Special Investigating Unit on cases currently being handled

Public Accounts

06 September 2017
Chairperson: Mr T Godi (ANC)
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Meeting Summary

A total of only twenty-nine final reports have been submitted by the Special Investigating Unit to the Presidency since 2009, however, the SIU expects that another twenty-one final reports will be submitted by the end of 2017/18. These include ten reports concerning national government, three reports concerning provincial government, seven reports concerning local government, and one report on state-owned enterprises. SIU and AGSA had established a memorandum of understanding to allow AGSA to follow up on SIU recommendations in their auditing process. Major challenges for SIU include generic and wide proclamations; non-payment by some state institutions; delays in finalisation of civil matters; the implementation of SIU referrals by the National Prosecuting Authority; feedback from state institutions on SIU recommendations; the limitation in dealing with pre-proclamation activities; and the uneven spread of proclamations.

The SIU reported that investigation into the South African Broadcasting Corporation is currently ongoing. The proclamation had been signed off by the Presidency and gazetted. The scope of the investigation includes employment practices, payment of bonuses and irregular expenditure at the SABC. The final report on the investigation into Eskom was submitted on 12 July 2017. The SIU made 3 475 disciplinary recommendations, and 2 criminal referrals as a consequence of the investigation.

The SIU is owed in excess of R400 million by state institutions for services rendered. A major concern is the lack of budgeting by state institutions for SIU investigations, a symptom of the SIU cost recovery model. The SIU implored the Committee to provide assistance by referring matters emanating from engagements with state institutions to the SIU, as well as discouraging the use of private sector forensic firms by state institutions to ultimately cut costs for the state. The use of private firms is prominent among state-owned entities, despite the SIU benchmarked cost structure undercutting private rates.

Members asked about the progress in civil litigation against Nkandla-architect Minenhle Makhanya, from whom the SIU is attempting to recover R155 million for authorising security upgrades “in excess and beyond security assessments and requirements” to the President’s homestead. The SIU reported that a discovery affidavit and pre-trial notices had been served, however no trial date had been set. The SIU Head stated that it was uncertain as to whether the full R155 million would be recoverable from Mr Makhanya.

The SIU reported that the average turnaround time for investigations is three to four years. Members voiced concerns about the insufficient capacity at the SIU, and the SIU Head admitted that it employs only three forensic accountants. The forensic accountants are often stretched by the workload, leading to slower turnaround times for investigations. For this reason, SIU admitted to insourcing specialist staff on a contractual basis during periods when its workload is heavy.

Members asked if the SIU had the power to freeze pensions, considering that as a common practice, state institutions cannot take action against guilty parties because the employee in question had already resigned. The SIU replied that any proceedings to freeze pensions must go through the normal civil litigation process, and that the SIU had no specific powers in this regard. Members expressed concern that the SIU does not have the power to make its recommendations legally binding, and suggested a legislative amendment for this purpose. The SIU has engaged with the Department of Justice to assist in the establishment of the special tribunals, and awaits the appointment of the Tribunal President.

Meeting report

The Chairperson stated that the genesis of this meeting arose from an engagement with the Anti-Corruption Task Team (ACTT) on 23 May 2017. During this engagement, the ACTT outlined the scope of its investigation into the SABC, based on the work done by Parliament’s Ad Hoc Committee on the SABC Board Inquiry. He reminded the Committee that during its strategy review session in October 2016, the Standing Committee on Public Accounts (SCOPA) had resolved that Parliament should take its rightful position in the centre of the fight against corruption, malpractice and maladministration. In doing so, SCOPA would be the head organ. For this reason, all necessary resources, expertise and capacity needed to be mobilised to empower SCOPA to conduct its oversight responsibilities.

Based on the deliberations of the previous engagement, Mr Godi asserted that having the SIU as part of the Anti-Corruption Task Team robbed SCOPA of the opportunity to engage specifically with the SIU in a much more focused manner. With this said, the SIU does not appear before the Committee as “the accused”. However it would be necessary for the SIU to highlight key areas of concern while keeping in mind the objectives of the meeting. Thereafter, Committee members can ask questions.

Special Investigating Unit (SIU) presentation
Adv Lekhoa Mothibi, SIU Head, provided the Committee with insight into the SIU delivery model: After receiving information or allegations – which could be from hotlines, whistleblowers or state institutions – the SIU assesses and verifies the authenticity of the claims based on evidence available. The SIU then gathers additional information as needed to support a motivation for a proclamation. A motivation and schedule for the proclamation is then drafted, setting out the scope of the investigation. The drafted proclamation is sent to the Department of Justice (DOJ), then to the Minister of Justice, and finally to the Office of the Presidency. Whilst the proclamation approval process is underway, the SIU continues analysis of available documentation, project set-up and investigation planning. On publication of the proclamation, the SIU may formally commence with the investigation.

Adv Mothibi emphasised that SIU powers only become effective once the proclamation – signed-off by the President – is published in the Government Gazette. Once this is realised, the SIU produces a project plan and letter of engagement (LoE) outlining the approach, staff and projected cost for the state institution. The SIU collects and analyses further evidence utilising its powers, which include interrogating witnesses under oath, issuing subpoenas, obtaining affidavits and seizing evidence. The SIU may also institute civil litigation proceedings in its own name, or refer evidence of criminality to the National Prosecuting Authority (NPA) or the Asset Forfeiture Unit (AFU). Evidence of misconduct is routinely referred to the state institutions in question for disciplinary action, whilst evidence of any other transgressions are referred to the relevant authorities, including the South African Revenue Service (SARS) and the Financial Intelligence Centre (FIC). The finalised reports are presented to the Office of the Presidency.

During the process, SIU regularly engages with the institution under investigation for the purposes of providing updates, deliverables and outcomes of the investigation. Adv Mothibi stated that this was because the accounting authorities of state institutions often require this information to support the costs incurred by the SIU. This information is provided along with the invoices sent to the institution under investigation.

On the costs for services rendered, Adv Mothibi stated that the SIU recovers costs and fees incurred as per Section 5 of the SIU Act on a monthly basis, in line with the LoE. At a business operations level, he assured the Committee that the charge-out rates were benchmarked, and below the industry standard. The SIU had a total staff complement of 521 employees as of 1 August 2017, which included 401 operations staff and 120 business support staff. Of the total staff complement, 59% consisted of ‘African’ employees, 7% ‘Coloured’, 10% ‘Indian’ and 24% ‘White’. In terms of gender, the SIU consists of 51% male and 49% female employees. Adv Mothibi acknowledged that most of the ‘Unskilled’ and ‘Semi-skilled’ employees were females. SIU is actively seeking opportunities to enhance the skills and training of these individuals. Geographically, the majority of SIU employees are based in Gauteng while the Northern Cape is the only province in which the SIU has no presence.

Since 2009, the SIU has received 81 proclamations from the Office of the Presidency, consisting of 68 original proclamations, 9 extensions and 5 amendments. During that period, 26 proclamations have been made on national government, 26 on provincial government, 22 on local government, and 7 on State-Owned Entities (SOEs). The low number of proclamations on SOEs is that these institutions generally utilise the services of private firms for investigations. In terms of proclamations by region since 2009, 29 proclamations were made on a national level, 9 in the Eastern Cape, 2 in the Free State, 14 in Gauteng, 10 in Kwazulu-Natal, 5 in Limpopo, 4 in Mpumalanga, 1 in the North-West Province, and 7 in the Western Cape.

A total of 29 final reports (after the investigation) have been submitted to the Presidency since 2009, of which 6 concern the national sphere of government, 11 concern provincial government, 8 concern local government and 4 concern SOEs. The submission of the final report can often have a multitude of consequences, including criminal and disciplinary referrals, civil litigation, and further investigations. Thirty-four final reports were submitted to the Presidency before 2009, of which five deal with the national sphere of government, 19 concern provincial government, and 10 concern local government. In some investigations, the final reports are submitted to the Presidency more than five years after the proclamation date. With this considered, there is a need to improve the turnaround times of the final submissions, however the SIU must be cautious not compromise the quality of its outputs. The SIU has recently introduced measures wherein interim reports are produced on a yearly basis if it is expected than an investigation will span several years.

The SIU provided the Committee with a detailed list of the final reports submitted to the Presidency before and after 2009, including the state institutions concerned and the outcomes of final reports.

Adv Mothibi stated that it was necessary to improve the communication of outcomes to the public. To this end, the communications manager at the Department of Justice and Correctional Services is currently working on a plan to ensure that there is a collective communication of outcomes, led by the Ministry. There are 21 final reports being prepared for submission by the end of the 2017/18 financial year. These include 10 reports on national government, 3 reports on provincial government, 7 reports on local government, and one report on SOEs.

The Chairperson noted that the Bushbuckridge Local Municipality, his local municipality, was under investigation by the SIU.

Adv Mothibi replied that the SIU would report on the outcomes of the investigation at their next appearance before the Committee.

There are currently 27 proclamations in which investigations are still active, including the investigation into the SABC. Adv Mothibi acknowledged the need for the SIU to speed up investigations to achieve the necessary results. Performance information for 2016/17 showed that SIU closed out 1 186 investigations, surpassing the annual target of 800; it recovered R43.5 million in money/assets, falling considerably short of its annual target of R140 million, while the estimated value of money/assets recoverable was R126 million. SIU estimated the value of potential loss prevented for 2016/17 was around R106 million. SIU made 108 referrals to the prosecuting authority, and 137 referrals for disciplinary, executive or administrative action.

With reference to the SIU’s root cause analysis for 2016/17, Adv Mothibi reported that only two indicators were not achieved: ‘the value of money and/or assets potentially recoverable’, and ‘the actual value of money and/or assets recovered.’ There were challenges with matters referred to the Asset Forfeiture Unit (AFU), specifically doe to civil litigants challenging the AFU process. There were delays in finalising the just and equitable leg of civil matters, simply as a result of the queue in the adjudication of civil proceedings. He noted that the SIU has the legislative mandate to set up a Special Tribunal that may be able to provide assistance in this regard. There has recently been a change in the profile of matters under investigation, as the SIU had previously investigated the South African Social Security Agency (SASSA) and Land Reform which had made significant contributions to the indicators.

In the interest of improving turnaround times, the SIU reported that previously, the proclamations were generic and wide in ambit. The new strategy aims to obtain proclamations as specifically as possible, and matters will only be investigated if they are related to allegations received. Secondly, for proclamations anticipated to span several years, interim reports – specifying key focus areas – are submitted to the Presidency on an annual basis. Lastly, the SIU has introduced project reviews to assist in fast-tracking the finalisation of investigations.

On civil litigation cases pursued by the SIU, Adv Mothibi said that SIU cases were underway in various courts. The potential recovery from ongoing cases was in excess of R650 million if the SIU is able to act quickly and effectively, however this would be contingent on the assessment of the courts.

Adv Mothibi stated that the SIU requires organisational enhancements in several areas, including capacity, personnel and systems improvements, and enhanced governance and accountability levels. An updated operating model had been included in the revised Annual Performance Plan (APP) as of 31 August 2017, which the SIU would be willing to share will the Committee at a later date. Enhancements in the high-level value chain included market data analysis, the introduction of an SIU Advisory Unit, the creation of a ring-fenced unit for national cases, and involving the Auditor-General South Africa (AGSA) as a monitoring agent. With reference to the latter, SIU and AGSA had established a memorandum of understanding (MOU) to allow AGSA to follow up on SIU recommendations in their auditing process.

SIU’s major challenges are generic and wide proclamations; non-payment by some state institutions; delays in finalisation of civil matters; the implementation of referrals to the NPA; feedback from state institutions on the SIU recommendations; the limitation in dealing with pre-proclamation activities; and the uneven spread of proclamations. Adv Mothibi stated that SCOPA could assist the SIU by referring matters emanating from engagements with state institutions to the SIU, as well as discouraging the use of private sector forensic firms by state institutions to ultimately cut costs for the state.

Discussion
Mr Godi thanked the SIU for the presentation, and invited members to pose any questions or suggestions.

Mr E Kekana (ANC) welcomed the presentation, stating that as a Committee, the primary concern is consequence management. Although SIU covered many concerns in the presentation, there were still several matters requiring clarity. In terms of the scope of the SIU mandate, is there a tracking mechanism to ensure that disciplinary procedures are followed once SIU recommendations are made? How does SIU know whether government entities have implemented the necessary disciplinary action?

Adv Mothibi replied that in previous years, the SIU had attempted to follow-up on recommendations to state institutions, but this was not happening in a structured manner. Recognising this, the SIU began a process of engagement with the Presidency, and resolved to put measures in place to ensure effective tracking. The Presidency had informed the SIU that these tracking measures were currently in place. An MOU with the Department of Justice has been established, outlining the monitoring and evaluation structure of the feedback loop. The revised structure involves contacting the state institutions to report on where they are with implementing the referrals made by the SIU. Once the relevant reports are identified with the corresponding referrals, the structure will allow the SIU to follow-up on referrals on an on-going basis.

Mr Kekana inquired as to the “fall-back” position for instances of non-compliance, considering the focus on consequence management. If there are clear indications that a state institution is not implementing the referrals, and there is perhaps a backlog of disciplinary hearings, does the SIU have a mechanism to ensure compliance?

Adv Mothibi replied that if the SIU finds out that its recommendations have not been implemented, it simply follows the escalation process with the accounting authority, and if needs be, the executive authority of the institution in question. Based on the Constitutional Court pronouncements on the remedial action of the Public Protector, the SIU is considering a legislative proposal that will provide a legislative backing for referrals and recommendations made by SIU. The SIU was not there yet, however this is one of the mechanisms proposed.

With reference to the cost structure in the SIU presentation, Mr Kekana asked if the rates quoted were per hour or per case. How do these costs compare to the prices charged by private forensic institutions? How did the SIU come to agree on this cost structure?

Adv Mothibi replied that these figures were benchmarked, and that the Chief Financial Officer could elaborate further on this. The SIU considered the rates levied by AGSA and private forensic firms in order to arrive at the current cost structure.

Mr Kekana asked which departments owe monies to the SIU. Is there non-cooperation? Does the SIU have a mechanism in place to recoup funds from the departments in question?

Adv Mothibi replied that the SIU works on a cost-recovery model fee for its services. Although SIU is allowed to levy fees in terms of its legislation, the Act allows state institutions to apply for a partial exemption from these fees. Upon engagement with non-paying institutions, it is often revealed that departments had not planned or budgeted for an investigation. These departments then call for the SIU to submit its final report, however the legislation dictates that these reports can only be submitted to the Presidency, not the institutions themselves. Therefore, a new strategy is being implemented where the SIU submits a statement on the deliverables and outcomes to state institutions. Engagements with CFOs and accounting officers have yielded promising results, however SIU does have the option to escalate the matter to the executive authority or the relevant Minister if deemed necessary. SIU is aware of the state institutions in question; however, Adv Mothibi did not have the list of debtors on hand. He suggested furnishing the Committee with the list of non-paying institutions at a later date.

Mr Godi said that the problem of state institutions not paying is a serious issue. For this reason, he suggested that producing the list should not be left for another day.

Adv Mothibi assured the Chairperson that the SIU would provide the Committee with the list in writing before the end of the day.

Mr Godi requested that the SIU produce the list during the course of the meeting instead.

Mr Kekana requested an estimated figure of the amount owed to the SIU by state institutions.

Adv Mothibi replied that the figure is upwards of R400 million.

Mr Kekana stressed the severity of non-payment, asserting that the SIU will not be able to fulfill its mandate if there are no resources available. In terms of the timeline for the investigation of cases, what is the average turnaround time? How long does the SIU take?

Adv Mothibi replied that the average turnaround time for investigation is three to four years. He assured the Committee that this problem has been identified, and that measures have been put in place to reduce the “blockage” in this regard. This is evident in the number of reports to be submitted in the 2017/18 financial year. Adv Mothibi stressed the importance of internal monitoring of project timelines.

Mr Kekana noted that the SIU presentation categorised investigations on the national, provincial and local levels. Out of these three spheres of government, which generates the most problems in terms of cooperation?

Adv Mothibi replied that he does not believe that there are any material issues in this regard. If the SIU experiences difficulty in obtaining information from state institutions, it immediately escalates to involve the accounting and executive authorities. This process generally works; and that for the SIU to say that a state institution is not cooperating, it must have exhausted this process.

Mr Kekana said that the Committee was under the impression that there were instances of bottlenecks and non-cooperation in cases referred to the SIU. In terms of the cases reported on in the presentation, would the SIU be able to submit a report on certain cases? Notwithstanding the sensitivity of the information pertaining to these cases, could the SIU provide the Committee with a list of cases, as well as their respective timelines for completion? Considering the average length of the SIU turnaround time and the high-profile nature of many cases, can the SIU inform the Committee as to how far they are?

Adv Mothibi replied that the SIU could provide limited details, however for some there was sensitive information that could prejudice the investigation as a whole. The SIU could engage further with the Committee on the key issues outside of the public domain.

Mr Kekana said that the Committee had no intention of interfering or compromising the integrity of the investigations, however it may be useful to get an idea of how far the SIU is on these cases privately.

Adv Mothibi replied that it may be possible to prepare a “status update” on each case, as well as the estimated time to completion. However, this would have to be done in a private discussion.

Mr Kekana said that the SIU had presented an interesting model going forward. However it seemed as though it did not have sufficient capacity to adequately achieve its targets. Is this the case?

Adv Mothibi replied that the SIU was currently in the middle of its organisational review project, which involved capacity modelling to establish capacity needs on a national and provincial level. Moreover, the SIU business development initiatives at central and regional levels should help to position the SIU as the preferred state service provider. The SIU is looking to complete this project by the end of 2017/18, subject to available funding. He assured the Committee that the SIU has the capacity to turnaround all investigations at hand, however it may need to improve capacity going forward.

Mr Kekana said that Adv Mothibi responded “like a politician”. Based on his answer, it is unclear as to whether the SIU had sufficient capacity. If the SIU is not afforded the necessary resources, what will happen?

Adv Mothibi replied that the SIU had put its recruitment process on hold until the completion of the capacity modelling project. By December 2017, when the new model is implemented, SIU should know where it stands in terms of capacity.

Mr Godi asked if the SIU had the personnel it needed in its current structure.

Adv Mothibi replied that the answer was yes based on the proclamations that have come through. SIU does have the necessary capacity; however, it is looking to improve in this regard.

Mr D Ross (DA) asked about the status of the ongoing SIU proclamations. How big is the backlog of proclamations awaiting approval from the Presidency? If this information cannot be disclosed to the public, could it be furnished in private? On the SIU proclamation on the SABC, the DOJ finalised and submitted a motivation for the proclamation on 10 May 2017. As of 27 June, the President was still finalising its review of the proclamation. Does the SIU have this proclamation at hand? With regards to the active investigations in the SIU presentation, the SABC proclamation R29 of 2017 is featured. Was the information provided to Ms G Howes, SIU Programme Manager, included in this proclamation? Specifically, the revelations of a contract for R5.1 million awarded to Infonomix, as well as a contract of R7.3 million to Imagine Communications. Mr Ross had submitted 37 reports on corruption at the SABC to Ms Howes, is there any feedback on this? Is this information included in the SABC proclamation? In the battle to secure accountability at the local level, Mr Ross possessed documents relevant to investigations at the Ekurhuleni and Matjhabeng municipalities. These documents could be of assistance to the SIU, particularly on matters concerning corruption on the Vrede dairy project, as well as low-cost housing in the Free State.

Adv Mothibi replied that the SIU memorandum of understanding with the Presidency should bring greater efficiency in finalising outstanding proclamations. He reiterated that motivations do not go directly through the Presidency, but first to the DOJ, then to the Minister of Justice, and finally to the Presidency. He is not in possession of the list of outstanding proclamations. However, the SIU could provide it to the Committee in writing after the meeting. He assured Mr Ross that the proclamation on the SABC had been signed off by the Presidency and gazetted. Moreover, the proclamation included the wider scope of employment practices, payment of bonuses and irregular expenditure at the SABC.

Mr Leonard Lekgetho, SIU Head of Investigation, said that the SABC proclamation was wider in scope than other investigations. Therefore it would be necessary to prioritise certain areas for investigation.

Ms Howes assured Mr Ross that the SIU had received the documents submitted, including documents on Infonomix and Imagine Communications.

Mr T Brauteseth (DA) requested specific clarity on two SIU investigations: The Life Esidimeni tragedy and the Nkandla architect. With regards to the latter, he noted that the SIU had made one criminal referral and one civil referral, while the civil referral of R155 million relates to Mr Minenhle Makhanya, the architect of the Nkandla residence. Could the Committee get a progress report on the civil matter? Would SIU expect to collect R155 million from Mr Makhanya? Is the figure based on the amount recoverable, or the net worth of Mr Makhanya?

With reference to making SIU more profitable, Mr Brauteseth said that the reason state departments utilise private forensic firms is because of the capacity and bottleneck challenges associated with the SIU. Where are these bottlenecks specifically? Is the proclamation process one of the bottlenecks? In terms of the SIU cost structure, the SIU rates were “extremely cheap”. How many forensic investigators, forensic accountants and data analytics professionals does the SIU have within its staff? Could the Committee be provided with an indication of the vacancy rate and capacity constraints at SIU? Can SIU legally compel state institutions to act on SIU recommendations? He argued that legislative amendments is the direction that SIU needs to be going, otherwise SIU is merely performing the same role as SCOPA, but at great expense.

Adv Mothibi replied that the Life Esidimeni investigation had commenced, and that he had recently met with the relevant Member of the Executive Council (MEC) to go through the approach of the investigation, as well as to engage with stakeholders such as the Health Standards Ombudsman. The SIU Corporate Legal Counsel Mr Gerhard Visagie, would be better equipped to address the questions on civil litigation in the Nkandla investigation. In terms of recovering the R155 million, SIU expects that once the court makes its ruling on the matter, the funds should be recoverable. However, whether this will be realised is uncertain. In terms of the criminal referral of Mr Makhanya, as per its legislative mandate, criminal matters with evidence are referred to the NPA. It is in SIU’s interest to follow up on this matter, and further details can be provided at a later stage.

Addressing the questions on capacity, Adv Mothibi assured the Committee that SIU did have the necessary resources to conduct its work; however, improvement was required. The vacancy rate at the SIU was one of the reasons for the organisational review and the adoption of a revised operating model. Adv Mothibi admitted that the SIU did not employ enough forensic accountants, and that this was one of the areas requiring capacity improvements. In terms of SIU’s current resourcing model, when the workload builds up, SIU is able to insource employees on a contract basis; however, this is not a sustainable practice. Once an adequate level of resourcing is realised, SIU still needs the flexibility to insource as its workload is not consistent. With this said, the SIU possesses a “relative hope” that corruption will decrease over time.

Mr Lekgetho replied that the SIU had made the report as part of an update on other matters, including the criminal referral.

Adv Mothibi replied that SIU did not have this information available at this time, but would be willing to submit an update in writing to the Committee.

Mr Brauteseth noted that Adv Mothibi had skipped his question on the legal authority to compel state institutions to act on its recommendations.

Adv Mothibi replied that the current legislation was sufficient in enabling the SIU to investigate state institutions. The legislated powers include the ability to issue subpoenas, and to search and seize evidence. These powers are exercised where there is non-cooperation with the investigation. The SIU also recommends remedial action, which can be followed up through the SIU’s escalation process to ensure disciplinary action is taken.

Mr Brauteseth said that based on Mr Mothibi’s response, the SIU cannot legally compel institutions to act on its recommendations. How do we get to a point where the SIU is in that position? If there is non-compliance by state institutions, the SIU is effectively “stuck”. How can the legislation be changed?

Mr Godi said that the Committee could take this point as an observation.

Ms N Mente (EFF) said that she was under the impression that the SIU had the power to arrest suspects, however the presentation revealed that this was beyond the scope of the SIU mandate. She noted that the Standing Committee on the Auditor-General was currently in the process of drafting a Bill to extend the powers of AGSA in terms of recommendations. She cautioned that the SIU’s hope for a legislative change should not be taken for granted, considering the number of Bills that “slip through the fingers” in Parliament. Who bears the cost of litigation when SIU institutes civil litigation proceedings? Does the person the SIU litigates against bear these costs? Is SIU able to sanction the pension funds of individuals found guilty of corruption and maladministration? In terms of initiating investigations, how can the SIU expect institutions to not approach private forensic firms if it only employs three forensic accountants? Is it only institutions that approach the SIU, or is information from whistleblowers also accepted?

Adv Mothibi replied that the Judicial Matters Amendment Bill regularises pre-proclamation activities in terms of SIU’s ability to utilise its powers. SIU is also busy with the “next round” of legislative proposals pertaining to its funding model, and the issuance of remedial action. He noted that these legislative proposals still require further consideration. He replied that the SIU does carry the costs of civil litigation. Depending on the outcome of the case, the court may issue the costs to the litigated party. However, there is a need for a change in the litigation process to drive the outcome. SIU works with the State Attorney to ensure that the legal representatives are properly appointed. In terms of sanctioning pension interests, a court order would be necessary through a civil litigation process. After finalising reports, a common practice is that state institutions cannot take action because the employee in question had already resigned. There should be measures in place to insist on freezing pension interests. However any proceedings to freeze pension interests must go through the normal legal process. SIU often receives documentation from whistleblowers, at which point the SIU verifies the information and begins the pre-proclamation process. The SIU also welcomes state institutions coming forward.

Ms T Chiloane (ANC) asked which staff had been assigned to investigate the SABC proclamation. Do these employees have the necessary skills to undertake this investigation? What process does SIU use to allocate staff to specific proclamations? She requested a list of SIU staff currently assigned to the SABC proclamation. The SIU employment equity statistics did not look satisfactory in terms of demographics. How does SIU plan to address this? Are any consultants currently employed by SIU? If so, how many, and how long are they contracted for? Does SIU have a progress report on the investigation into Msunduzi Municipality and Eskom? Considering the scale of the investigation into the power utility, how long will the investigation into Eskom take? Could the SIU provide the Committee with an update on the “Hillcrest” issue that appeared in local newspapers in 2016?

Adv Mothibi replied that the team undertaking the Eskom investigation was in place, and currently under the leadership of the programme director, Ms Howes. He assured the Committee that the team will be able to handle the investigation, and that the names and skill levels of the team could be provided if necessary. Adv Mothibi highlighted the difference between ‘forensic accountants’ and ‘forensic investigators.’, the former being chartered accountants. He admitted that the forensic accountants are often stretched in terms of workload, leading to slower turnaround times for investigations. Adv Mothibi replied that the transformation of its staff complement was an inherent imperative. To this extent, the SIU must look to reach its employment equity goals while simultaneously improving its resourcing. He said that the SIU does not currently employ any external consultants, although the previous operating model had incorporated outsourcing. Regarding the investigation into the Msunduzi Municipality, no details are available, however an update can be provided at a later stage. In terms of the report on Eskom Holdings Ltd, he noted that the investigation had been finalised and the report submitted on 12 July 2017. The SIU made 3475 disciplinary recommendations, and 2 criminal referrals as a consequence of the investigation. Adv Mothibi replied that he was not aware of any “Hillcrest” matter, but would gladly listen to any information available.

Ms Chiloane said that she could provide Adv Mothibi with further information on the “Hillcrest” matter. Can the SIU elaborate on the 3 475 disciplinary recommendations from the Eskom investigation?

Adv Mothibi replied that during investigations, a primary focus point was to check for conflicts of interest. This is achieved through running data checks to see if employees are in fact doing business with Eskom Holdings Ltd. There were a number of individuals implicated from a single investigation, and the SIU can provide further details on the criminal referrals if necessary.

Mr Brauteseth requested that SIU identify the bottlenecks in its operations. How many forensic investigators and data analysis professionals does the SIU employ? He asserted that the issue of consultants in the industry was not a “swear word’, but necessary in times when the volume of work is heavy. For this reason, the Committee should be cautious of the narrative of criticising the use of private firms.

Ms Chiloane raised a point of order, arguing that SCOPA should be concerned about the use of private consultants.

Mr Brauteseth argued that Adv Mothibi has admitted to using outside consultants during times when the SIU was busy. How does it make sense to criticise the use of outside firms when the turnaround time of the SIU is so slow? Does SIU actually have the capacity to sustainably conduct its investigations independently? He asked how the figure was ascertained for the ‘value of potential loss prevented’ in the SIU presentation. Is SIU certain that there is no SABC “mole” within the investigating staff in the SIU investigation into the SABC?

Adv Mothibi replied that the SIU employed a number of forensic investigators, however he was not aware of the exact figure. The information included in the presentation was not this specific. He confirmed that the SIU employed three forensic accountants.

Mr Brauteseth accused Adv Mothibi of side-stepping his question. Is Adv Mothibi leading the Committee away from the fact that the SIU does not have the capacity to work? How can the SIU Head not know how many forensic investigators or data analysis professionals there are? He stressed the severity of this situation. Has the SIU considered recruiting young people to study investigative sciences through bursaries?

Adv Mothibi replied that SIU had provided the Committee with a breakdown of its employee headcount in the presentation, however the data had been presented in a manner more general than his question required. If there is a need to provide specifics, the SIU would do so. The SIU does not contract with consultants, nor does it slate them, instead the SIU uses an insourcing model which recruits professionals to become contract employees. Although SIU does not have the power to legally compel state institutions to act on its recommendations, its powers extend to making witnesses testify under oath and seizing evidence. The SIU may require legislative amendments in terms of remedial action, as this is done only in an administrative capacity at the moment. On the question of the ‘value of potential loss prevented’, where an irregular contract is cancelled early because of an SIU investigation, the amount that would have been paid on the years outstanding falls into this category. In terms of bottlenecks at the SIU, there has been emphasis on bringing greater efficiency to the proclamation process. Initially there were no timelines indicated for this process, however upon discussion, certain timelines were agreed upon. He noted the significance of judicial and legal requirements during the process. The objective was to reduce turnaround time on proclamations to three months.

Mr Brauteseth asked if the SIU currently had a bursary system, and if any SABC staff members were potentially involved in the SIU investigation.

Adv Mothibi replied that the SIU did have a bursary scheme which was taken up by many of its employees.

Mr Godi said Mr Brauteseth’s question pertained more to recruiting students from universities.

Adv Mothibi admitted that there was not much happening in that space, but recognised the need for mentorship programmes to encourage students to take up forensic studies. This did form part of the SIU strategy.

Mr Ross asked if any progress had been made on the SIU special tribunals? Where do the special tribunals fit into the SIU’s initiatives and financial modelling?

Adv Mothibi replied that the SIU had engaged with DOJ to assist in the establishment of the special tribunals. The SIU currently awaits the appointment of the Judge President of the tribunal, and can thereafter focus efforts on developing the support structure. He recently went on a personal visit to the tribunal infrastructure in the Eastern Cape and was encouraged by the progress made. Once the courts become operational, some of the referrals from the new proclamations can be channeled towards the tribunals. He noted that there were some budgetary issues in planning for additional resource requirements.

Ms N Khunou (ANC) said that the staff complement reported by the SIU did not make sense, as it did not give the Committee a sense of how the office is structured. With reference to the SIU Annual Report, the SIU’s achievements are not as convincing when compared with the number of problems at SIU. The Annual Report made reference to supply chain management irregularities and “service providers”, is this another term for consultants? How much does SIU spend on the leases for all its facilities, and when do these contracts expire? She noted that most departments appearing before SCOPA outsource their forensic investigations. How has SIU incurred such high costs without the use of consultants? She requested that the Committee be provided with a list of the consultants used by SIU.

Adv Mothibi replied that the SIU resourcing model is based on having full-time employees, but where it becomes apparent that contract employees are needed, the SIU will recruit them. He reiterated that the SIU does not utilise the services of consultants for forensic investigations. In terms of “service providers” referenced in the Annual Report, these were companies providing basic office services. SIU had made use of consultants in the past, which brought about the supply chain management irregularities. SIU operates in a complex environment, and had previously administered the Criminal Asset Recovery Account (CARA) fund, legislated by the Prevention of Organised Crime Act. The fund is utilised by law enforcement agencies to combat crime, including corruption. When SIU administered the CARA fund, private forensic investigators were procured through the fund to assist the Anti-Corruption Task Team. SIU later identified that some consultants were appointed outside of the supply chain management process, and thereafter moved to the policy of insourcing. The CARA fund is now administered by the DOJ. He stressed the need to develop internal capacity rather than make use of external help. He said that most of the buildings occupied by the SIU are leased.

Ms Khunou asked how much SIU was paying on all of its lease contracts.

Adv Mothibi replied that the SIU had offices in every province, excluding the Northern Cape, however he did not have the exact figure on hand.

Ms Khunou requested that the CFO report this figure.

Mr Andre Gernandt SIU CFO, reported that there were nine offices, and an amount of R27.8 million was being paid for premises leased.

Ms Khunou said that it was a problem that state entities generally lease offices. It would be better that the state owned its own premises for financial and security reasons. She cited the robbery at offices of the Directorate for Priority Crime Investigation (Hawks). How long will it take for the SABC investigation to be completed?

Mr Godi asked if SIU had obtained a list of the non-paying departments.

Adv Mothibi replied that a list had been compiled, but was not yet ready for submission. SIU had identified more than 20 departments.

Mr Godi requested that SIU submit a list in writing with the names of the entities, the amounts owed, and the duration of non-payment.

Mr Kekana said the Committee should consider how to structure its formal relationship with SIU looking forward.

Ms Chiloane asked if the forensic accountants were insourced, considering it is a highly specialised skill. Does SIU ever insource South African Police Service (SAPS) members or retired individuals? How many cases has SIU completed since 2013/14? What happens when an investigation lapses?

Mr Ross said that Mr Kekana had made an “excellent proposition”. He noted that SCOPA had first come to prominence through partnership with law enforcement agencies, and that it may prove useful for the SIU to delegate a member to engage with SCOPA.

Mr Godi asked if a proclamation has ever been denied by the President. How can the SIU improve on the turnaround time from proclamation approval to gazetting? What are the specific challenges regarding the referral of cases to the NPA? How many cases reported to the NPA are outstanding, and for what periods? In terms of the SIU providing feedback to departments, he suggested that this should not happen strictly with regards to justifying payments. The SIU presentation referred to ‘North-West Province Municipalities’. Is there no specific information available on the individual municipalities? The establishment of special tribunals should be a key area of focus in bringing the SIU recommendations to fruition. On enhanced powers, he said that consequence management is a priority area. He noted that AGSA is making recommendations about fruitless and wasteful expenditure on 8 September. Within the current atmosphere, this could be an opportune moment to establish the SIU as the most effective organ in the fight against corruption. He suggested that it might be a more effective practice to refer final reports to Parliament, as opposed to strictly submitting the final reports to the President and to the department. The Committee would look into how to institutionalise its working relationship with the SIU.

Adv Mothibi replied that SIU would take the Committee’s guidance on how to institutionalise its relationship with SCOPA. He said that specialists are insourced when required according to the SIU resourcing model,. After it becomes apparent that some projects require specialised skills, the relevant personnel are acquired through the supply chain management process. Forensic accountants would traditionally fall into the “specialists” category; however, it has become clear that a level of internal capacity is required for this position. With this said, SIU was beginning to build its own capacity in this area. SIU does have a working relationship with SAPS. However as per legislation, criminal referrals identified by the SIU are taken directly to the NPA. If the NPA decides the matter referred is a crime beyond reasonable doubt, it is then referred to the SAPS, and a docket is registered. SIU would then work together with SAPS to ensure a proper investigation is conducted. The average time taken from proclamation to submission of the final report is around three years but SIU is actively looking to reduce this period. Theoretically, an investigation can go on indefinitely, as there is no expiry period attached to the proclamation. However, the SIU has realised that if it maintains the current trajectory of long investigations, it will not be as effective as it needs to be.

Addressing the questions raised by the Chairperson, Adv Mothibi replied that he was not aware of any proclamations declined by the President. In terms of criminal referrals, 586 matters have been referred to the NPA. In terms of feedback from state institutions, he said that through debt analysis, the SIU has realised that departments are not willing to approve payments for reports they do not receive. To mitigate this, the SIU provides these institutions with statements of the deliverables and outcomes of the investigation so that there is a basis to pay. He agreed with the Chairperson’s prioritisation of consequence management. However , it is currently the head of the department under investigation that has the fiduciary duty to ensure that the SIU recommendations are taken on. Currently, there is no legislative “push” in this regard. He noted that there were 24 municipalities under investigation in the North West Province from a single proclamation

Mr Brauteseth asked whether a report adopted by SCOPA could be taken to the National Assembly.

Mr Godi said that the point he was making was for SCOPA to compile its own report on the SIU investigation into the Life Esidimeni tragedy, for instance.

Mr Kekana said that this was an issue that the Committee needed to fine tune.

The Chairperson agreed and the meeting was adjourned.


 

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