previous financial year and if the correct legal processes had been made in filing these positions.

Ms Mokhatla replied that the correct processes, including screening procedures, had been followed in the appointment of staff to the SIU.

Ms Schӓfer referred to the intention to replace the fleet of the SIU, mentioned in the presentation, and asked what justification the SIU had for the expenditure incurred on the allegation that a senior official had embarked on a countrywide tour to inspect its current fleet.

Ms Mokhatla explained that the inspection of the fleet was part of a larger exercise put in place at the time austerity measures were embarked upon in the SIU. In a bid to ensure that members of staff were not being exposed to risks based on these austerity measures, it had become important to ascertain the condition of the fleet which was alleged to have been run down.

Ms Schӓfer questioned the necessity of a nationwide trip to inspect vehicles when this could have been achieved through communication from staff at each location.

Ms Mokhatla responded that the trip was not just aimed at the inspection of the fleet, but was part of a larger exercise. The trip was to engage with members of staff and discuss other major issues.

Ms Schӓfer remarked that in a meeting of the Committee with the AG, the AG had indicated non-compliance of the SIU on an audit of its predetermined objectives, and asked what the SIU was doing to address this.

Ms S Sithole (ANC) noted with concern that the CFO of the SIU was in an acting position, and asked when the SIU planned to employ a full time CFO, considering the sensitivity of the position.

Ms Mokhatla explained that a CFO had been recruited and was to have started in January this year, However, negotiations on the employment package had broken down and no consensus had been reached, thus the recruitment process had had to be started over.

Ms Sithole questioned whether the SIU had an internal audit unit, an audit committee and a risk management plan.

Ms Mokhatla responded in the affirmative -- the SIU had an internal audit unit, an audit committee as well as a risk management plan. Details of these would be forwarded to the Committee.

Ms Sithole asked if the SIU possessed fixed assets, such as buildings.

Ms Mokhatla replied that the SIU did not own fixed assets such as buildings.

Ms Sithole referred to the proposed budget of the SIU and asked what it meant by ‘other income’ as one of its anticipated sources of income.

Prof L Ndabandaba (ANC) asked if the SIU had liaison with the International Anti-Corruption Academy based in Vienna, and suggested that it might be useful to liaise with the academy for training purposes.

Ms Mokhatla responded that the suggestion would be considered by the SIU.

Ms C Pilane-Majake (ANC) commented with dismay that the presentation of the SIU was empty and devoid of content.  She was also concerned that the vacancy rate in the SIU was high and needed to be addressed with urgency.

Ms Mokhatla explained that recruitment was under way to fill the vacancies in the SIU and appointments were to be made before the end of May.

Ms Pilane-Majake noted that of the proposed R532million budget of the SIU, R82million was earmarked for payment to consultants.  In previous engagements, the Committee had stressed the need for less reliance on consultants and instead ensuring needed capacity was employed in-house. This needed to be addressed.

Mr Modipa explained that the use of consultants in the SIU was different from other government departments, because consultants were sometimes needed for specific investigations which had no bearing on the day-to-day activities of the SIU, such as quantity surveyors or civil engineers required for case-specific investigations.  However, the SIU had made efforts to reduce its dependence on consultants, particularly forensic consultants.  Its spending on consultants for the 2012/13 financial year had reduced from R170million in the 2011/12 financial year, to R82million. It was hoped that planned training for staff and the transfer of skills would reduce this figure further in the coming year.

The Chairperson added that it was important Members remembered the SIU’s special need for expertise which it could not retain internally on a permanent basis, from time to time.

Ms Pilane-Majake responded that she had asked the question with that realisation in mind, but the question had been geared more towards the need to ensure job creation opportunities and avoidance of state institutions that were run by consultants.

Mr Swart remarked that the consultants used by the SIU should not include forensic experts.  Did the SIU now have its own complement of forensic experts, or did it still outsource this duty?

Mr Modipa replied that the only major outsourcing in forensics was for forensic accountants. The SIU was careful about filling this position, due to its funding constraints.

Ms Mokhatla added that the SIU had embarked on a review to determine the kind of services which its consultants provided   This review, in addition to further training, had ensured that the internal forensic unit was tasked with more of the duties previously outsourced to external consultants. Furthermore, the SIU had made a decision to henceforth recruit consultants on the basis of tenders.

Ms Pilane-Majake asked how the human resource unit of the SIU had responded to the country’s tripartite challenge of unemployment, poverty and inequality.  She asked for details on the racial representation at the executive level of the SIU, as well as at management and lower cadre levels.

She asked how the SIU prioritised the proclamations it received.

Mr Mahole responded that the SIU had developed a prioritisation framework which took into consideration certain factors, including assessing the complexity of the proclamation, resources available, timeframe need to complete the matter, etc. The SIU did not as a matter of policy reject matters, but sometimes scaled down on the volume and thus prioritised matters. The SIU was currently in consultation with the Department to amend its Act to include a provision for pre- investigation of matters before acceptance of a proclamation, to ensure it was not overburdened by Departments.

Mr Swart remarked that this was not a new issue, and the provision for pre-investigation should have been included in the last amendment of the SIU Act, as some Departments intentionally used this to frustrate the SIU.

Ms Mokhatla added that an exercise was currently underway to consider all proposed amendments to the SIU Act.

Mr Visagie explained that there was a need for further amendment of the SIU Act in the near future. Some amendments related to reporting procedures whereby even when investigations had been commenced at the request of DGs of departments, reports of the investigation could not be released until they had been submitted to the President. In addition, there was a need to include provisions on pre-investigation, especially in the light of the AG classifying amounts spent by the SIU on pre-investigations as irregular expenditure in its last audit report.

The Chairperson requested the SIU to forward to the Committee a report listing all proclamations it had received from 2009 to date, and status reports on its concluded investigations.

Mr Modipa attempted to discuss this, but was requested by the Chairperson to send details in writing to the Committee instead.

The Chairperson questioned whether the SIU was aware on the debate with regard to the briefing patterns of government departments and agencies, and warned that the Committee would be keeping a close watch to observe how many black female lawyers the SIU gave briefs to in terms of civil litigation.

Ms Mokhatla replied that the SIU ensured proper representation in its briefing patterns, as well as pairing juniors from the SIU with Senior Counsel briefed by the SIU to ensure transfer of skills.

The Chairperson thanked all for their attendance.

The meeting was adjourned.