SABC Investigation Report 2011: SIU briefing; Terms of reference (ToR) for 2017 SABC investigation

Meeting report

SIU Mandate

Adv Andy Mothibi, Head: Special Investigating Unit (SIU), said the presentation would focus on the legislative mandate, Proclamation R58 of 2010, its scope and results, Proclamation R29 of 2017, and its scope and status. The major functions were twofold -- to investigate corruption, malpractice and maladministration, and to institute civil proceedings.

The SIU had been established in terms of the Special Investigating Units and Special Tribunals Act 74 of 1996.  In terms of the Act, it was mandated to investigate matters in respect of the affairs of a state institution and state-owned enterprises, or where public money or public/State property was involved or where unlawful or improper conduct by any person had caused or might cause serious harm to the interests of the public. The mandate included investigating maladministration and corruption matters in the state institutions. Such investigations were authorised through the issue of a Proclamation by the President of South Africa.

The SIU performed the following functions:

• Investigated corruption, malpractice and serious maladministration;
• Instituted civil proceedings resulting from its investigations to correct any wrongdoing where causes of action could be found in law, and recovered funds due to the state and prevented future losses to the state, and set aside contracts and irregular appointments;
• Recommended disciplinary action against officials with supporting evidence;
• Referred evidence of criminality to the National Prosecuting Authority (NPA) for prosecutions, and to the Asset Forfeiture Unit for recovery of the proceeds of crime;
• Recommended systemic changes to improve systems and processes in the affected areas of the relevant state institutions; and
• Reported to the President and Parliament.

The SIU was in regular contact with the accounting authorities of state Institutions to follow up on recommendations. Regular updates were also done with the NPA and the Presidency. Employees of the SIU were experts in forensic data analysis, forensic accounting, forensic investigation, litigation, legal and cyber forensic.

Proclamation R58 of 2010

Adv Mothibi said that in March 2010, the newly appointed board of the SABC, under the leadership of Dr Ben Ngubane, had approached the SIU. In order to act on the recommendations contained within the Auditor General of South Africa’s (AGSA’s) report, the SABC Board had requested the SIU to conduct investigations into these main areas: potential conflicts of interest, salary audit, revenue collection and contracts, and to assist the South African Police Service (SAPS) with the finalisation of matters referred for criminal prosecution. Thereafter, the President had issued Proclamation R58 of 2010, as published in Government Gazette 33718 dated 29 October 2010. The investigation was concluded, and the SABC was provided with reports. The SIU also submitted the report to the office of the President in June 2013.

In terms of proclamation R58 of 2010, the SIU was mandated to conduct an investigation into, inter alia, allegations of serious maladministration in connection with the affairs of the SABC; improper or unlawful conduct by Board members, officials and/or employees of the SABC; unlawful appropriation or expenditure of public money or property; any unlawful, irregular or unapproved acquisitive act, transaction, measure or practice having a bearing upon state property; and intentional or negligent loss of public money or damage to public property. Further to the Proclamation, the Board of the SABC requested the SIU, in a formal letter dated 11 May 2011, to assist with concluding the outstanding criminal matters related to the investigation, and to use all resources available to ensure that any money or assets illegally or fraudulently taken from the SABC were indeed recovered. 

Adv Mothibi highlighted main findings of the outcomes of investigation. The SIU had identified irregular expenditure amounting to R428 million, which included eight procurement matters totalling R275.7 million, and the appointment of 16 consultants at a cost of R153 million. It had also identified fruitless and wasteful expenditure amounting to R36 million, which included a payment of R9.6 million to High Television (HiTV). It found non-compliance with policies, contracts or transactions amounting to R1.2 billion.

The SIU had referred 464 disciplinary matters to the SABC for action. The majority of these matters related to a conflict of interest and/or not declaring their business interests. Other referrals included non-compliance with SABC policies. As a result of the SIU’s referral of disciplinary matters, 273 matters were proceeded with, as documentation not available for the balance. Of the 273 matters, 127 employees were found guilty; 144 employees were found not guilty; and two employees resigned. The SIU referred matters to the South African Revenue Service (SARS) amounting to R35 million, as the SABC had made payments without due consideration of the employee tax implications. The SIU was, at the time of the presentation, following up on the status of this. The SIU had identified potential recoveries amounting to R207 000, of which R184 268 was recovered from an SABC employee for abuse of travel benefits to the Beijing Olympics.

The SIU had identified and referred five criminal matters to the SAPS for registration and possible criminal prosecution. It had assisted the SABC with the investigation of ten criminal matters, five of which were referred to the SAPS Specialised Commercial Crime Unit (SCCU) after the appointment of the SIU. It would engage afresh with the SCCU to determine if any further assistance was required to conclude the two matters still under investigation. It would also establish the reasons that several of the criminal cases were withdrawn in court and/or closed by the SAPS.

The details of the withdrawn or closed cases were set out as follows: Ms Matilda Gaboo (International Acquisitions); Clover S.A. (Pty) Ltd; Mr Strini Naicker - Mango Airlines (Tulca (Pty) Ltd) and Nestle South Africa (Pty) Ltd; Mr Mafika Sihlali  (former SABC Head of Legal); RMN Productions CC; South African Music Rights Organisation (SAMRO); Oilers Clothing CC; World cup contracts; The Nash Nair Photography CC; and the SAPS Gun Amnesty campaign.

Referring to the Board inquiry, Adv Mothibi said that the National Assembly had established the ad hoc Committee on the SABC Board Inquiry (the Committee) to inquire inter alia into the fitness of the SABC Board to discharge its duties as prescribed in the Broadcasting Act 4 of 1999 and any other applicable legislation. This followed after widespread concern from the public about the SABC’s ability to exercise its mandate as the public broadcaster. In addition, the Board could no longer convene quorate meetings, as several non-executive Board members had been removed or had resigned. There was prima facie evidence at that stage that the SABC's primary mandate as a national public broadcaster had been compromised by the lapse of governance and management within the SABC, which ultimately contributed to the Board’s inability to discharge its fiduciary responsibilities.

Proclamation R29 of 2017

Referring to the relationship between the SIU and SABC, Adv Mothibi said that the SIU had approached the SABC Interim Board and engaged with them on 26 April 2017. The Interim Board had passed a resolution on 26 April 2017 for the SIU to conduct an investigation and a task team of SABC members was set up to work with the Unit. After considering the comments of the Committee and upon consultation with the task team – which had requested the investigation of certain procurement contracts to be prioritised -- the SIU had submitted a motivation for a proclamation to the Presidency. As a result, Proclamation R29 of 2017 was published on 1 September 2017. The Proclamation mandated the following broad areas of investigation:

• The procurement of, and contracting for, goods, works or services by or on behalf of the SABC and payments and related unauthorised, irregular or fruitless and wasteful expenditure incurred by the SABC or the State in respect of 8 contracts listed;
• Maladministration in the affairs of the SABC and any losses or prejudice suffered by the SABC or the state as a result of such maladministration in relation to undisclosed or unauthorised interests;
• The mismanagement of finances, rights, assets or liabilities of the SABC, including the selling of assets and rights;
• Non-viable business transactions concluded by or on behalf of the SABC;
• Irregular appointment and promotion of staff, as well as the payment of salaries, increases, bonuses and other forms of remuneration that were not due, owing or payable;
• Any interests members of the personnel of the SABC may have had with regard to contractors, suppliers or service providers who bid for work or did business with the SABC; or contracts awarded

The focus areas identified by the SABC task team on 8 May 2017 had been prioritised and dealt with in the first phase of the project. The broad scope of the schedule to the proclamation would allow additional matters to be considered for inclusion in the investigation. Should further matters be identified which fell outside the scope of the proclamation, the SIU would assess them and, if appropriate, motivate for the extension of the proclamation scope. It had already identified additional matters to be investigated based on the initial review conducted of the available documentation and information provided to it by whistle blowers. As the investigation progressed, there may be further matters identified. These matters would be assessed for possible inclusion in Phase Two of the investigation.

The SIU had adopted an investigative methodology with a phased approach, given the volume of matters to be investigated. In each of the contracts listed in the proclamation the SIU is conducting a supply chain management (SCM) investigation as well as a value for money investigation and profiling of identified role players for corruption indicators. These contracts were entered into with the following service providers:

Lorna Vision (Pty) Ltd – R62m

Vision View – R23m

Sekela Xabiso CA Incorporated – R31m

Lezaf Consulting cc – R7m

Gekkonomix (Pty) Ltd (trading as Infonomix ) – R4.5m (advance payment)

Asante Sana (Pty) Ltd – R21m

Foxton Communicating (Pty) Ltd – R1.2m

Mott MacDonald (Pty) Ltd – R8m

MultiChoice contract regarding sale of SABC archives – R460m

With regard to the Multi-Choice investigation, the investigation focussed on the legality of the agreement (including subsequent amendments), including whether any provisions of the following were contravened or were not complied with:

• The relevant encryption policy and/or related policies;
• The Broadcasting Act 4 of 1999;
• Any code of conduct for broadcasting services (for example, as prescribed in terms of the Electronic Communications Act 36 of 2005);
• The Prevention and Combatting of Corrupt Activities Act, No.12 of 2004;
• The Public Finance Management Act, No. 1 of 1999;
• The roles played by individuals involved in the process and whether any of them benefited unduly; Whether the agreement was viable and/or in the best interests of the SABC; and
• Whether the SABC has in fact received all payments due to it.

The investigations of the above-mentioned procurement contracts were all at the stage where the relevant documentation had been obtained, reviewed and analysed. Interviews had been conducted with most of the major role players at the SABC. The outstanding work was largely comprised of formal interviews to be conducted with certain individuals in terms of the provisions of Section 5 of the SIU Act -- which was a time consuming process -- and finalisation of written affidavits in order to make determination on the remedial action to be taken by the SIU and/or the SABC.

Regarrding the status of phase one, Adv Mothibi referred to the irregular appointments and promotion of staff, and said the SIU was focusing on the appointment process, maladministration and possible corruption by those involved in making the appointments of the eight officials concerned. The four listed below were reported on in the Public Protector’s Report and/or the Ad Hoc Committee Report and/or the SIU report related to the previous proclamation: Sully Motsweni (Public Protector’s Report); Thobekile Khumalo (Public Protector’s Report); Itani Tsietsi (Ad Hoc Committee’s Report); and Guga Duda (SABC Forensic Report).

Discussion

The Chairperson said that there would be questions on MultiChoice, but first asked whether there was nothing to report on ANN7 in terms of the Inquiry Committee. This should be brought into light before Members started engaging with the presentation.

Adv Mothibi responded that this matter had come up when the SIU engaged with the SABC Board, and the Inquiry Committee had looked at it. The SIU had not looked into this matter because the Public Protector had dealt with it, and she had indicated in her report that that there would be a phase two. At the SABC, they had wanted to make sure that they did not cause duplication. However, the SIU had indicated that it wanted to get involved because the SABC was at risk. There was a risk of litigation. The information at the SIU was that the contract with the ANN7 had been cancelled, and ANN7 had instituted legal action against the SABC to quantify their amount, which was about R85 million. The SIU felt that it had a duty to assist the SABC and be part of the litigation process. The decision would be finalised soon.

Ms P van Damme (DA) asked further clarity on the response given.

Adv Mothibi said that he implied that the case of ANN7 was being looked at. The SIU had engaged with the Presidency because the litigation was imminent. It wanted to be part of the ANN7 matter even though this fact was not included in the presentation. It was not involved in the matter because the Public Protector had indicated that there would be phase two investigation at some point. The SIU wanted to know when the phase two would be commenced. It had engaged with the Public Protector, who indicated that phase two would be starting soon. At that stage, the SIU would get involved, but it would ensure that there was no duplication. The rationale behind involvement was the litigation that was imminent. There was a need to defend the SABC.

Mr M Kalako (ANC) welcomed the updates on the ANN7 case and other cases. He said that the SABC Board members who were present should assist in making the matter clear. Clarification was needed. He was aware of the interim report which had been developed by the Committee, but it might not be very detailed, as the phase two report would be. He wanted the SIU to help Members to understand the preliminary report. He also wanted to understand those points highlighted in the presentation, in particular those referring to staff and personnel at the SABC, and whether the Interim Board had taken action against individuals. Were they still employees of the SABC? The SIU had indicated that it had been able to find 127 employees guilty. Members needed to get some information on why the NPA had declined to prosecute. This was a matter of concern. He wanted to know what the NPA was doing about these cases, and therefore it should be invited to brief the Committee. There was a need to recover some monies on the so-called ‘succession fees’ and around (former COO) Mr Hlaudi Motsoeneng. Had the SIU looked into whether Mr Motsoeneng should pay back money, because Mr James Aguma (former CEO) had insisted that he should be paid the money? Members of the Board who approved Mr Motsoeneng’s payment should be held accountable.

Ms N Tolashe (ANC) wanted to know whether the SIU was satisfied with what had happened between the time of submitting the report to the President and making sure that the machinery started to move. This was important, because the assumption was that the government was corrupt and that no one cared. She could see that the SIU had done very good work. Was the SIU happy with the time it was given to investigate and the feedback given on the submission? She would like to hear from the Board what progress they had made in trying to move forward. There should be a meeting between the Committee and the NPA for it to explain why it should not prosecute. The public should be convinced by the NPA that it was not just sleeping in its offices, but that there were good grounds not to prosecute. On the Public Protector’s Report, she said the main question was when the phase two would start, and the public should be advised. The public should be convinced that that the process would be commenced soon, and that there was funds to do so. Things ought to happen and the Committee should know what the challenges were for the investigation process to be carried out. When people were found to be corrupt, there should be consequences. The SIU Tribunal should make sure that they were accountable. There ought to be a conclusion of an investigation. On the ANN7, she said that this was much in the public domain, and there were contradicting views on the matter. Therefore, the Board should take the Committee into its confidence and briefed it on exactly what the problems were,.

Mr R Tseli (ANC) said he now better understood the work the SIU was doing as it related to its mandate. He agreed with Ms Tolashe’s comments with regard to the SABC Board. The Board was present and could respond to their questions and concerns. It should indicate how far it had gone in implementing the outcomes and recommendations of the SIU report. This included the question of whether there had been disciplinary action. He referred to the issue of Beijing, and asked whether these employees were still with the SABC. The SIU had indicated that R183 million had been recovered, but what had happened to the money which was not recovered? Why was R207 000 not recovered? On the contracts under investigation, he asked whether the SIU was checking whether there was value for money. What had happened with the SCM investigations? When would contracts come to an end, and would there be engagement with contactors?

Ms M Matshoba (ANC) referred to the results of the SIU investigation in terms of Proclamation R58 of 2010, and asked whether those employees who had been found guilty were still working, or what action had been taken against them. Had the issue of set-top boxes been included in the investigation? If not, it should be investigated.

Mr L Mbinda (PAC) said that he was curious to know about the ANN7 issues.

Ms V van Dyk (DA), referring to appointment of 16 consultants at a cost of R153 million, asked whether criminal or disciplinary action had been taken. How much money had the SIU been able to recover? Had R11 million been recovered from Mr Motsoeneng? On the question of Beijing, was money recovered? Were the employees found guilty still working? What had happened to the two employees who had resigned -- had they resigned because they were guilty? If they were guilty, would they be prosecuted? In the SIU report, it was indicated that the Board would be criminally prosecuted if it was found that there was gross negligence or a violation of the Public Finance Management Act. There was financial misconduct involving 22 members of the Board. Was any criminal action taken against them?

Ms Van Damme applauded what the SIU had done. Its work appeared to have been clinically detailed, and was quite impressive. She raised serious concerns on matters referred to the NPA which it had decided not to prosecute. Had they given a report to the SIU to say why they did not want to prosecute? Had the NPA objected orally or in writing? Clarity was needed with regard to ANN7 in respect of its move to sue the SABC for cancelling the breakfast deals, and how the SIU would assist the SABC in the litigation. She was interested in the investigation, especially how witnesses felt. Was there any witness who felt threatened and/or did not want to come forward? Did they feel threatened in that they wanted to be interviewed in different locations? Did people at the SABC know that witnesses were being interviewed? What about the investigation of that murder which she knew had happened after speaking to investigators? Was there a general feeling among witnesses that they felt threatened? On Multichoice, was there any money to be recovered? There was R11 million to be recovered from Motsoeneng – had it been recovered? She asked clarity on another R10.7 million that were needed to be recovered. Was the Multichoice investigation related to the archives deal, and nothing else? She remarked that individuals who looted public institutions should not be allowed to resign or be dismissed with no further action being taken.                 

The Chairperson said that a meeting with the SABC would be scheduled to brief the Committee on how it was affected.

Referring to the disciplining of employees, Adv Mothibi responded that disciplinary action had been taken, especially in those cases where a conflict of interest was found. Those involved had been given written warnings. It was possible that some were still employed, while others had moved on.

On the question of the NPA, inefficiencies had been identified and he wanted to make sure that these gaps were closed. They could be closed if and when the SIU’s referrals were acted upon. Since they had signed a memorandum of understanding with the NPA, they had been meeting regularly. The SIU wanted to get a blow by blow account of the matters referred to the NPA and be advised whether action had been taken or not; and if not, why such action was not taken. From the strategy perspective, there was a gap. There was now an improvement in the relationship between the NPA and the SIU; however, if they had to add value, they ought to make a follow up.

On the question of recovering succession fees, he said the SIU was of the view that there was no legal basis for that, but civil suits could be instituted.

The R10.7 million was about the damages that the SABC would have suffered through the irregular appointment of staff, or those irregularly dismissed or ordered to leave the SABC, whom the SABC had to pay. The SIU was of the view that these conducts had resulted in damages that it had to claim on behalf of the SABC.

Adv Mothibi said that since he had assumed office, a lot had been done, including addressing the backlogs. The turning around of the SIU had ranged from between three to six years. On the question of Public Protector’s phase two investigation, he indicated that this had come up as a part of the SIU methodology. They had to ask first whether there was any state body that was involved with the matter in order to avoid duplications. At this stage, the SIU was satisfied. It was engaged with the Commissioner dealing with the matter, and would get involved in the litigation.

On the question of the Beijing trip, he said that some monies had been recovered. He did not have information of whether disciplinary action had been taken against those employees involved. However, a follow up would be made for the sake of reporting back to the Committee.

On the value for money, and whether contracts were still in existence, he said that some of contracts were still running, including the Multichoice contract. Others had ended and been set aside. The SIU had looked at contracts to determine whether they had run their course and whether there was any irregularity. Irregularities had been identified. Even if a contract had run its course, there was a possibility to recover.

On the employees that had resigned, the SABC was guided by the employment law, which indicated that action could be taken against an employee. It was difficult to take action against those who had ceased to be employee, given that there was no longer an employee-employer relationship. Civil actions were not regulated by employment law. However, resignation did not mean that a person could not be prosecuted in terms of civil and criminal actions.

Regarding the financial contraventions, he said that if there were infractions by a previous body, they would be identified and action would be taken.

On witnesses feeling threatened, he responded that the SIU had engaged with investigators to see whether witness had been threatened. In cases where a witness was or felt threatened, witness protection would be invoked. He had not received a report of a witness who felt threatened. The murder had awakened them, and measures had been taken once they become aware of threats against a witness. A witness was placed in an environment where he or she felt safe.

Ms W Newhoudt-Druchem (ANC) asked about compliance amounting R1.2 million. Was this because of not understanding the policy or ignoring the policy, and what would be remedial action in the future?

Ms Toloshe asked what the timeline was between the submission of the report to the Presidency and feedback from the Presidency.

SABC’s response

Ms Khanyisile Kweyama, Interim Chairperson: SABC, said that the responses would be brief because they had thought they would only be listeners at the meeting.

The issue of ANN7 had been explained enough. The SIU had not conducted an investigation into it in order to avoid duplication. This was the first contract that had been cancelled by the Board, and it was working together with the SIU to ensure that everything was in order.

They did not have a list of all the employees who had been found guilty. They would have to get the list from the SIU in order to indicate those who had been, dismissed or not. Sully Motsweni was suspended, while the others – Thobekile Khumalo, Itani Tsietsi and Guga Dudu – were no longer employees of the  SABC.

After Mr Motsoeneng had been dismissed, it was found that he had received R11 million, which had been paid directly as commission for the Multichoice contract. The R10.7 million was for damages, and that was why these amounts were listed separately.

Mr Aguma had been mentioned several times. The contracts appearing on slide 24 had given rise to disciplinary action against him. The initial investigation showed that he had assisted bidders in one way or another. Mr Aguma had resigned before he could be subjected to disciplinary action. The pension fund of Mr Aguma and Mr Motsoeneng had been approached for money to be recovered.

The Chairperson said that it was a pity that R11 million would be recovered from Mr Motsoeneng’s pension fund. It was the Board that had decided to give him commission as an individual. The problem was that the members of the Board were no longer there.

Ms Kweyama agreed, and remarked that the issue was beyond the current Board of the SABC, the Ministry, the Committee and shareholders. The recovery was beyond the executive. There was regular reporting by the SIU to the Board. On the value for money, they had been able to recover money with regard to certain contracts. They could not comment on the set-top boxes.

The Chairperson said that the issue of set-top boxes belonged to the Department of Communications. The matter would be followed up, and would not fall between the cracks.

Adv Mothibi said that the issue of set-top boxes was an issue that the SABC and the Department had to look at.

On the question on non-compliance, he said that the R1.2 million that was mentioned in the presentation had been quantified on the basis of very specific contracts. If a stationery contract was concluded and valued at R1 million, and if an action was quantified in a civil action, R1 million would not be recovered. When the contact was found to be irregular, the court would be approached for a declaratory order, declaring that a certain contract was irregular. The second phase of litigation was to ask the court to make a just and equitable order. The court would look at what was due to the state institutions and what the other party was defending was due. The systemic recommendations that were made at the end, even in between, were to improve the financial control or financial risk management. If there was a lack of training identified, it was for an institution to rectify that. What was problematic was when an institution was not firm in controlling non-compliance.

On the submission of the report to the Presidency, he responded that once a report was submitted to the Presidency, it was viewed and treated as the President’s report. The SUI had done its work. There was a memorandum of understanding signed between the SIU and President to state that the SIU, as an interested party, could do a follow up.

Ms Matshoba said that the Committee should interrogate the court ruling between Minister Faith Muthambi and eNCA. She would wait for the right time to pose questions to the Department of Communications.

Ms Tolashe asked whether the report had an influence on what had to be done, like taking people to court and matters like that. What were the end results,

The Chairperson thanked the SIU for its detailed and enlightening presentation. He remarked that when things were usually done, they were stuck somewhere until the Committee unblocked them. Unblocking could be possible if they engaged together. This was what the Committee had to do and ensure that the matter was moving. If unblocking required another Committee to do so, there should be a joint meeting to deal with the issue at hand.  The engagement with the SIU was not end of it. The Committee would continue to make a follow up on the progress and the SIU should make use of phone calls to report to the Committee on any matter arising. They should not wait until a date was scheduled to report to, or brief, the Committee.

Adoption of 2018 First Term Committee Programme

The 2018 Term Committee programme was considered and adopted with amendments.

The meeting was adjourned.