Anti-Corruption Task Team on progress made with regards to disciplinary cases being investigated in Limpopo Province

NCOP Finance

22 August 2014
Chairperson: Mr C De Beer (ANC)
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Meeting Summary

The Select Committee on Finance was briefed by the Anti-Corruption Task Team (ACTT) on the progress achieved by the ACTT in the Limpopo intervention, and the challenges related to criminal investigations and disciplinary proceedings.  The purpose of the task team was to provide for better coordination of governmental functions with the aim of reducing corruption in South Africa, to expedite the effective investigation and prosecution of priority corruption cases, and to work together with other government departments and initiatives to strengthen government systems, reduce risks, and to prevent the incidence of corruption.

A summary of disciplinary cases of fraud and corruption, which included the provincial departments of Health and Social Development, Education, Public Works and Co-operative Governance, Human Settlements and Traditional Affairs (COGHSTA), showed that there were 47 cases of fraud, with 46 still in progress and one having been finalised.  National Treasury (NT) had further established in the review audit of the Limpopo Provincial Treasury that six out of ten Limpopo Paymaster-General (PMG) accounts had been used to process both credit transfers and other electronic bank transfers directly on the First National Bank (FNB) online system, without authorisation or disbursement through the Basic Accounting System (BAS).  An investigation was still in progress to establish if all identified irregular transactions not processed through BAS had been rectified and recorded in the BAS in the correct financial periods of the affected departments.

A summary of disciplinary cases involving conflict of interest -- government officials doing remunerative work outside the public service -- showed that 41 cases had been uncovered, with 14 finalised and 26 still in progress. One case had been withdrawn.  A summary of ACTT criminal charges under section 100 showed there were 26 cases with 34 accused, with 13 of the cases in court and 13 investigations still in progress.

Key challenges had caused delays in the investigation of the Limpopo corruption cases.  There had been challenges in accessing funding for the ACTT projects, and NT had been engaged for assistance to resolve the problem. There had been delays in the procurement processes for the engagement of expert witnesses, and non-cooperation by certain witnesses, while the fact that certain witnesses were suspects in other matters had caused delays in the finalisation of other cases.  Because of limited capacity at the NPA, prosecutors had not been available for certain cases, and in other cases original documents had not been available.  The Polokwane court in the Limpopo Province had been burnt down, which had resulted in a limited number of courts for cases to be heard.   The continuous postponement of cases, the failure of state witnesses to attend hearings, and the resignation of officials before the conclusion of Disciplinary Committee (DC) processes, were additional factors.

Strategies had been employed to deal with the challenges.  The accounting officers in different departments were held responsible to take forward the DC proceedings, as the custodians of discipline in the affected departments.  State employees who were chairpersons and initiators of disciplinary cases were released by their respective heads of departments, in order to speed up the finalisation of cases.  Consideration was also given to suspending senior officials and any other officials alleged to be sabotaging the intervention in the departments

Members felt that the presentation by the ACTT was not detailed enough and the progress of the intervention had been too slow. They agreed that the ACTT needed to establish clear leadership roles, provide the capacity the team needed to function properly and to engage with the Department of Public Service and Administration (DPSA), as well as the Special Investigative Unit (SIU) and chief administrator. They said that the DPSA needed to deal urgently with the resignation of officials implicated in corruption cases, as this was prolonging the investigations.  Explanations were sought for the reasons behind the withdrawal of some cases.   It was suggested that there needed to be an indication of the follow-ups taking place, and whether money was being recovered or not. 
 

Meeting report

Opening remarks by Chairperson
The Chairperson welcomed everyone to the Committee meeting and explained the purpose of the meeting, which was to receive a briefing by the administration team on the termination of section 100 (1) (b) issued to Limpopo Province, and the issuing of directives in terms of section 100 (1) of the Constitution of the Republic of South Africa.  He said that Ms W Zondi (ANC) had submitted an apology, as she was on a sick leave. He handed over to the Anti-Corruption Task Team (ACTT) to make its presentation.

Report by Anti-Corruption Task Team (ACTT)
Mr Anwa Dramat, Head of the Directorate for Priority Crime Investigation (DPCI) and Chairperson of the ACTT, said that the Task Team had been formed in July 2010 to better coordinate government’s efforts to deal with issues of corruption and fraud. The initial make-up of the ACCT was as a directorate for priority crime investigations, and included the South African Revenue Service (SARS) and National Treasury (NT), the National Prosecuting Authority (NPA) and Financial Intelligence Centre (FIC). These teams all prioritised on corruption and fraud cases, and the target was to address and fast-track matters of corruption involving R5 million and more. The Department of Public Service and Administration (DPSA) had recently joined the ACTT investigations. The report served to inform Members on the progress achieved by the ACTT in the Limpopo intervention, and the challenges related to criminal investigations and disciplinary proceedings.

Mr Dramat stated that the following provincial departments were identified by National Treasury as priority areas for the ACTT investigations in January 2012: the Department of Education; the Department of Transport and Road Agency of Limpopo; the Department of Health and Social Development; the Department of Public Works and the Provincial Treasury.

During the investigations in the Limpopo Province, the ACTT had also identified the Limpopo Department of Co-operative Governance, Human Settlements and Traditional Affairs (COGHSTA) as another risk area in respect of developing low-cost housing, for consideration. There were a number of achievements and challenges of the ACTT since its last presentation to the Select Committee on 15 October 2013, until 15 August 2014.

Mr Dramat indicated that there was total of 14 section 100 criminal cases for the Limpopo Department of Roads and Transport.   Four were already concluded and judgement issued, five were still on trial in court, one case had been discarded and judgement was under review, and four cases were still under investigation

There were also 14 section 100 criminal cases for the Department of Health.   Two were on trial in court, eight had been closed and referred for Disciplinary Committee (DC) proceedings, and four cases were still under investigation

There were seven cases involving the Department of Education.  Two were still under review by National Prosecuting Agency, two cases were closed and had been referred for DC proceedings, and three were still under investigation

There were four cases involving the Department of Public Works.  One case was under review by the NPA, two cases were closed and referred for DC proceedings, while one case had been referred to National Treasury (NT) for a forensic report, and was still under review

Mr Dramat identified the key challenges that had caused delays in the investigation of the Limpopo corruption cases.  There had been challenges in accessing funding for the ACTT projects, and NT had been engaged for assistance to resolve the problem.  There had been delays in the procurement processes for the engagement of expert witnesses, and non-cooperation by certain witnesses, while the fact that certain witnesses were suspects in other matters had caused delays in the finalisation of other cases.  Because of limited capacity at the NPA, prosecutors had not been available for certain cases, and in certain cases original documents had not been available.   The Polokwane court in the Limpopo Province had been burnt down, which had resulted in a limited number of courts for cases to be heard.

National Treasury had further established in the audit of the Limpopo Provincial Treasury that, out of ten Limpopo Paymaster-General (PMG) accounts, six had been used to process both credit transfers and other electronic bank transfers (EBT) directly on the First national Bank (FNB) online system, without authorisation or disbursement on the Basic Accounting System (BAS) and the following departments were affected: the Office of the Premier, the Department of Education, the Department of Public Works, the Department of Roads and Transport, the Department of Safety and Sports, and the Department of Agriculture

Mr Dramat said that the investigation had found that the Departments processed journals to rectify irregular on-line credit transfers and payment in the BAS, to an amount of R23 million.  However, payments to the value of R43 million could not be traced to any journals processed, and follow-up was still in progress to resolve the transactions.  In the Department of Roads and Transport, two duplicate payments had been identified to the total value of R2.5 million and the follow-up on resolving the discrepancy was in still in progress.  All the identified discrepancies would be reviewed for criminal investigation once the NT report was finalised. The NT had resolved that all electronic transfer payments in all the departments should be centralised within provincial treasury.  The NT had issued an Instruction note for the prohibition of payments via internet, effective from 1 July 2014, in all state departments.

When the intervention for Limpopo section 100 disciplinary cases had started, 22 forensic investigation reports were issued for Department of Public Service and Administration (DPSA) to facilitate disciplinary hearings.  It had been reported that there were 47 cases of irregularities identified from the forensic reports issued by the NT against state officials, and 302 cases of conflict of interest established by the Special Investigating Unit (SIU).

When the DPSA office of Standards and Compliance had commenced with the management of disciplinary cases, only 99 cases had been recorded for disciplinary processes from the Department of Education, Health, Public Works, Treasury and COGHSTA.  Due to this, other cases of conflict of interest were resolved and withdrawn.  Later on, additional cases from the Department of Roads and Transport (eight), Roads Agency Limpopo (one), Gateway Airports Authority (ten), and the Head of Department (HOD) of Public Works, were added to the 99 cases.   This had resulted in a total number of 108 DC cases being analysed.

The main causes of the slow finalisation of disciplinary cases were the continuous postponement of cases, the failure of state witnesses to attend hearings, and the resignation of officials before the conclusion of DC processes.

Mr Dramat described the strategies employed to deal with challenges.  The accounting officers in different departments were held responsible to take forward the DC proceedings, as the custodians of discipline in the affected departments, in terms of section 7 (b) of the Public Service Act, 1994, as amended.  State employees who were chairpersons and initiators of disciplinary cases were released by their respective heads of departments, in order to speed up the finalisation of cases.  Consideration was also given to suspending senior officials and any other officials alleged to be sabotaging the intervention in the departments

The Chairperson thanked the ACTT for its presentation on the Limpopo intervention and the key challenges relating to criminal charges.

Discussion
The Chairperson said it was concerning that there was a high number of corruption cases in Limpopo and there was a need for an urgent action to introduce stringent measures against the officials found guilty. He asked whether it was possible that R1 billion had been lost in case number 6, page 4, considering that the case had been closed, and listed as “no crime, referred to the NT”.

Ms Zanele Mxunyelwa, Head of Specialised Audit Services in the Office of the Auditor-General, responded that R1 billion had indeed been lost, and this referred to the actual total value of the tender.   While the value of a tender would be a particular amount, however, there were services that had been rendered in that amount.

Ms T Motara (ANC, Gauteng) asked about the role of the ACTT to ensure that the resignation of officials before the conclusion of disciplinary processes was not disrupting the investigations, and whether this was the reason some of the cases had been withdrawn. She asked why, in case number 14, on page 5, the amount was unknown. Was the tender value loss applicable to all the cases reported?   In situations where the corruption cases were closed, there was no indication of a follow-up, or whether the money had been recovered or not. She also suggested that in cases where the money had been recovered, there was a need to mention the actual amount lost.

Ms Mxunyelwa responded that the ATCC was able to determine only the actual value of the tender, as this was subject to determination by the NPA in court.   

Mr E von Brandis (DA, Western Cape) asked how it was possible that in case number 7, page 5, R14 million worth of laptops had disappeared but the case had been closed.  This was not a reflection of good work. The delay in the completion of some cases was a matter of concern, and a sense of urgency was needed.  It was concerning that some of the government officials were still earning huge salaries while on suspension, and the State was losing a lot of taxpayers’ money on people sitting at home. 

Colonel Johan du Plooy, Group Leader: South African Police Service (SAPS), explained that the initial investigation had indicated it was only three laptops that had been lost, but further investigation had proved that the whole tender value of the laptops was indeed R14 million.  He suggested that when the ACTT came back, there would be further information on the tender value and the actual amount lost.  Delays in some cases were caused by lawyers who complicated matters.  The South African justice system required proof beyond reasonable doubt in criminal charges, and if there was a slight doubt, then the benefit went to the accused.

Mr Percy Tshabane, Director, DPSA, said that the system in the public service was operating in an unfair manner.  Senior officials earning huge salaries usually hired expensive and experienced lawyers to complicate and prolong the charges.  Another major cause of delays in some cases was that lawyers would ask for postponements, and this made it difficult to give a time-frame for the finalisation of cases.

The Chairperson added that the President had pointed out during the State of the Nation Address (SONA) that there were laws that had been enacted by Parliament to protect the government officials implicated in corruption charges, and this needed to be corrected.

Ms G Manopole (ANC, Northern Cape) questioned whether the suspension of senior officials implicated on charges of corruption was a correct strategy, considering that they still needed to be a witness -- or was the plan to get another witness?  She questioned the financial implications of suspending officials embroiled in corruption charges.

Mr T Motlashuping (ANC, North West) asked whether the ACTT had managed to do a follow-up on the concerns that had been raised by the previous Select Committee during the Fourth Parliament. Similar issues had been raised, and they had still not been addressed. There was a need to indicate both the amount of money recovered and the amount expected to be recovered in all cases.  This was critically important -- comparing the money actually recovered in relation to the amount that was expected. He asked whether there was a plan to deal with all the challenges identified by the ACTT. The issue of the resignation of officials before the conclusion of investigations was a matter of concern, and he suggested that the ACTT needed to come up with recourse to pursue criminal charges against those individuals.  He cautioned the ACTT not to dwell too much on the cases that were still pending, as this was likely to weaken the cases. 

Mr Dramat said it was difficult to reveal too much information on the cases that were still pending, but  the ACTT was compelled by legislation to brief the Committee about the progress made in the Limpopo province intervention.

Mr Tshabane said that there was nothing that the DPSA could do to stop officials from resigning before the proceeding of the investigations.  However, DPSA relied on the police, the SIU and investigators to pursue criminal charges against the accused as long as they resided in South Africa. He also admitted that the surge in resignation of government officials was mostly from those who were suspected of being implicated in corruption charges.  The DPSA was not briefed about the cases of corruption for fear of compromising cases, and was given information only when needed to reprimand the officials who were implicated in corruption. 

Mr Von Brandis asked whether it was possible to ensure that officials evading corruption charges were not able to be employed in municipalities.

Mr Tshabane said the problem was that the municipalities and provincial governments were separated, meaning that this was impossible when considering that the DPSA was not directly linked to the municipalities.

Mr Dramat added that the ACTT and DPSA had identified the problem of officials in public service evading corruption charges, and others resigning from one department and then emerging at municipal level.  The DPSA and ACTT were advancing a new bill that would be a possible solution to this problem, and the Department of Co-operative Governance and Traditional Affairs had also come on board to assist in removing corrupt officials.

Mr M Khawula (IFP, KZN) asked whether the ACTT was conducting any extensive examination to determine if a tender was advertised and allocated properly. He also asked what punitive measures were imposed on government officials who were involved in corruption cases.  The ACTT needed to indicate the name of the companies that were owned by government officials.  Was the ACTT satisfied with the progress made in some cases, especially those where there were no witnesses?  He also supported the suggestion for recourse to pursue criminal charges against the officials who resigned before the conclusion of investigations. 

Col Du Plooy responded that it was impossible to force a witness under oath to testify in court, and this was causing major delays in the investigation of some cases.  Mr Dramat also confirmed that even if the officials resigned, the criminal charges continued as long as they resided in the country.

Ms Manopole asked whether there were any mechanisms in place to blacklist companies that were implicated in the corruption cases.

Ms Mxunyelwa responded that were two pieces of legislation that facilitated the blacklisting of service providers implicated in corruption charges. There were two types of restrictions -- a restriction on performing any service to the State, which did not require any court order, and a restriction on the registration of tender defaulters, which would be a decision of court.  The NT was likely to influence the decision to restrict corrupt service providers.

Mr F Essack (DA, Mpumalanga) asked whether the ACTT had any other alternatives when they did not file any criminal charges against a company or individuals.  Was the ACTT working with SARS in the investigation of corruption cases, as SARS was likely to play a major in simplifying and fast-tracking the cases?

Col Du Plooy responded that the ACTT ensured that it finalised cases and then proceeded to imprison the individuals embroiled in corruption.  It was particularly important not to interfere with the cases being investigated.
Ms Mxunyelwa said that the ACTT was working in parallel with SARS and the reports on corruption cases were shared with SARS in order to check whether tax regulation was being followed.  There were cases where SARS was not consulted, however.

Ms Manopole advised the DPSA not to hire consultants when the chairperson was suspended, as this was likely to create a financial burden.  There were officials within the board that could chair the meetings.

The Chairperson thanked the ACTT for the report and mentioned that he hoped by the time the Committee reconvened on Wednesday, 27 August, the ACTT would be able to respond further to some of the questions asked by Members.
Adoption of Minutes
The Chairperson said Members needed to adopt the minutes of 23 and 30 July 2014.

Mr Motlashuping moved the adoption of the minutes of 23 July, and Mr Khawula seconded.

Mr Von Brandis moved the adoption of the minutes of 30 July, and Ms Motara seconded.

The meeting was adjourned.
 

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