Follow-up Briefing by Department of Public Works on progress made in pursuing the fraud and corruption cases within Department, with Minister and Deputy Minister in attendance

Meeting report

Opening Statement
The Chairperson apologised on behalf of Mr P Mnguni (COPE) and Mr L Gaehler (UDM), who could not attend the meeting. She welcomed the Minister and Deputy Minister of Public Works to the meeting.

Department of Public Works Strategy Against Fraud and Corruption
Mr Mziwonke Dlabantu, Director General: Department of Public Works, presented a report updating the Committee on its Strategy Against Fraud and Corruption, the challenges associated in the implementation of said strategy and the improvements identified, post implementation. The Turnaround Strategy Intervention strategy developed and adopted by the DPW’s Minister identified two key areas as critical zones: Fighting Fraud and Corruption and Improving business operational performance

It was noted that the DPW was lacking in its capacity to efficiently deal with issues related to corruption and fraud, subsequently invoking a need for there to be a dedicated focus in building internal capacity in dealing with cases of such a nature. The Minister’s Turn Around Intervention strategy adopted an integrated approach where the DPW’s fight against fraud and corruption was aligned with its business operations. Since fighting fraud and corruption were identified as a key focus area for the DPW in its Annual Performance Plan (APP), a Project Team and Steering Committee was established, The Charter had been developed and adopted by the Steering Committee, a high level project plan was developed and the Anti-Fraud and Corruption Awareness Communication Strategy Draft was adopted by the Project Team and was awaiting presentation to ExCo. The DPW stated that its Fraud awareness programme was directly aligned to other departmental projects such as Project 2-The Audit of leases, Project 3- Clean Audit, Project 7- Supply Chain Management Review and Project 8- Governance and Performance Management Review in attempting to combat the issue of fraud on a comprehensive level. The Special Investigating Unit (SIU) although an independent unit, was aligned with DPW in combating fraud and corruption and was busy with investigations in terms of Proclamation 38 of 2010.  The SUI had several completed and ongoing investigations, which were underway with the DPW against allegations of fraud/corruption and maladministration, with stern actions being taken against senior officials within the Department for completed investigations.

As part of the Minister’s Turnaround Strategy/Intervention, funds had been allocated to appoint a panel of service providers, who would conduct investigations with the Department as and when they were reported. This process was anticipated to be finalised by September 2013. The Department was facilitating improved interaction and cooperation with other fraud and corruption institutions such as the Auditor-General (AGSA), Public Protector and the National Treasury. Working in alignment with other fraud and corruption fighting institutions as well as its own dedicated Unit, the Fraud Awareness and Investigation (FAI) which was a directorate within the Chief Directorate: Internal Audit and Investigation Services (IAIS), ensured that the proper responses were given in addressing cases relating to corruption and fraud and promoted a culture discrediting such behaviour. FAI conducted anti-Fraud and Corruption workshops across the Department targeting all DPW officials regardless of status and level and created awareness on matters related to fraud and corruption and promoted a culture of anti-fraud and corruption. It conducted investigations on reported allegations of fraud and corruption and referred cases to other law enforcement agencies such as the SIU, the South African Police Service (SAPS) and the National Intelligence Agency (NIA) as well as reviewed and implemented the Fraud Prevention Strategy.

The DPW’s approved Fraud Prevention Strategy identified basic fraud and corruption prevention measures, which were already in place within the DPW, it furthermore also identified fraud and corruption risks that needed to be addressed and had the potentiality of jeopardising the successful implementation of the fraud prevention strategy and achievement of the DPW goals. It was intended to serve as an additional measure to assist in the limitation of the impact of fraud and corruption risks, with a focus on creating awareness and promoting ethical business conduct. Its Integrated Anti-Corruption Strategy was based on elements addressing prevention, detection, investigation and resolution in ensuring that corruption and fraud cases were rigidly confronted. The key stakeholders driving the DPW’s initiative were said to be the Executive Authority (Minister), Accounting Officer (DG), Management and Staff, who were also subject to face internal investigations in the event of allegations pertaining to fraud and conduct. Through internal investigations the Department had a total of 225 reported cases from the fiscal years of 2009/2014, and a total of 60 misconduct cases committed by DPW officials.

Its ongoing awareness campaigns included Fraud Awareness Workshops rolled out across the entire Department, presentations during the Expanded Public Works Programme (EPWP) and during engagements with contractors, Public Service Induction (New employees), Anti-Fraud and Corruption Posters and provide Worx-News with articles, which focused on internal publications. Its current priorities were:
- Instituting and finalising investigations reported during the 2012/13 fiscal year,
-Finalising the Review of the Fraud Prevention Strategy
-Conducting Fraud Awareness Campaigns/Workshops
-Capacitating the Fraud Awareness and Investigation unit by filling vacant positions and appointing secondments
-Developing detailed plans and implanting those plans
-Creating a tracking system for reported incidents of fraud/corruption
-Presenting progress reports to ExCo, Mintop and the African Resource and Environmental Management Constellation (ARMC).  

Although the DPW faced challenges such as an inadequate internal capacity, a poor control environment and the remaining high levels of susceptibility to fraud/corruption, some of its success included the suspension of officials implicated, the implementation of an internal disciplinary process, the permanent appointments of those in executive positions and the carrying out of criminal proceedings. Its proposed solutions in addressing some of the highlighted challenges included the establishment of Governance and Supply Chain Management (SCM) branches, filling vacant positions and obtaining external assistance to enhance internal capacity, establishing a stand-alone Anti-Corruption Unit, promoting ethics within the organisation, and aligning the fight against fraud and corruption with Departmental operational effectiveness.

Discussion
Ms C Madlopha (ANC) asked who in the DPW would be conducting the disciplinary hearings especially since those positioned within the senior level such as the Directors and Chief Directors had been accused of allegations of fraud, she asked whether said individuals would be in a position to come up with an acceptable outcome in holding the guilty accountable for their actions. She asked what the turnaround time was for the DPW internally, in addressing investigations and hearings because it was noted that the DPW was facing slow turnaround progress, which in turn prolonged the disciplinary process affecting service delivery and the community at large. She stated that on the issue of registering criminal cases, the committee needed time frames so as to ensure that Parliament had a sense of the length it took to register such cases and potentially provide the DPW with a special unit solely focusing on dealing with fraud and corruption. She said that SIU investigations stated persons accused of irregularly conducting business with the DPW also classified as a conflict of interest were constantly given warnings but asked when those warnings would amount to actual disciplinary action. She asked for clarification on what the powers of the panel of service providers would be and the difference between that group and the Internal Audit and Investigation Services (IAIS) unit.

Ms A Dreyer (DA) stated in combating fraud and corruption further action needed to be taking place as well as enforced consequences. She asked whether all senior level managers had declared their financial interests as required by the Public Service Commission on the specified due date, and whether consequences were in place for those who failed to comply. She asked on the signing of the Nkandla proclamation and wanted further clarification on whether there had been any progress in the signing of said document and whether the document would be made available to the committee. She said the DPW needed to make it clear and provide names in its reports of individuals accused of fraud and corruption and said individuals needed to be exposed to the public and held accountable for their actions. She asked the DPW why turnaround was taking such a prolonged period, and why there was a significant low rate of investigations lacking finalisation, she said this was disconcerting because it meant individuals convicted were not being held accountable and justice was not being served.

Mr K Sithole (IFP) asked for clarification on the recovery strategy as part of the DPW’s resolution component in combating fraud and corruption. He stated that the report did not provide details on whether the Department had recovered funds from convicted officials and contractors and if so what were the numbers. He said the finalisation of investigations were moving at a very slow rate and actions needed to be taken to streamline the process. He asked the DPW when it would address the issue of departmental inadequate internal capacity and when those with adequate skills would be recruited into the DPW.

Ms P Ngwenya-Mabila (ANC) said she agreed with her colleague’s sentiments about the slow process in respect to the finalisation of the cases. She said when looking at the record of SIU investigations the lack of dates made it difficult for members to track the efficiency or delayed nature in the finalisation of cases. She said in the cases referred to SAPS by the DPW, was there any progress in SAPS finalising its cases and was the DPW monitoring and ensuring that SAPS was doing its job properly. She asked whether the Public Service Commission (PSC) was involved in the Department’s anti-fraud and corruption strategy and that it was important for Directors and Senior Managers to be involved in this process.

Ms N November (ANC) asked the DPWt what was being done to those individuals who had been suspended and if they were still being granted their salaries even after conviction.

Ms N Madlala (ANC) asked whether the individuals suspended were suspended with or without pay, she asked how long said individuals were suspended for and if they returned back to work once they had completed their suspension.

Ms N Ngcengwane (ANC) asked the DPW how far it was with its expenditures, and if it could give the committee a rough percentage of its expenditures spent on investigations. She asked the DPW to clarify on the SIU investigations against the fraudulent lease agreements provided by landlords and if such officials were still employed. She asked the DPW how it would recover funds from these fraudulent agreements and asked where said officials were currently. She wanted clarification on the level of alignment between the DPW and other fraud and corruption busting institutions such as the Auditor-General (AGSA) and asked for a time frame of when it referred cases to other law enforcement agencies and whether there had been any progress in regards to those cases. She asked the DPW if it had any strategies in shortening the process of filling posts to enhance its internal capacity.

Ms Madlopha stated that DPW needed to take more consideration in ensuring that the figures being reported were accurate.

Minister of Public Works, Mr Thulas Nxesi, stated that the DPW was aware that the restructuring process in pushing forth for the eradication of fraud and corruption was slow. He said that within the DPW’s Turnaround Strategy the three phases were identified which would unfold over a period of the time. The first phase would be the stabilisation phase, the second phase as indicated to the Committee would take three years to implement was improving business and operational performance and the third phase which was said would take seven years to implement was the reconstruction of the DPW, which needed a significant amount of time due to the deeply rooted structural challenges as the DPW noted. He said in capacitating its internal body in ensuring that it was equipped with the right skills it had to go into other departments and request for individuals established in senior level positions to be seconded into their DPW, which had enabled in facilitating the movement of cases.

He said that Human Resources (HR) was responsible for conducting disciplinary hearings, but with high profile cases linked to the very people who were expected to deal with the issue of fraud and corruption, those particular cases had to be outsourced into the hands of legal experts and tended to take time because the Labour relations requirements required one to be meticulous and accurate when dealing with such cases. He said that the registration of criminal cases was out of their jurisdiction and since it was dealt with SAPS/ NPA or the justice system all it could do was inquire on the standings of such cases. He said the DPW was aware that the issue of backlog was a challenge, which needed to be addressed, and a special unit of police addressing such cases would facilitate in alleviating the pressure of those particular cases. He said that in addressing the Nkandla proclamation, that particular investigation dealt with sensitive security matters which could not be taken up with the public but was being dealt with the Public Protector, and once a conclusive cause was undertaken by the public protector and parliament those reports would be made public. In government all processes needed to be conducted meticulously because failing to do so would enable the challenge of institutions promoting accountability.

Mr Dlabantu reiterated that streamlining the investigative processes was an area the DPW was focusing on and looking to make longer-term changes.  He said the DPW was conducting the vetting process in recruiting a panel of service providers who would conduct investigations within the DPW and once this process was concluded those members recruited would be entered into its databases ensuring that during investigative process individuals with the right skills were available to deal with such cases. He said that the issue of the problematic leases were in the process of being rectified and the DPW was conducting further investigations to determine whether further criminal activities were involved in the processing of said documents. He said that in dealing with backlog cases, obtaining information for such cases were difficult because of how timeworn they were hence slowing down the streamlining process. He said he agreed that more emphasis had to be placed on the implementation of consequences and it was imperative that the Department communicate that it would support whistle blowing. He apologised to the committee for the lack of states and said the Department would be able to provide them with that information.

Mr Phillip Masilo, Legal Adviser to the Minister of Public Works, gave the Committee a detailed breakdown of the SIU investigations currently underway. Part of the SIU investigations had found that 25 members of the DPW were engaged in fraudulent business tactics with the Department. 20 faced disciplinary actions, were found guilty and dismissed from the Department. The lease agreement involving Roux Shabangu had been taken to Court. As a result of this, Nedbank was suing the Department on the grounds of loss of income, because during the signing of the lease, Mr Shabangu had stated that in event of a failed payment the bank was subject to have a guaranteed lease from Public Works worth R800 million. This matter was still before the courts.

Mr Masilo highlighted other SIU investigations. These included those relating to the former Director General, Mr Siviwe Dongwana, who had various charges of financial misconduct under his belt, and the former Acting Director General, Mr Sam Vukela who was accused of failing to sign performance agreements and attend to submissions timeously. The Department was trying to recover R28 million it lost due to fraudulent lease agreements in the Johannesburg region, where it was paying money for buildings which were not inhabited. The DPW v Majestic was another involving Mr Roux Shabangu. The nature of the dispute related to invalid lease agreements as well as fraud and fronting. The allegation of corruption against the Autom Star official was still underway and individuals name could not be disclosed.        

Ms Dreyer asked for a copy of the detailed breakdown of the SIU investigations stated by Mr Masilo, and suggested that the DPW should focus on the cases that dealt with high officials who were accused/convicted of committing fraud and corruption and proposed that cases of lesser importance be written off, which would be much more cost effective.  

Ms Madlopha thanked the DPW for its transparency but said there needed to be a policy dealing with the issue of writing debts off so the DPW could focus on cases that were most pertinent. She said the DPW needed to ensure that the panel of service providers recruited had a clear understanding of what their duties were in ensuring that duplication of work was not being conducted. She said a clear term of reference was needed, which would aid Committee Members to distinguish the roles played by each panel members.

Ms Ngwenya-Mabila agreed that a debt write-off policy would be beneficial to the DPW in solving the issue of backlog cases but the Committee needed to be informed and made aware of such write-offs. She said that the committee also had a right to procure a hard copy of the information being presented by the DPW even it was deemed as classified.

Mr Dlabantu said that he agreed with the Member’s suggestions of putting a solid policy in place in dealing with the prioritisation of backlog cases.

Mr Masilo said that disclosure of information was a sensitive matter hence the report did not have some of the specifics because those were a matter of confidentiality. He said that the Department was ensuring that individuals benefiting from fraudulent lease agreements and residing in such properties were being asked to pay at market value and the Umthatha waster de-sludge case was also being dealt with properly.

Deputy Minister of Public Works, Mr Jeremy Cronin, said that individuals accused of fraud and corruption needed to be held accountable for their actions without the benefiting of remaining anonymous. He said he agreed that cases needed to be prioritised, but the impression must not be given that smaller cases were unimportant because in defacing the culture of fraud and corruption a zero-tolerance attitude needed to be adopted. He thanked the Committee for the support it provided to the DPW.

The Chairperson thanked all Members present and said the Committee was satisfied with the DPW’s presentation.

The meeting was adjourned.