Special Investigating Unit 2019/20 Annual Performance Plan

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Justice and Correctional Services

09 July 2019
Chairperson: Mr G Magwanishe (ANC)
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Meeting Summary

The Special Investigating Unit provided an overview of the Special Investigating Unit before briefing the Committee on the 2019/20 Annual Performance Plan (APP) which aimed to promote engagement between SIU stakeholders and remedy poor investigation turnaround times as some investigations had taken five to seven years. The SIU and NPA had entered into a MOU to ensure that key cases are tracked and that there is engagement between the key stakeholders.

The current funding model of the SIU is unsustainable as 40% of the SIU budget is funded by SIU invoiced services which are not being paid. The SIU is owed R493 million by state entities. The outstanding debt poses a risk to SIU functioning, making it impossible for critical investigator posts to be filled.

Committee members praised the SIU APP but raised concern about the security measures of the SIU Head, specifically questioning the installation of blue lights and siren for his official vehicle. The SIU was requested to focus not only on the State Capture Commission but also the other commissions. Although it said all cases are important, the SIU said it was currently prioritising Life Esidimeni and Water Affairs matters.

With the establishment of the Special Tribunal in October 2019, the Committee hoped that the billions spent on civil litigation would be recovered and noted that members of the public wanted to see more arrests being made. Members asked about the lack of communication by SIU on what it knew about Bosasa a decade ago; if public funds had been spent on upgrading the personal security of the executive authority; the cause of undue delays in investigations; the delayed appointment of the SIU panel of experts; and the forensic investigator internships. Despite noting that SIU appeared to be in a state of perpetual reorganisation which indicates instability, the Committee praised the SIU for its work.

Meeting report

Special Investigating Unit (SIU) 2019/20 Annual Performance Plan
Adv Andy Mothibi, Special Investigating Unit Head, noted the SIU is a public entity that conducts investigations mandated by a proclamation from the President. Once the investigation is concluded the President is provided with a report on the findings.

The SIU has four key investigation outcomes: instituting civil litigation proceedings where there is potential for recovery of assets; prosecution referrals to the National Prosecuting Authority; disciplinary action referrals; and referrals to other regulatory bodies such as the South African Revenue Service (SARS) and the Financial Intelligence Centre.

The SIU works closely with Anti-Corruption Task Team stakeholders to conduct vulnerability sector assessments. Sectors vulnerable to fraud and corruption include health and construction as well as state owned enterprises. Prioritised vulnerable institutions currently include Eskom, South African Broadcasting Corporation (SABC), State Information Technology Agency (SITA), National Health Laboratory Services, Gauteng Provincial Department of Health (mental health care facilities), Health Professions Council of South Africa (HPCSA) and the Construction Industry Development Board.

SIU strategic goals have been delineated into three key programmes:
▪ Programme 1 aims at enabling core services to perform optimally by attracting a skilled workforce managed within a performance driven environment, assessing internal controls through internal audits and collaborating with stakeholders in support of enhanced service delivery and core business objectives.
▪ Programme 2 aims at achieving legal outcomes against perpetrators of maladministration by ensuring each case is reported and mentored centrally, assessing each allegation in accordance with standardised criteria, conducting forensic investigations, initiating the implementation of legal recommendations and increasing legal outcomes based on civil and other proceedings.
▪ Programme 3 aims to influence the root causes of maladministration and corruption by assisting state institutions with the prevention of the reoccurrence of reported cases and increasing public awareness on targeted anti-corruption behaviour.

SIU challenges included that its financial model was unsustainable; there was poor investigation turnaround times as investigations took five to seven years to complete; its performance management system was inadequate; its ICT environment was unsustainable and there was a lack of engagement between the SIU stakeholders because once investigations were completed the SIU did not provide updates to the relevant entities. However, the APP has been updated to remedy these issues.

Meetings of the various SIU Committees will be logged and made available to the public via the SIU website. This will ensure that the SIU is giving appropriate attention to state capture matters such as Bosasa. The National Projects Review Board will review active SIU investigation projects to ensure that investigations are not unduly delayed.

The SIU has signed a Memorandum of Understanding (MOU) with the NPA on its referral of 1 065 cases to the NPA during the past five years. The MOU ensures that there are ongoing engagements between the entities and is also a means for the SIU to monitor these cases. One of the focuses of the MOU is prioritising some of the referrals to speed up priority cases.

In 2014/2015, 3769 disciplinary referrals were made to state institutions with 3456 of these matters due to the Eskom investigation. The SIU will ensure that the SIU Reports to the President are made available to the Executive and relevant accounting authorities via the Presidency. This is to improve stakeholder engagement because previously the SIU did not follow up with stakeholders (like Eskom).

Adv Mothibi spoke about the establishment of the Special Tribunal. In February 2019, the President established the Special Tribunal and appointed Judge Gidfonia Mlindelwa Makhanya as the Tribunal President. Judges from various provincial divisions were also appointed to the Special Tribunal.

The SIU, Judge Makhanya and Department officials met and confirmed the seat of the Special Tribunal as well as the Regulations to the SIU Act to be promulgated and the applicable Rules of Practice for drafting. It is anticipated that the Special Tribunal will be operational by October 2019 although it is dependent on the Department of Justice facilitating the logistics.  

The Special Tribunal had been established to look at matters arising from the Zondo Commission of Inquiry into State Capture, and the other commissions. It would be looking into the allegations, including Bosasa. It will fast track finalisation of matters for civil litigation following the conclusion of their investigations for both public and private sector persons and entities.

Once the Special Tribunal is operational, it will deal with civil litigation to recover an estimated R14.7 billion. “We also want to involve the Asset Forfeiture Unit (AFU) in recouping the losses”, added Adv Mothibi. It would be preferable if the AFU were able to take its matters to the Special Tribunal to speed up recovery and seizure of assets.

Adv Mothibi noted the international work done by SIU by participating in the African Union, SADC and BRICS Anti-Corruption Working Groups and the United Nations Office on Drugs and Crime (UNODC). The SIU is benchmarking itself with the Hong Kong and Singapore framework. Hong Kong and Singapore have been declared the 14th and 3rd least corrupt place respectively.

SIU Budget 2019/20
Mr Andre Gernandt, Chief Financial Officer, SIU, stated that SIU has total revenue of R718 099 000 with total expenses of R718 099 000, indicating a break even. Despite not having a deficit he explained that the current SIU funding model is unsustainable. The South African government funds 60% of SIU budget whilst the remaining 40% is funded by SIU invoiced services. This is in stark contrast to similar organisations in other countries which are fully funded by their governments.

Key challenges of the current funding model include that the SIU invoices the senior officials of state institutions that are the subject of investigations which potentially poses a conflict of interest. Also, in many cases the cost of the SIU investigation has not been budgeted for as state institutions do not foresee and plan for the investigation of corrupt activities. As at 31 March 2019, local, provincial and national government entities owed SIU R493 million for services rendered.

The outstanding debt could pose a risk to SIU functioning if it is not addressed soon. Despite efforts to recoup the money, the debt has ballooned, making it impossible for some critical investigators’ posts to be filled.

The SIU, National Treasury and the Minister of Justice have sent letters to HoDs and CFOs about the outstanding debt. Feedback from the debtors indicated that the SIU did not supply the state institutions with feedback reports. Since receiving this feedback, the SIU has begun to supply progress reports to state institutions.

Adv Mothibi added that the SIU is financially sound but could have done “so much more” if the outstanding debt was paid.

Ms Neptune Mashego, Chief Human Capital Officer, SIU, provided an overview of the human resources statistics. The SIU has 531 permanent employees. Of these employees, 97% are permanent and 3% are on fixed term contracts. Women constitute 49% of employees.

The SIU is committed to upskilling its employees and has provided bursaries to 111 employees at an amount of R1.6 million. The Forensic Investigator Internship was also implemented to capacitate employees. The internship caters for 45 interns, 20 of which are internal candidates. Given the dissatisfaction expressed by staff that only 20 employees were allowed onto the internship programme, the SIU decided that the Forensic Investigator Internship will be an ongoing programme to ensure that more employees are upskilled.

Adv Mothibi concluded by saying that the SIU had received the Best Risk Management Award.

Adv H Mohamed (ANC) expressed his satisfaction with the MOU between the NPA and SIU to allow the latter to track matters but wanted to know more about what has been done to strengthen remedial action.

In response, Adv Mothibi explained that the MOU established a monitoring structure that would meet regularly to discuss each case. However, to date there has been no satisfactory progress in implementing the MOU. This is partly because the NPA has undergone a change in leadership but there is now a team in place at the NPA that will communicate with the SIU. Adv Mothibi was hopeful that with the establishment of the Investigative Directorate, NPA challenges would be addressed resulting in more movement in key cases.

Adv Mohamed suggested that the SIU ring-fence personnel expenditure (rather than goods and services) because the SIU is driven by human capital.

Adv Mothibi acknowledged that this was a possibility, but it would require a careful consideration of the Treasury Regulations.

Adv Mohamed requested more information on the Special Tribunal, specifically when it will come into operation.

Adv Mothibi confirmed that a site for the Special Tribunal has been established at the South Gauteng High Court, also known as the Booysens Court. However, the exact date on which it will become operational is dependent on the Department of Justice who is mandated with arranging the logistics.

Adv Mohamed asked about the relationship between the Auditor General and the SIU as the Auditor General can now refer material irregularities to a public body. He specifically wanted to know if the SIU had attempted to strengthen its relationship with the AG.

Adv Mothibi confirmed that the SIU had several engagements with the AG about mechanisms for referring matters to the SIU. After these engagements, the AG concluded an agreement with the SIU. The SIU expects to receive formal referrals from the AG in due course.

Adv G Breytenbach (DA) commended the SIU on their “impressive presentation” before asking about the frequent overseas travel by the SIU. She asked who incurred the costs for a union representative’s 30 day stay in Hong Kong.

Adv Mothibi refuted the statement that a union representative spent 30 days in Hong Kong and confirmed that even when there is overseas travel, a business case must be put forward to motivate for funding and such processes are vigorously audited.

Adv Breytenbach noted that in the SIU’s previous APP the SIU was committed to reducing its reliance on government funding. However, there is no mention of this in the current APP. She asked for the reason for removing this target.

Adv Mothibi explained that this target was removed because it is not entirely within the SIU or government’s control.

Adv Breytenbach questioned the rationale for considering union members as stakeholders and asked who bears union representative costs.

Adv Mothibi explained that the SIU operates in a country where unions are given recognition. The Labour Relations Act (LRA) refers to the right of association of members. This right is determined by unions. Provisions in the LRA do not allow for the proliferation of union members. Therefore, there is a Recognition Agreement between SIU and NEHAWU (as a majority representative union). When considering stakeholders, unions cannot be excluded. It was nearly impossible to move the organisation forward without the co-operation of the union. Since their arrival, the situation has improved. Until such time as SIU is proved wrong, it will continue to view unions as stakeholders. Union related expenses are prescribed in the Recognition Agreement. However, union related activities initiated by management are paid for by management.

Adv Breytenbach enquired about Adv Mothibi’s security measures. In particular, she asked if it was true that he ordered the installation of blue lights and sirens in the BMW that he purchased for R857 890. She was particularly interested in the specific regulations empowering him to install blue lights and sirens in the BMW. She asked who employs his bodyguards, and under which legislation do they drive the said vehicle.

Adv Mothibi replied that upon his arrival at the SIU in 2016, he familiarised himself with all relevant regulations to ensure that the SIU risk profile as well as his security was taken care of. The security measures were taken from the recommendations of a SAPS report. However, for security reasons, he did not want to elaborate in public but he would make the written report available to the Committee.

Adv Mothibi explained that as SIU head he was allowed the use of the official vehicle but continued to use his own personal vehicle, at a risk to himself, from 2016 to 2018. He elaborated that the make of the vehicle may be misleading because he bought a second-hand vehicle despite the authorised amount. The SIU is committed to following due process.

Adv Breytenbach told Adv Mothibi that he “protest[s] too much” and should put his “mild paranoia to rest” before inquiring about the progress on the Nkandla and Bosasa matters.

Adv Mothibi confirmed that the Nkandla matter has been investigated and it was recommended that Public Works issue disciplinary processes. The SIU is currently occupied with the civil litigation aspect of the matter and recently appeared in a KwaZulu Natal court where the matter was postponed. The SIU is following up on the matter and believes that had the Special Tribunal been in operation, this matter would not have dragged on this long. “Although all cases are important, the Life Esidimeni and Water Affairs matters are currently being prioritised”, he added.

Mr W Horn (DA) noted that previously the Committee was briefed on proclamations as far back as 2010 and asked why this was not done in the current presentation.

Adv Mothibi explained that previously investigations took between five to seven years and remained on record therefore presentations referred to 2010 because 2010 investigations were still ongoing as late as 2016. The current presentation does not go as far back because SIU’s older investigations have been concluded.

Mr Horn acknowledged that the Forensic Investigator Internship is, in principle, a good initiative but given the intelligence he received it was not a seamless exercise especially with the involvement of unions. He asked if union members were given preference in the internship selection process, whether entrance exams were written and how many of those who performed well were selected. He asked if there were any mechanisms in place to ensure that non-union members were protected.

Adv Mothibi replied that NEHAWU is the only recognised trade union. Whilst employers supported other rival unions, SIU cannot bargain with them because they are unrecognised unions.

Mr Horn requested more information about an alleged overseas trip to Paris.

He also wanted to know whether security threats, such as poisoning, occur at the SIU and whether public funds have been spent on upgrading the personal security of the executive authority. In such cases there is a Ministerial Handbook covering the funding process.

Mr S Swart (ACDP) commended the SIU progress but said that members of the public want to see more arrests being made.

Adv Mothibi acknowledged that the public wants to see results but held that the SIU must first thoroughly investigate to obtain sufficient evidence before arresting.

Mr Swart asked if the Department of Justice and Correctional Services owes the SIU outstanding money.

Adv Mothibi confirmed that the Department of Justice owes the SIU money and that there has been engagement between the two about payment.

Mr Gernandt confirmed that Correctional Services is repaying its debt on an ongoing basis.

Mr Swart asked for an update, in writing, on the number of Correctional Services matters sitting with the SIU. He said that the Committee would like to see that the R14.7 billion spent on civil litigation is recovered and referred to the R3.7 billion and R467 million spent on litigating the Eskom and SABC matters respectively. He requested a status update on these matters.

Adv Mothibi confirmed that the SIU has been very public about the R3.7 billion spent on Eskom litigation. It included costs for investigations into Eskom’s irregular purchase of Tegeta coal. The R467 million spent on the SABC matter is the accumulative amount spent on litigation in civil courts. Matters that cannot be solved in the courts will be referred to the Special Tribunal to reduce costs.

Mr Swart sought clarity on the relationship between the Hawks and the SIU. He was concerned that there may duplication as both entities carry out investigations.

He asserted that in February 2019, the Minister said his department might have broken ties with Bosasa earlier and been able to recover money had the SIU given more detail in its report on the company a decade ago. Given this statement, Mr Swart asked what the SIU stance was.

Mr V Zungula (ATM) said that the presentation illustrates that “things are looking good” but asked if the SIU is confident that the MOU signed with the NPA will translate into assets being recovered. In particular, he wanted to know if the MOU content is structured well enough to ensure assets are recovered successfully.

Adv Mothibi confirmed having covered this point in response to a similar question by Adv Mohammed but pointed out that he was confident in the processes undertaken in the MOU between SIU and NPA.

Ms N Maseko-Jele (ANC) asked about the vacancy rates. In the 2018/19 APP, the SIU committed to reducing the vacancy rate to 14% but there is no indication in the current APP on mechanisms employed to do so.

Ms Neptune Mashego confirmed that the vacancy rate has occupied the SIU extensively. The acceptable benchmark is 10% and the SIU is committed to ensuring that the organisation is well resourced

Mr Q Dyanti (ANC) referred to page 12 of the presentation on the various investigation stages such as case registration, investigation, forensic analysis and requested a written response on the timelines for the stages.

Adv Mothibi confirmed that the SIU follows specific timelines for each stage and would submit these in writing to the Committee.

Mr Dyanti said that the SIU presentation focused on state capture, failing to mention the Nugent, PIC and Mokgoro Commissions of Inquiry.

Adv Mothibi confirmed that the SIU would engage with the outcomes of the Nugent Commission of Inquiry.

Mr Dyanti requested an age analysis of the 2018/19 referrals to the NPA to ensure that SIU is not merely “dumping files with the NPA”.

Adv Mothibi replied that he did not have an age analysis at hand but would submit it to the Committee in due course.

Mr Dyanti enquired about the steep decline in disciplinary referrals. In 2014/15, there were 3769 referrals which decreased to 335 referrals in 2018/19.

Adv Mothibi explained that the high number of referrals in 2014/15 was due to the Eskom investigations. That number is an outlier and it does not mean that the SIU is neglecting its referrals.

Mr Dyanti asked why the SIU uses numbers throughout the presentation but changes to percentages when dealing with the annual targets.

Adv Mothibi explained that the SIU is advised by performance management experts. Some outputs are numbers driven while others are percentage driven, hence the alternation between the two.

Ms W Newhoudt-Druchen (ANC) asked about the number of disabled employees and if SIU is meeting the 2% target.

Adv Mothibi acknowledged that there is room for improvement in the disability rate within the SIU. Although the SIU wants to attain the 2% target it must first ensure that the physical infrastructure of the SIU is disability-friendly so that said persons can perform optimally.

Ms Newhoudt-Druchen asked if the Department of Planning, Monitoring and Evaluation request that departments make payments within 30 days applied to the SIU as well.

Prof C Msimang (IFP) asked for the cause in investigation delays. Members are suspended whilst investigations are underway but continue to draw their salaries.

Adv Mothibi responded that the SIU is committed to ensuring a quicker turnaround time for investigations.

The Chairperson asked for the reason for several extensions in the appointment of the SIU panel of experts.

Mr Andre Gernandt replied that 31 different experts are needed which requires 31 separate tenders to be issued. Phase 1 of this process has been completed and the internal quality assurance process is being conducted. According to this process, if the entity exceeds 90 days then the appointments must be re-extended. Hence, the extensions are purely based on administrative reasons.

The Chairperson asked if the Anti-Corruption Task Team is functioning as he had previously read an article indicating that it was not functional.

He noted that there is a perpetual reorganisation of the SIU structure, indicating instability within the SIU.

Adv Mothibi explained that when he started at the organisation in 2016/17 the SIU underwent reorganisation, but it was not completely effected. This created internal consternation, CCMA complaints, payment progression issues which warranted a reorganisation. “It was the right time to reorganise the organisation”, added Adv Mothibi.

The Chairperson queried what was done with the R120 million surplus that SIU had in 2017/18 before confirming that the Committee would consider engaging other portfolio committees to ensure that the SIU debt is paid.

Before adjourning the meeting, the Chairperson commended the SIU on its work.

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