Special Investigating Unit on its Annual Report for 2012/13; Adoption of Legal Aid Guide 2013

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Justice and Correctional Services

16 October 2013
Chairperson: Mr J Sibanyoni (ANC) (Acting)
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Meeting Summary

The Special Investigating Unit (SIU) briefed the Committee on its Annual Report for 2012/13 and its changed vision and mandate for the future. A new Head, Adv Soni, had just been appointed. He noted that the SIU was established by statute, and its principle task was to investigate serious malpractice or administration of state institutions, assets and public money. In the past, it had detected and reported on nefarious activities, but it was later recognised that instead of purely passing on information, it should be able to tae action, and it was therefore shifting its focus, firstly in the type of matters undertaken, from numerous smaller beneficiary-type matters to larger and more systemic issues, particularly around supply chain management and procurement. Secondly, it would be playing an active role in seeking civil redress, rapidly and probably through Special Tribunals, to ensure that money was recovered and that wrongdoing was brought to a halt, contracts cancelled and perpetrators pursued through the courts. The SIU must be given the right powers and resources to serve its purposes effectively. The new vision was still being developed, but it would identify culprits, locate the ill-gotten gains and assist other entities to institute actions, with a proper coordination of resources to defeat the evil of corruption. SIU must set the highest standards for itself.

A full report was given, against this backdrop, on the activities in the 2012/13 year. The SIU had 25 active proclamations, including seven extensions, which were detailed. Some discussion was held on the relevance of the indicators, and it was repeated that in the future, the SIU would be focusing on serious maladministration. The staff were recognised as important, and there were some challenges around gender equity and skills that would have to be addressed, but it was vital to note that the SIU existed to serve the people of South Africa, and energies must be sternly directed to that goal. The audit report, although unqualified, had noted some important matters of emphasis and concerns, around irregular expenditure on temporary employment services, fruitless expenditure on a past ICT application, the need to tighten internal controls, which would hopefully be addressed by the appointment of a Chief Operations Officer, Project Director and Chief Financial Officer, and a more serious focus with a qualitative assessment of performance indicators. SIU had spent a lot of energy in creating stability. It had filed reports, but acknowledged that these took too long; it would improve on this, although the reporting mandate was likely to become less important with its ability to actually pursue matters to conclusion.

In the past year, SIU had carried out five beneficiary-type investigations, including the South African Social Services Agency, housing grants, and Department of Public Works. Seven of the current proclamations were in relation to provincial departments, focusing on procurement, and six related to local municipalities, with the focus on procurement, with similar-type compliance assessments. It was felt that concentrating on these would achieve the right impact for the resources spent. Discussions were held with other agencies to try to unblock referrals, and to ensure that in future, civil and criminal trials could run concurrently. The targets and performance were explained. Matters involving the Department of Public Works were highlighted as important, for they involved procurement issues, mismanagement, and financial misconduct. SIU must be able to investigate matters that revealed criminality, as this would be far too restrictive, would not pick up conflicts of interest and the ways in which benefits accrued to individuals. Operational challenges related to the need for more specialist in-house skills, including cyber-forensics and forensic accountants, the threat that those people would be poached, finding the right focus to achieve maximum impact, and facing a sophisticated and faceless enemy. SIU needed to develop a stronger civil litigation capacity. Special Tribunals were permitted in the Act, but had to be set up. A stronger technological infrastructure was needed, and more thought on its reporting obligations, particularly on interim reports.

The financial statements showed that SIU had a surplus, which it had been permitted to roll over, because in this year it was permitted to being billing as a forensic services entity, which led Members to ask later if there was a problem with bad debt, although the SIU was fairly confident that it would be able to recover. SIU believed that it would be able to increase its project income, but still wanted to retain the government grant because it did provide some security.

Members congratulated the new appointees and were confident that they would be able to take the SIU forward. They asked about the mandate of the SIU, citing certain cases where the SIU had said that it was not able to investigate due to “lack of cooperation”, wondered if it was doing any more investigations into Limpopo, where there had been government interventions into the province, and asked if SIU was able to address the “army of mafia” and the foreign threat, and whether the SIU was now more confident that it was making the right impact and was using the powers that it had effectively. They questioned the likely cost of setting up the Tribunals, and questioned whether there was an ideal time for the submission of reports. Questions were asked about the filling of vacancies, gender, and whether SIU was concentrating only on developing skills in-house or would brief senior counsel on some complex matters, although Mr Soni cautioned that merely because counsel had achieved a certain rank did not imply that s/he was specialist in the types of matters that SIU handled. One Member urged that the SIU must develop a frank and ongoing relationship with the Auditor-General, make use of that body’s reports on other entities, and not forget also the usefulness of internal Audit Committee reports. The status of some investigations, and court actions, was questioned and the point was stressed that staff grievances would have to be taken through the correct administrative channels. Concerns were expressed about the fact that SAPS were apparently not pursuing matters, and the question of leaked information. The suggestion was made that Parliament and government must also be vigilant to try to ensure that matters were more speedily detected, or even legislated for.

Members unanimously adopted the changes to the Legal Aid Guide proposed on the previous day.

Meeting report

Special Investigating Unit 2012/13 Annual Report briefing
Mr Vasantrai Soni, Head, Special Investigating Unit, noted that he had, two weeks ago, been appointed to head the Special Investigating Unit (SIU), and introduced his supporting team. The purpose of this briefing was to formally present the 2012/13 Annual Report. He was still familiarising himself with the issues, and therefore Mr Faiek Davids, Deputy Head, would go through the details. However, he wanted to speak to the work that the SIU had been doing, what it would do in the future, and its needs.

He summarised that the SIU had been established by an Act of Parliament (briefly referred to as the SIU Act), and its principal task was to investigate serious malpractice or administration of state institutions, assets and public money. Its investigations had led to detection of nefarious activities, but this was not enough, and it had later received additional powers to reclaim money from illegal activities, which transformed it from a purely investigative to a more useful unit. Prior to this, the SIU had been “a hand-maiden” merely creating evidence for other authorities. In order for the SIU to play its rightful role, it would have to re-invent itself and be transform radically, with a new and dynamic vision to meet the challenges.

When locating the SIU’s correct position and determining its role in the protection of democracy, it was necessary to consider that the Constitution required certain minimum actions for the democracy, which were related to the allocation and spending of public resources, the appointment of persons to the public service, how they were rewarded and sanctions, procurement of goods and service and allocation of benefits from the public purse. The SIU must have the right powers, serve the purposes effectively and efficiently, and justify what it did given the large resources it consumed.

The SIU had begun the process of re-inventing itself, and believed that the appointment of the new Head, and the return of Mr Davids as Deputy Head, had boosted the SIU. The process of consultation and engagement with staff had been initiated. It was hoped that SIU could begin implementing the new vision within the next few weeks. Parliament now required it to do more under the new mandate, to “battle out matters” in the courts and win back for the public what had been lawfully granted but unlawfully used. The consultation process was not yet finalised, so it was not appropriate for him to say too much about the new vision being developed. However, it would require identifying the real culprit, locating the ill-gotten proceeds and taking prompt action to recover, and then assisting the institution, by cancelling contracts or getting interdicts.  SIU would meantime also help others to institute actions. All the different processes must be coordinated to ensure efficient use of state resources. The ultimate purpose was to maximise recovery, and limit the benefits and freedoms of those who had unscrupulously taken resources. Visible and decisive action would bring home that the work of the SIU would not, in future, be limited to writing reports and collecting evidence, but waging a real war to recover state assets. All those contemplating wrong-doing must know clearly that the game was not worth the candle. It would replace the current climate of impunity with one that required people to respect the law.

The SIU would have to make certain commitments to achieve these ideals. The SIU was conscious that the public was impatient to ensure that hard-earned resources were recovered from those, in both the state and private sectors, who had obtained these illegitimately. The powerless and vulnerable depended on the SIU to take steps. It was honoured at being chosen to perform this task, but recognised that it faced a long and daunting road. Support would be needed from others to defeat the “evil that is corruption”, including all three arms of government and other tribunals and entities called upon to make decisions. All other role-players in civil society, including the media, NGOs, activists and the public must be prepared to play a role and carve out a niche. Together, they could win the war. The Constitution and legal system were powerful and must provide the effective tools and weapons necessary to use against the beneficiaries of evil and wicked deeds.

He concluded that in the SIU, the first steps were being taken. The fight must begin in the SIU itself, as individuals would be taking steps to discover who was unduly benefiting. The SIU must set the highest standards itself, otherwise it would not have the moral authority to investigate and claim back. It must show that there was no need to investigate anyone within the SIU. The main fight however, would concentrate not on the SIU, but on the needs of the citizens of South Africa.

The Acting Chairperson congratulated Mr Soni, asked that the former Acting Head of the SIU should be thanked for her work, and noted that Mr Soni seemed to have “hit the ground running”.

Mr Faiek Davids, Deputy Head, SIU, said it was a pleasure for him to return to present a report before a Parliamentary Committee. The SIU report in this year was rather different because of the appointment of a new Head of Unit. That appointment confirmed the importance of filling top positions. He wanted to place on record that all 583 members of the organisation welcomed Mr Soni, were aware that this was a daunting challenge and looked forward to getting the assistance of the Committee to take up that challenge.

He noted that the slide presentation was a succinct overview of the work over the last few years. Annexure A was an overview of all the SIU’s active proclamations, 25 in number, including seven extensions. These investigations were set out in more detail on pages 20 to 64 of the Annual Report. Annexure B was essentially a list of reports sent to the President by way of “close out reports”, being a list of the proclamations already reported on. Annexure C set out some more details on some matters covered in Annexure A.

The Strategy Overview slide referred to page 74 of the Annual Report (AR). The SIU would welcome robust engagement with the Committee on these points. The key performance indicators were tabled, and it was important to reflect on how they was measured and the relevance of those indicators in the future. A summary of the civil litigation matters was given, although further details were in the AR. This gave an indication of the transitional process towards focusing on matters to be dealt with by the organisation as it transferred its focus towards serious maladministration. The key operational challenges covered the work that had been done to account for that and explain where there was a shortfall. Human Resources (HR) feedback was very important, given the Committee’s concerns, and significant energy and attention had been paid to this. He candidly acknowledged that SIU as an organization must serve the people of South Africa, so it was not about management and leadership serving the staff only, but directing their energies to that goal.

There had been improvements in employment equity. The question of “who guards the guards” was seriously taken and good governance was being robustly promoted in the SIU. The audit had revealed that there were some shortcomings, although the SIU was on the right track. Irregular expenditure had been acknowledged as an area needing improvement. Over the Medium Term Expenditure Framework, there would be an important shift, because now the SIU had the ability to raise its own funds from projects. It was not asking for more money but did want to use its money better.  

Mr Davids said that over the last two weeks, the Head and Deputy Head had been having frank conversations with the rest of the staff. They were satisfied that they were close to understanding the challenging issues and were clear about the vision and its alignment to the mandate. The appointment of the new Head meant that three out of the top four appointments had been filled, and the appointment for Projects Director should be made shortly, as well as the appointment of a permanent Chief Financial Officer, which was very important because some control issues had to be tightened.

The legislative amendments had been vital as a “game-changer”, and would allow the SIU to perform a stronger role in the fight against corruption, and to focus on the right types of matters, and pursue the recapture of state resources, in a way that it had not been able to do before. It was not only sufficient to say that it had reached its key financial performance indicators, but it needed to make a qualitative assessment of its impact. Processes, people and methodology must be aligned to achieve the correct results. The makings of a senior management team were there.

Mr Davids urged that a broad overview of the SIU in the context of the challenges that it faced be taken. He maintained that it had still managed to perform better in this year. It had not yet become fully in line with the new thinking, but at least knew where it had to be. It had spent a lot of energy in creating stability. The numbers in relation to operations suggested an organisation in transition to filling its mandate properly. 30 reports were submitted to the President, but the SIU was not proud of the long delay, which was acknowledged as problematic. The SIU would have to revisit how it was reporting, and to whom.

The report of the Auditor-General (AG) was a mixed bag. The report was not financially qualified. The SIU nonetheless thought that it should always achieve a clean audit as it needed to be the benchmark for others. It should be leading by example. It was not pleased about the emphasis of matter, and the irregular expenditure. He would not defend it, but would explain it, and said that the right steps would be taken to have it condoned. It was unfortunate that the second comment, about performance reporting, was allowed to happen and he confirmed that as part of the transition, there would be a need to refine the vision and the performance indicators in the new context. A strategic planning framework was in place that allowed for proper strategic objectives aligned to key performance indicators, to ensure that performance was properly aligned to achieve the right outcomes, in the right areas.

A five-year strategic plan was coupled with an Annual Performance Plan, signed off by the executive authority and this was in line with the pre-amendment mandate. There was one strategic objective - to increase the impact of SIU’s forensic services in the public sector by completing investigations successfully – that would have to be reviewed in the light of the new mandate. The objectives were supported by seven key enablers (see attached presentation, slide 4), of which five were externally focused. There had been confusion whether those were objectives or drivers, and this led to discussions with the Auditor-General, who maintained that the way they were framed made them appear as objectives, and commented that there were then no enablers linked to them. The SIU could perform and account against nine of the objectives but these were extended to 16, to increase accountability for the strategic plan. They were aligned to government outcomes 3 and 12.

Mr Davids said that there were currently 25 active proclamation and seven extensions, as outlined in Annexure A. These indicated that the SIU covered all spheres of government. In the national departments and State Owned Enterprises (SOEs) the focus was mostly on procurement and supply chain issues. That had to be enhance, with an emphasis on serious matters, and because there were sophisticated developments, they had to be met with a sophisticated response. Compliance assessments were not an end in themselves but played an important ancillary role in understanding the nature of the conflict of interest.

In this year, SIU had carried out five investigations in national departments in beneficiary-type investigations – such as social grants and housing subsidies, similar to the focus in the previous years. Those were aggregations of small type matters, which had driven the financial performance indicators. However, now, the SIU was moving away from those, where the seriousness had depended on the aggregate numbers. Seven of the current proclamations were in relation to provincial departments, focusing on procurement, and six related to local municipalities, with the focus on procurement, with similar-type compliance assessments. The SIU focus had to be deepened and extended to matters where the right impact would be achieved. The challenge was not on keeping the organisation busy, but in refusing those matters where there would undue competition for resources without achieving the maximum-impact results.  Over the last two weeks SIU had had discussions with other key agencies. It was important to ensure that the pipeline of referrals was unblocked, so that the right type of matters came to the SIU,  and translated there into reports that would ensure civil legal outcomes. Ancillary to that  was the possibility of criminal investigations. The SIU wanted to focus on the core business of direct outcomes, and it would be a bonus if it could support indirect outcomes by engagements with other investigative entities as well.

The performance measures were outlined ion page 6, with a comparison to the previous year. Most of them showed improvement. He noted that one of the financial performance measures indicated that SIU had recovered 163% of what it aimed to do, but noted that the prevention of future losses was just as important. Cash recoveries were an important part of the target – and here SIU had achieved 490%. This was because there had been a surge in output on beneficiary type investigations. He was not sure that there had been as successful results on procurement, and the SIU had introduced a target looking to the  value of procurement matters in which irregularities were found. This was outlined in the next slide, and the 263% was achieved because the whole value of the contract was measured. The question was whether those targets were accurate – he thought not, but it was important to make some assessment to get a proper understanding of the extent of wrongdoing, and how it was quantified. Further thought was needed around that point. A number of other non-financial performance indicators followed. The target for “evidence prepared” was below target because of the transition of the focus, to the civil legal outcomes and recoveries, rather than criminal and disciplinary actions.

An overview of some projects was listed on page 8 of the attached presentation. The National Department of Public Works (DPW) would continue to be an important area for the SIU. Page 12 showed the civil litigation mattes, which extrapolated the information on some of the matters falling into direct civil legal outcomes. The Corporate Legal Counsel and his team would be working on what matters could be taken to court. Row 2 showed seven contracts with the Department of Public Works, in relation to the lease agreements that had been reported in the media and a number of these matters were still under investigation. A list of procurement matters being reviewed and taken to court was shown, with potential legal actions. He again stressed that the SIU was not only concerned with setting contracts aside, but also with making recoveries, for it was important to ensure that people would not derive any benefit from irregular processes.

The advantage of the SIU processes was that criminality was not a requirement, before SIU could intervene, for it could investigate irregular processes and non-performance. The DPW matters involved  procurement issues, mismanagement, and financial misconduct. If these only related to corruption in the legal sense, the SIU would be missing out on other misconduct that resulted in benefits, particularly a financial outcome. Tshwane Municipality was one of those being investigated, and he had mentioned this to indicate the extent to which officials were able to manipulate procurement processes; in this instance a contract of R77.7 million was manipulated by one official, who also ensured that he would benefit to the tune of R16 million out of the deal. The SIU process allowed for the whole value chain to be audited and to pick up conflicts of interest, anyone benefiting who was linked to the official, and to uncover full extent of benefit.

The South African Social Services Agency (SASSA) had been a focus are for SIU over many years, with the proclamation first issued in 2005/6. The beneficiary types of investigation had allowed for an understanding, within SIU, of the nature and extent of endemic irregularity and corruption in social areas. Now that SIU had uncovered the extent of the programmes, there was a need to focus now more on the more serious areas with big budgets. That was why the SIU had made a transition to looking at procurement processes, especially ICT contracts, so that it would be moving away progressively from the beneficiary-type matters. There had been great strides made in getting processes to avoid the beneficiary problems, such as leakage of pensions.

It was important that the country benefit from SIU capability especially on the forensic investigator profiles. There was an acknowledgement of submission of 20 Presidential closure reports. There were 12 reports being drafted. As Mr Soni had said, the reports should not be viewed as reports for their own sake, but the investigations must result in legal outcomes.

Mr Davids moved on to describe some of the operational challenges, as set out on slide 14. The SIU needed more in-house special skills, such as forensic accountants. He said that the skills might not have been applied in the right areas in the past. SIU did have one of the best skills-sets in the country, and he would maintain that, without apology. However, the main challenge was that it was open to these skills being poached. SIU had to focus into the right areas to maximize the impact. There was a need to reinforce with more specialist skills, such as cyber forensics and forensic accountants. The enemy was sophisticated and faceless. The SIU did not want to recruit, however, without having key plans in place, which would give an understanding of what and who was needed, and then to go out progressively into the market. He repeated that the SIU was about doing a service to the country. There was also a need for greater specialist expertise on procurement investigations. In matters like housing, and leases, skills sets were needed to help the investigators understand the environment better. When doing compliance assessments, it was necessary to have people who understood the public governance framework to get to the areas of irregularity, more quickly. The SIU was not confident yet that it had this – and this would require a mind-shift from the current setting, to SMART proclamations.

He added that the SIU needed to develop a stronger civil litigation capacity, to meet the growing demands on the procurement matters. He repeated that the focus was to achieve a particular outcome and output SIU staff would be coming up against very senior counsel in courts, with huge stakes. It was a daunting challenge to build that expertise, although he was confident in abilities, and Mr Soni would be passing on his 27 years of experience. The Asset Forfeiture Unit (AFU) had shown how the model could work, and SIU believed that it could improve on that. He said that it was not about recruiting lawyers to retire in the civil service, but about developing the best in house civil litigation capability in the country.

Mr Davids noted the need to establish one Special Tribunal in key centres. There was huge competition to get on the High Court rolls, and he believed that setting up Special Tribunals would be the answer. The legislation allowed for this, but they must be properly established and functional. The SIU may request the Committee’s help on this.

There was a need to establish a stronger technological infrastructure in operations. A professional forensics capability was impossible without a strong case arrangement, and the analysis programme was unheard of. There was irregular, fruitless and wasteful expenditure relating to Memix, and this was probably because SIU had been too anxious to get the processes on board and had not looked after the maintenance and application. He noted that investigators needed to focus on investigations, so they needed the right technology to help them, and he did not think that this was in place at the moment.

Mr Davids was not oblivious of the mixed messages from the Auditor-General on inconsistent reporting. SIU was in the process of improving the reporting obligations. It wanted to correct any wrong reporting. However, there was difficulty in exposing some reports – particularly those on high-level procurement – during the course of investigations, but was trying to find a way of dealing immediately with the needs of the accounting authority, who indeed required information to deal with issues speedily. SIU did want to account, but wanted to do so in the right way. He suggested that in the future, all proclamations should be made known to this Committee, so that the work was not open-ended, and that would allow a better framework of accountability. SIU wanted to enhance the operations focus towards stronger civil legal outcomes, not only by improving the Key Performance Area, but by ensuring that the proclamations, taken together, presented trends. Committee Members had previously asked if the SIU was making the right impact and he quipped that this question kept him awake at night. He was not sure that putting a number on corruption was enough, because this was a shifting target. In the next six months, he would want to see an increase in the proclamations, based on engagement with the Auditor-General and other agencies. The impact of operations must be increased. SIU would not be attempting to reinvent the wheel, but to align processes properly.

Mr Davids moved on the HR overview. There had been 78 appointments and promotions, primarily in the forensic investigator space. That allowed the SIU to employ the right people with the right skills to focus on the right work. It had converted 104 temporary workers to fixed term contract employees. These positions were not filled permanently. The SIU had been quite reliant on labour broking, and the Auditor-General had also commented on the temporary contract service providers. However, he explained that this was an exigency – the SIU had tried to move fast, to ensure that it was properly capacitated. Those appointments would result in a strengthening of the project administration and support. The project management capability was good, focusing on the right matters, and making for accountability. This was being drilled down to all operations. The SIU was determined not to have “distant leadership”. He and Mr Soni wanted to understand where it was, why, and ensure that all sign-offs were done. The senior management appointments of Projects Director and Chief Financial Officer would be finalised in this year. They were both critical and would ensure that SIU revisited the business support area to check whether there was accountability at the right levels, and whether the right internal processes were in place. Employee relations continued to improve. He and Mr Soni had held extensive meeting with the staff across the board. The focus was externally driven, so it was recognised that although SIU wanted to remain people-centred, it had a duty to perform. A proper diagnostic study was being undertaken. He was satisfied that there was stability in the organisation, and that people were being held accountable.  Both he and Mr Soni had signed a pledge to the Cluster to good governance and a corruption-free environment, and every employee had to acknowledge that. There was not the luxury of time to indulge in mollycoddling.

He tabled a slide on HR statistics, and noted that resignations were not because people were ‘jumping ship’ but because they were motivated by better opportunities elsewhere. In fact, the attrition rate was quite low, and SIU hoped that it had the right people staying on. There was concern about employment equity at senior management level, where more female staff were needed. Middle management was on track, and there were opportunities to move up, as some of the senior management were reaching retirement age. The SIU did not want to create artificial corrections.

Mr Davids finally dealt with the financial statements. SIU had a surplus at year end, and had received permission from National Treasury for a rollover of R81 million. The project income slide showed the budget income as 75 million, compared to the actual of R124 million – the amendment to the Act had allowed the SIU to bill in this year, as a forensic services entity, so this was unanticipated income. In the future, there would be de-escalation of the government grant, and more emphasis on the project income. The authority to bill meant that SIU could get deeper reach into the most important areas. SIU was building an expensive model. It was committed to retaining the austerity measures – for instance, travel and accommodation was shown this year at R15.5 million, a drop from two years previously, when it had been R23 million. No productivity had been lost in the process. Debt impairment was shown at R28.9 million – the downside of being permitted to bill was the risk of bad debt. SIU had been asked to do work by local government, and must ensure that the payment agreements were honoured. In the early part of the financial year, SIU had received a R30 million transfer to tide it over, but it was now in good financial shape.

Mr Davids reiterated that the SIU was pleased to have three unqualified audit reports in a row, although this was not so much something to be feted as to be expected, given its position. He had highlighted the gaps and irregularities in performance information. One emphasis of matter related to restatement of corresponding figures in previous financial years and the compliance with Generally Recognised Accounting Principles (GRAP 17). In relation to performance information, there were 31 findings tabulated, of which 9 were achieved, and 24 were work in progress. Irregular expenditure would be regularised. Slide 23 set out the wasteful and fruitless expenditure, which was in relation to operational costs on Memex, and rental. R822 000 had been paid to Memex but there was a question on software had actually been received against other charges. The SIU wanted to get condonation and finalisation on all irregular expenditure. The R42.7 million figure related to more than one financial year. There was a need for close-off. The bulk of this related to  spending on temporary employees. SIU had procured services and had thought that the service providers did not exceed a R500 000 threshhold for quotations, but the Auditor-General took a different view and said a competitive bid process should have been followed. This would be corrected for the future. SIU had some concerns around the vulnerability of internal checks and controls, particularly to avoid repeats of irregular expenditure.

SIU believed that it would be able to increase its project income, but still wanted to retain the government grant because it did provide some security and would allow SIU to enter into the right areas for investigation if it was not totally dependent on other income. SIU did not want to build a huge organisation, but rather aimed to have a manageable number of specialised professionals with optimal performance. The breakdown on the programme expenditure showed that the main spending was on business operations – where there would be delivery – and it was satisfied on that point, although more may need to be done. In conclusion, he said that SIU thought it had done better, but believed there was more to be done, and it was poised to strike effectively against corruption.

Discussion
Prof L Ndabandaba (ANC) thanked the SIU for the assurances given. That morning, he had heard on SAFM about the “army of mafia” invading the country, and asked if SIU was in a position to play a role in fighting this. There was no doubt that foreigners were coming to South Africa to promote corruption, and this was a serious development that made people feel unsafe.

Ms D Schäfer (DA) wanted to congratulate Adv Soni and welcomed his and Mr David’s frank statement of the shortcomings of the SIU, which had given an honest account of what was going on in the SIU, instead of the denials made in the past. She disassociated herself from thanks given to the former Acting Head of the SIU. She wanted an assurance, firstly, that SIU would act against anyone involved in corruption, without fear or favour. Secondly, she welcomed Mr David’s comments on the inconsistencies in the reporting mechanisms – saying that no information was given on the Western Cape, whereas there was information about North West. She fully understood that sensitive information must not be exposed, but the concern was that, whatever was done, there should be consistency.

Ms Schäfer thought that the vacancy rate on page 7 of the Annual Report was disturbing. In the business management units, there were 71% of employees who were not permanent.

Ms Schäfer welcomed the comments and suggestions on reporting to the Committee, and said that she would like to see quarterly reports. Many of the previous requests for information made by this Committee had been ignored, including the positions vacant, and how long. She also had thought that the Reports to the President were taking too long.

Ms Schäfer asked if the forensic investigations with the Commission for Conciliation, Mediation and Arbitration (CCMA) had been resolved, and, if not, when this was likely to happen.

Ms Schäfer was concerned that some reports were not mentioned. In the April to September 2012 Interim Report, there had been a report, on page 25, relating to the former Department of Roads and Transport in the Eastern Cape, which said that due to uncooperative department officials and lack of documentation, most of the matters could not be found. She asked if this meant that effectively the SIU had not investigated, and thought the file may have been closed to avoid embarrassment. However, she reminded the SIU that it had extensive powers of search and seizure and subpoena, and could lay criminal charges She wondered firstly why it had not gone further, and secondly, why this was not included in the Annual Report itself (although it was listed on one of the annexures).  She hoped that something would be done about that matter.

Ms Schäfer then wanted to move on to another matter similar to this. In July 2011, there had been referral of a matter in the Free State, around a controversial cattle deal, and this was acknowledged in August 2011, but in July 2013 the SIU had informed the parties that they were “unable to pursue the matter” due to “non-availability of relevant information”. She said that she would give a copy of this to the SIU, to take up further. Again, she pleaded that the SIU should be using the full range of powers available.

Ms Schäfer noted various complaints to the Public Protector and SIU and wondered if these had been resolved.

Ms S Swart (ACDP) was pleased to see the acknowledgment of the shortcomings, and said that the Committee understood the constraints and internal difficulties. It made sense to increase capacity of units, to collect more and save more for the state, which was a win/win situation. He was pleased that the resources had been used and that the project income put the SIU in a better financial position. Further improvements were indeed needed. He asked again whether the SIU felt it was making the right impact – and he was sure that this was an issue that the new Head was thinking about.

Mr Swart was also confused about the references to “lack of cooperation” in the examples read out by Ms Schäfer. He also asked if the SIU was using its powers effectively, to get hold of the information. He noted that Parliament should be able also to assist if the information related to state departments, by perhaps calling on the Minister or Director General to intervene. However, it would be preferable for SIU to use its powers first.

Mr Swart asked how far the SIU was in proceeding with setting up tribunals, and whether there were discussions with the Chief Justice, who would need to allocate judges; he pointed out that this Committee would be meeting with the Office of the Chief Justice on the following day, and could raise particular concerns, should there be any. SIU needed to get to court quickly, and implement quickly, before further money was lost and to be able to work with the AFU. He knew that corruption was almost systemic, having worsened to a dire situation. The SIU had the power to address this and the Committee must ensure that it had the capacity in the Special Tribunals to get quick enforcement and recovery.

Mr Swart agreed it was important to develop skills in-house but asked if the SIU had ever briefed a private senior counsel for a particular case, now that it had project income.

Mr Swart commented that SIU was on track on spending, and income, half way through the financial year. If these figures were realistic, they were encouraging. However, he wanted to know whether the money billed was being collected. \He understood local government-level problems, but asked if there were provincial or national departments where similar problems of debt recovery were also seen.

Mr Swart saw the interventions in the transport sector in Limpopo and asked if there had been any others there, given the massive National Treasury intervention into that province.

Ms S Shope-Sithole (ANC) also congratulated Mr Soni on his appointment, and hoped he would be able to assist the SIU in addressing the matters raised by the Auditor-General. She was impressed by the clarity of today’s input. She advised the SIU to reach as clear an understanding with the Auditor-General, in recognition of the fact that the purpose of the Auditor-General’s work was to enhance the public confidence, and therefore that organisations had to be frank. The SIU must also remember that it made use of the Auditor-General’s reports in other areas also.

Ms Shope-Sithole also emphasised the need to address the concerns of its own Audit Committee, which had remarked on certain weaknesses, something not done until now. The previous audit report had said that there was no improvement on the usefulness and reliability of certain information, and that in that previous also, there had been problems with internal controls, which indicated a disregard of what management had said. She urged that these same errors should not recur, and stressed that if the reports of the Auditor-General were not taken seriously, then nobody could take the SIU seriously.

Ms C Pilane-Majake (ANC) also congratulated Mr Soni on the appointment and on the report presented. The Committee looked forward to seeing the SIU develop. She welcomed the extension of the mandate. She also supported her colleagues, Mr Swart and Ms Schäfer, on expeditious responses.

Ms Pilane-Majake had a query on the employment of temporary employees, and questioned why, firstly, the right procedure had not been followed, as this was a substantial amount of money, which emphasised the need to find a mechanism to “guard the guards”. It was, secondly, disappointing to see the continued use by SIU of labour brokers, in view of the in-principle concerns on this issue.

Ms Pilane-Majake noted the submission of the Reports to the President and asked if there was a sense that something was being done on those matters. She asked if the SIU would make it a specific task to know how they were finalised. She also questioned the turnaround time on the proclamations and asked that this be included in future reports.

Ms Pilane-Majake said that the HR matters needed attention. Previously, this Committee had been concerned about the use of consultants, which was linked to the question of skills, and the Committee had been working hard to try to ensure that internal personnel were being up-skilled. This report did not indicate clearly the current situation, and whether there had been a correction. She noted the skills needs set out in the presentation.

Mr Soni commented that many of the questions dealt with commitments, and they raised important legal issues. Prof Ndabandaba had reported on the overseas mafia. Mr Soni had stressed, at the outset, that the SIU was a creature of statute, and this meant that it could do only what the Act permitted – which limited it to matters on which proclamations had been issued. No matter how serious a matter, the SIU would have no powers unless a proclamation had been issued. In this regard, the SIU and the Farlam Commission were similar. In the case of Public Protector v Mail and Guardian the Supreme Court of Appeal had said that if there was a matter falling within its jurisdiction, the Public Protector (PPSA) was obliged to investigate it. The SIU was bound by the principle of legality, under section 1(c) of the Constitution. Parliament should raise any matters of concern and ask the President to refer to the SIU, in necessary cases. To the extent that the SIU was required to investigate, he gave a commitment that the SIU would do so without fear, favour or prejudice.

He continued that the reporting process followed the same theme. He had met with Mr Landers, Chairperson of this Committee, on the previous day and had discussed the engagement between SIU and the Committee. He had no difficulty with the idea that the SIU should inform the Committee when a Proclamation was issued, so that it could be held to account. Until April 2013, the SIU had made two reports only to the President – and he agreed that this was unacceptable. He undertook to report to the Committee, every three months, on what proclamations were issued. However, the powers had to be clear. If the President asked the SIU to investigate an MEC or Minister, (which was unlikely), the question arose what would happen to that report. The Act specified where the SIU reports must be submitted – and they could not be put out into the public domain.  Matters reported upon affected the reputation of the institutions. The SIU would do whatever was required to promote the democracy, but would not exceed the powers and protection by the Constitution.

He cited one complaint that had said that an individual had complained bitterly that the SIU had investigated him and given a report, but had never once asked him for his comment. That was unacceptable. The rights of people had to be respected, no matter that they were under suspicion. The SIU would not necessarily be able to give details, but could indicate when the reports were likely to be done.

Following on from that, Mr Soni said that he would welcome other views on whether the SIU was entitled to make interim reports. In the past, it could make recommendations to different organs of state that they take actions, but the increased powers may entitle it to actually tell the organs of state how they should act. The reporting process could well become a secondary activity.

Mr Soni noted that in the past, no time spans or limits had been set for proclamations, but this could be done in the future. He had spoken to the National Director of Public Prosecutions (NDPP) to agree that wherever possible, civil and criminal procedures against the accused person should be brought simultaneously. He had noted, at the outset, the need to develop a new vision. This would change the way that SIU operated, and the way that the Committee assessed it. The Committee could, for instance, ask the SIU how many times it had been to court, recovered money, and how much, and how many civil servants acting incorrectly had been eliminated from the system.

Mr Soni then responded to Ms Schäfer’s question on the matters referred to the SIU. He reiterated that it was not the SIU that determined whom it could investigate, but the President. The facts of the matters that Ms Schäfer had cited did seem to indicate that there could be a degree of fault, but in the absence of a specific Proclamation, the SIU could not act. The same applied to the PPSA processes, and it would be incorrect for any institution to be called to account, over and over. This did not detract from the need to account on the correct matters.

Mr Soni appreciated the support received in relation to increasing capacity. Ms Schäfer had pointed to an instance where investigations had petered out because officials were uncooperative, and he agreed that this was completely unacceptable, in light of the SIU’s huge powers. The PPSA and SIU had the power to require a person to answer, even if this would require the person to admit to criminality. Failure to do so would constitute an offence. If the institutions failed to do this they would, according to the Mail and Guardian judgment, be failing in their duties. He was not sure exactly what the case cited by Ms Schäfer involved, but it was possible that the official reporting back may have been unaware of the powers of the SIU. Laws in South Africa were well able to fight corruption and protect rights, but they must be used properly, so that the SIU’s actions would not be challenged. This Committee would probably be best placed to insist that the SIU fulfil its statutory and constitutional obligations. He noted that the SIU did not need any assistance from the Committee on this score as it did already have powers.

Mr Soni then noted that the President was the person who would appoint a Special Tribunal, in consultation with the Chief Justice, to protect the independence of the judiciary. In answer to Mr Swart’s offer of assistance from the Committee, he said that when the SIU was ready to “do battle” in court, it would write to the President asking for the appointment of a Tribunal. It may be necessary to set up tribunals in different parts of the country, but the Act allowed for that.

Although Mr Soni had not yet had the chance to move outside the office and meet anyone outside its staff, he wanted to be able to ensure that the SIU did go out and use its powers against people harming society, and remove any protection presently being afforded to, and remove, those people plundering state resources. Various matters needed to be done, and as soon as the SIU was ready, it might call upon the Committee for support of its requests.

Mr Soni agreed with Mr Swart that if there were huge implications to a particular matter, then it was vital to ensure that a correctly-capacitated legal team was available. The SIU wanted to be reasonably resourced in-house, and show that its lawyers did not only sit behind desks, but could stand up in court and recover the money. However, where those resources were not in place, the SIU would indeed call upon “heavyweight” senior counsel, as a cautionary measure, and to enable other SIU officials to learn from them, although ultimately, once the process was in place, and the SIU was on track, it hoped to be reasonably self-sufficient with its own counsel. He added that one of the reasons he had accepted this job was to have a hands-on approach to the litigation, and ensure that the public would benefit. This meant that the SIU must follow up on what happened to matters reported. The SIU could be in court for many months to ensure that people were removed from the system, and that would mean that the SIU reports would then be relatively simple, as it would report that in pursuance of the proclamation, summons had been issued, and a certain amount had been recovered, and a certain number of people removed. He was hoping that the new powers would allow the SIU to do this

Ms Schäfer wanted to follow up on some matters. She was aware of the Proclamation procedure, but the point was that the SIU had said that it would be looking into these matters; it had not raised the point that a proclamation was needed. She wondered if there were also other matters being investigated without proclamation. She pointed out that Parliament actually did receive a lists of proclamations made, through the ATC, but a progress report would be useful – she did not necessarily want details, but names could be useful.

Mr Soni said that the matters would be investigated and reiterated that perhaps somebody had not understood the full implications of communications and giving assurances when this should not have been done.

Mr Soni was not sure about the example given of the PPSA; he was not sure whether the Public Protector was entitled to require the services of the SIU. The PPSA did not have the power to do anything other than to make recommendations. It was true that the PPSA brought many people and incidents into the public eye. However, if nothing was done with the recommendations, then no concrete results were obtained. She might be able to refer the matters to the SIU because of its wider powers. Whatever the correct position was, both institutions were fighting on the same side and they should coordinate their work – similar to the his discussions with the National Prosecuting Authority, who had requested a meeting with him.

Mr Soni welcomed the suggestion of a progress report on the list of proclamations; Parliament should be able to ask why they were taking so long. It would be good if the SIU was taken outside of its comfort zone. He wanted to ensure that when any information was issued the SIU was above reproach on the procedure. The courts were quite caustic about possible abuse of public powers. The SIU would be looking carefully at what it could do and how best to engage.

Mr Soni said that he wanted some time to look into, and would report back on, the Limpopo investigations. SIU was still considering whether to separate the reporting from bringing immediate applications to courts and tribunals.

Mr Soni moved on to the question of the bad debt. Every department was accountable, not only for the correct recording of the book value of its debt, but for actually following through. If the SIU was told that a department could not pay because it had not budgeted for this it would ask the Auditor-General to ensure that the amount was correctly budgeted for – even in the following year – so that the SIU could get back the money that would enable it to improve services.

He then agreed with the comment that the SIU could indeed use the Auditor-General more effectively, without necessarily having to go to a Tribunal when certain matters could be sorted out with cooperation. His concern was not so much cooperative governance, but addressing the unscrupulous people who were the enemies of the whole of South Africa. Whilst on that score, he noted that one of the main problems for the SIU was its lack of a permanent Chief Operations Officer, as such an appointment would address the Auditor-General’s concerns about inadequacies in the SIU – particularly irregular and fruitless expenditure.

Dealing with questions on other employees, Mr Soni then responded to Ms Pilane-Majake’s question on the spending on the temporary employee services, which regrettably had amounted to R15 million. However, he reiterated that these employees were needed in the short term. To the extent that was necessary, SIU may also appoint a temporary Chief Financial Officer, pending the full-time appointment. He accepted that the SIU, who painstakingly pointed out faults in others, should have its own house in order and accepted any criticism on the appointments. If the SIU was perceived as not following procedure, it lost the moral authority to hold others to account. He could only give the assurance that the process would be resolved, although this would not happen overnight. The SIU also generally wanted to move away from using consultants. A discussion with the Director-General of the Department of Justice and Constitutional Development (DOJ&CD) had led to her useful suggestion that each month, she had decreased the use of consultants by 10%, using the money saved to hire and train new staff instead, to ensure that there would not be any gaps. He fully accepted that the gender balance needed attention.

Mr Swart said that the Department was looking at litigation in the State, in general. Although the SIU might have in-house capacity, it might want to consider following the example of the DOJ&CD, engaging counsel (particularly in the High Court) where necessary. In his experience, there was not always in-house specialists to handle litigation. The SIU was dealing with billions of rands of claims, and it was perhaps necessary to consider how to achieve consistency. The SIU was in the situation where its actions could lead to money being recovered quickly back to the fiscus, and it might be possible to use that argument for engaging counsel.

Mr  Soni said that the SIU would usually be able to claim back from the person against whom orders were given, and if not, it must be remembered that it was litigating not for itself, but on behalf of a government department, which would be responsible for settling the bills – for instance, the matter would be cited as “Department of Human Settlements v XYZ”, so it was unlikely that SIU would find itself in a position where it would not have the money to hire counsel and litigate. He added, however, that the perception that senior counsel were specialists must be tempered against the fact that often it SIU staff had to teach the senior counsel what procurement was all about. Some counsel did handle many of these kinds of matters, and SIU would list them as preferred providers, based on their experience, but it was the experience, and not the mere fact of being senior counsel, that made them adept for the SIU matters. The difficulty in finding sufficiently experienced outsiders was the main reason why SIU wanted to improve its internal capacity to deal with the matters. A risk that SIU always faced was retaining staff, once it ha them. Ideally, he would like to make the work environment so exciting that they wanted to stay.

Mr Swart noted that many of the Reports were completed on 30 April and wondered what the next step was. He asked if these were cases that were ready for Tribunal (he did not want specifics), the process now, and how long its would take. He would like to see them speedily resolved.

Mr Soni described the old and new procedures. Prior to the amendment, the SIU essentially reported for the sake of reporting, as that was its mandate. With the shift in mandate, the SIU would have to look at those reports again. One of the main challenges was likely to be that by now the perpetrators had no doubt spent the money, or may have disappeared, and that contracts were ended. If there was the possibility of recovery, the SIU would pursue it although he cautioned that, practically speaking, there were limited time periods within which recovery was possible.

Ms Schäfer agreed with the idea of the tribunals but wondered if the SIU had any idea about the costs.

Mr Soni said he could not give an indication off hand, but did point out that they would probably be similar to the costs of the Equality Courts, which were manned by judges and magistrates, and who probably had similar costs. These courts sat within a particular court building, and perhaps Tribunals could also be held in a High Court, with the judge sitting as a tribunal member. The costs would really relate to the administration and the personnel.

Ms L Adams (COPE) asked about the status of the Eskom investigation, which was not contained in the Annual Report. There were also two pending cases against the SIU in the courts (listed don page 113 of the Annual Report) sand she wanted to know the status of these.

Mr Soni thought that the Eskom matter was referred to, on page 35 of Annexure A. He said that there was a distinction between section 5(7) reports, and these recommendations submitted to the President on completion. He would look into the matters and give estimates on dates. He noted that there were five pending cases.

Mr Jerome Wells, Corporate Lawyer, SIU, said that the first matter was actually a matter relating to the Minister of Human Settlements and SIU. There was an appeal brought by the applicant, and the date had not been received, only the Notice of Appeal. The SIU was the second respondent. The original application had been dismissed with costs awarded against the applicant. The second matter was a SASSA matter, dating back to 2008. It was not proceeding. There had not been a formal withdrawal as the matter was merely left in abeyance by the applicant. It was being reported upon annually.

Ms Adams asked if the SIU would be using its powers to recover costs in the Nala Municipality, reported in the Mail and Guardian. It had been suggested that the SIU was turning a blind eye to the matter. She wanted to know if the public could not expect that civil litigation would be instituted against the perpetrators. Only a fraction of the houses paid for in Nala were paid for, and there had been neither criminal cases, nor a civil claim.

Mr Soni said that this matter was with the Anti corruption Task Team.

Ms Adams noted a complaint from a female investigator, who alleged that whilst she was pregnant, she was forced to do an investigation against the advice of her doctor that she should not be traveling out of office. She said that an official was made aware of it but nothing happened, and that her manager had then also forced her to delete the e-mail complaints about the matter.

Mr Soni said that it would not be unique for an employee to complain about the way in which s/he had been treated by his or her employer. However, the Labour Court and CCMA processes could be used. If employees were dissatisfied, then they must use the statutes and Constitution to take matters further. If the SIU was required to answer to this Committee about employee complaints, for instance, it might prejudice the very process that the law prescribed for resolution of disputes.

He added that two days after he took office, he had received a letter from a Union to say that if he did not attend a meeting outside Pretoria on that very day, there would be a strike. He had referred the matter to his Deputy and had asked him to convey to the Union that SIU had taken note of the letter, but point out that there was a recognition agreement to deal with grievances. This was not an urgent issue; the matter had been ongoing since 2011. Unless the proper grievance procedures were used, then SIU would be constantly being asked to report back on every employee who felt slighted. He was not dismissive of grievances, but it would be another matter if those processes were not working. Everyone had a constitutional right to fair labour practices and institutions had been created to protect that. He added that Person X might also decide to approach Parliament – but there was a rule of law to follow.

This particular matter he had mentioned had also been reported to the PPSA, and he had understood from previous reports that the Committee had questioned whether the PPSA was entitled to take on labour matters. This was the kind of waste of resources, through constant forum-shopping, that he had referred to earlier. The SIU wanted to account, but wanted this to be at a level that would show real benefit.  All the processes as set out in ten Constitution and relevant statutes should be followed.

Ms Adams also made reference to a comment made by the previous Acting Head that SAPS was not following up on investigations, and she asked who would be entitled to ask questions, if not the Portfolio Committee. SAPS took years to follow up. Shed asked why this Committee was getting reports noting that matters had been finalised by an SIU Report in 2010 but the matters were still outstanding at SAPS. It was not as if it did not have powers to do anything; the Reports seemed to be pushed from one department to another.

Mr Soni said that it was unfortunate, but historically correct, that investigations had been directed in a certain way in the past, to bring matters to the criminal courts, but that was a separate issue. The question of how SIU reported should not arise in the future because the SIU would be giving regular updates. He was surprised at the SIU was apparently looking to SAPS to assist because it was SIU who helped SAPS, although he did not have details.

Ms Adams referred to “leaked” reports, saying that it had happened when reports were tabled to the different departments. She asked how access to information was linked to the right to have dignity respected.

Mr Soni said that Parliament held senior public officials to account when they did not comply with the values of the Constitutional, and it was hugely regrettable that individuals were leaking information. One way to deal with that was to accord no weight to any leaks. He had handled a case recently in court where a tenderer who lost the bid obviously had sympathy from people in the departments, and ended up having more documents than the Department itself. That evidence should be discounted; it was stealing information from the person providing a livelihood. He noted that there was whistle-blower protection and that it must be remembered that everyone had his or her own agenda, and it was vital to protect the integrity of the institution, not the people involved. It pained him that in an investigation, one person could effectively destroy all the hard work. The SIU had to find better ways to get to the truth. It should not give credit to persons assisting others to benefit unlawfully.

Ms Shope-Sithole urged that the “management letters” that the Auditor-General issued had to be read religiously. Matters would be raised first with the auditee, before being put into the public domain. She also stressed again that reports of audit committees must be taken very seriously as that may assist in dealing with issues even before the Auditor-General was involved.

Mr Soni took this advice to heart and agreed that the SIU must be a fine example. He could not promise that totally clean audits would be reached overnight.

Ms Pilane-Majake would like to see the risk audit outcomes being reported upon, also connected to the external audit. It would deal with a number of other issues.

Mr Soni agreed and said that skills would be sought on that function.

The Acting Chairperson invited Mr Soni to make some closing remarks.

Mr Soni thanked the Committee for this opportunity to present to the Committee. The previous records of engagement between this Committee and the entities enriched the democracy. He accepted the position of MPs as representatives of the people and thanked every one of them for the constructive manner of engagement. The SIU would improve, taking into account the comments raised. However, the SIU would also be relying on Parliament to play its part. There was a major gap in the law in regard to how people plundered state resources, and the construction industry contracts were a prime example. Had government been more vigilant, it would have picked these up much earlier. Companies were, for example,  asked to tender for 150 items, and they tended to give the costs on 135 items, so they would produce the lowest tender, but when appointed, would start to raise the prices. Government had not been sufficiently alert to that. One way to deal with that was to insist that everyone who tendered for government services must undertake to give value for money, and if an objective analysis revealed that value was not received, government should be able easily to reclaim, without waiting for years. The SIU would like to see this kind of structure or procedure being legislated. Continuous engagement process on how to protect the people was needed.

The Acting Chairperson commented that Mr Soni clearly had a vision, and he was confident that progress would be made by the time of the next engagement. Corruption and fraud were of huge concern, and the Committee wanted to offer assistance to SIU as and when it needed.

Adoption of the Legal Aid Guide
The Legal Aid Guide amendments, which had been presented on the previous day, were unanimously adopted by all members and would be referred to the House for ratification.

The meeting was adjourned.
 

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