Orientation workshop continued

Public Accounts (SCOPA)

21 August 2019
Chairperson: Mr M Hlengwa (IFP)
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Meeting Summary

Members of the Standing Committee on Public Accounts (SCOPA) received induction and orientation briefings from the Department of National Treasury and the Special Investigating Unit.

The National Treasury described the mandate of the Department, the operations of the Accountant General and the Office of the Chief Procurement Officer, the initiatives undertaken to enforce consequences in terms of the Public Finance Management Act (PFMA), the challenges of unauthorised, irregular and fruitless expenditure, the abuse of supply chain processes through deviations and expansions, and the role of the audit committee and internal audit units.

Committee Members were concerned about the effectiveness of instruction notes given to government institutions, as it seemed as if they did not follow these instructions. They wanted to know what measures National Treasury had put in place to ensure that institutions complied. Other concerns included the borrowing at local government level, bail outs for state-owned enterprises (SOEs), the effectiveness of the Central Supplier Database, and the prevalence of personnel in acting positions at the Treasury.

The presentation from the department of the Special Investigating Unit covered its mandate, the processes involved in its operations, and the need for closer collaboration with SCOPA. Members were generally impressed with efforts of the SIU to fight corruption, but expressed frustration at the delays in bringing cases to court. The SIU acknowledged their concern, and said the delays were because the courts were clogged, but a special tribunal would come into force next month which would speed up the process.  

Members encouraged the SIU to engage more with the community and let them know about the work they were doing. They urged it to prioritise dealing with corruption at the local government level, and to finalise matters like the Mandela funeral scandal and the bogus lawyers in the Eastern Cape.

Meeting report

National Treasury Induction and Orientation


Ms Laura Mseme, Acting Head: Office of the Director General (DG), National Treasury (NT), outlined the mandate of Treasury, whose functions were set out in the Public Finance Management Act (PFMA). Treasury was responsible for promoting the national government’s fiscal policy and coordination of its macroeconomic policy. It was responsible for managing the budget preparation process and implementation of the national budget, including adjustment of the budget. Further, its mandate included implementation of the Division of Revenue Act (DoRA) and monitoring provincial budgets. It also enforced transparency and effective management in respect of revenue, expenditure, assets and liabilities of public entities and constitutional institutions. It was responsible for ensuring the stability and soundness of the financial system and financial services, and provides financial statistics.

NT contributed to six outcomes, and would contribute towards the seven apex priorities of government. It had eight programmes. These were:

  • Administration;
  • Economic policy, tax, financial regulation and research;
  • Public finance and budget management;
  • Asset and liability management;
  • Financial accounting and supply chain management (SCM) systems;
  • International financial relations;
  • Civil and military pensions, contributions to funds and other benefits; and
  • Technical support and development finance.

Ms Silindile Kubheka, Acting Accountant-General: NT, explained the PFMA model for accountability, strategic plans, outcomes/outputs, performance requirements, delegations/budget (outputs), financial statements/annual report and review and assessment of in-year management and reporting (financial and non-financial).

The governance framework overall was based on the PFMA addressing the Batho Pele principles and public service code of conduct.

The key function of the office of the Accountant-General was the assurance of an effective, efficient and transparent system through ensuring that institutions were well equipped and that functions were derived from the PFMA. The Chief Financial Officer (CFO) was the responsible official in execution of the mandate. NT worked in tandem with CFO forums. In this regard, Treasury ensured functions were well executed. On the previous audit outcomes, it had been found the regression in municipalities was challenged by the inadequate skills in some of the entities.

Ms Kubheka said PFMA sections guide the NT in assisting accounting officers/authorities to improve the levels of compliance by their respective institutions with all applicable compliance obligations.

In Section 38(1)(c) of the PFMA (Prevention), the Accounting Officer must take effective and appropriate steps to prevent fruitless and wasteful expenditure.                                                          

Section 38(1)(g) (Reporting) informs the Accounting Officer to take effective and appropriate disciplinary steps against any official in the service of the department or constitutional institution who makes or permits fruitless and wasteful expenditure.                                                

In Section 38(1)(h)(iii)/51(e)(iii) (Disciplinary action), the Accounting Officer must take effective and appropriate disciplinary steps against any official in the service of the department or constitutional institution who makes or permits fruitless and wasteful expenditure.     

Section (40)(3)(b)/55(b)(ii) (Disclosure in financial statements and annual report) focuses on the annual report and audited financial statements which include particulars of fruitless and wasteful expenditure that occurred during the financial year, and any disciplinary steps taken as a result of such fruitless and wasteful expenditure.

Section 45(c)/57(d) (Responsibility of officials) describes the requirement of an official of a department or constitutional institution to take effective and appropriate steps to prevent fruitless and wasteful expenditure within that official’s area of responsibility.

Ms Kubheka emphasised that consequence management was not happening, which meant departments were not implementing the requirement of this section.              

The section on unauthorised, irregular and fruitless and wasteful expenditure informed the Auditor-General (AG) to release a report on the state of municipalities and their compliance with proper financial controls.

Irregular expenditure was expenditure other than unauthorised expenditure, incurred in contravention of, or was not in accordance with, a requirement of any applicable legislation. It also included expenditure in contravention of, or that was not in accordance with, a requirement of the supply chain management policy, or any applicable by-laws.


Unauthorised expenditure referred to expenditure that municipalities incurred without provision having been made for it in the budget approved by the Council, or which does not meet the conditions of a grant. The presentation made reference to a checklist NT follows in its reporting


Expenditure management involves all procedures necessary to ensure payments of sums owed by the Department were made in sufficient time, within 30 days of the invoice. Competencies involved in expenditure management were connected to those required in financial accounting and financial reporting. The responsibility of the expenditure management function was to provide advice, support, technical and professional expertise to assist line managers in fulfilling their responsibilities.

Common reasons for late and non-payment of invoices include:

  • misfiled, misplaced or unrecorded invoices;
  • unresolved invoice discrepancies;
  • inadequate budget and/or cash flow management;
  • inadequate internal capacity;
  • IT system challenges;
  • incomplete supporting documents.

Office of the Chief Procurement Officer: briefing

Mr Willie Mathebula, Acting Chief Procurement Officer, NT, said the roles and responsibilities of the Office of the Chief Procurement Officer (OCPO) was to regulate supply chain management systems across all spheres of government to ensure efficient, economic, effective and transparent use of financial and other state assets for improved service delivery and to promote government-broad socio- economic objectives. The Office provides SCM support for policy implementation at all spheres of government, collaborates with law enforcement agencies and works to avoid confusion of legislative mandates.

Section 79 of the PFMA provides for departures from Treasury regulations, instructions or conditions. It stipulates that National Treasury may, on good grounds, approve a departure from a Treasury regulation or instruction or any condition imposed in terms of this Act and must promptly inform the Auditor-General in writing when it does so.                                   

Treasury Regulation 16A6.4 stipulates that if in a specific case, it was impractical to invite competitive bids, the Accounting Officer or Accounting Authority may procure the required goods and services by other means, provided that the reasons for deviating from inviting competitive bids must be recorded and approved by the Accounting Officer or Accounting Authority.                 

Practice Note 8 of 2007/08 refers to curbing potential abuse of Treasury Regulation 16A6.4. The Practice Note prescribed this regulation could be used in emergency and sole source instances, and transactions above R1 million procured through this regulation must be reported within 10 working days to the Auditor-General. .                                              

The Instruction Note issued on 31 May 2011 speaks to the emergency or sole source thresholds for contract expansions and variations for normal goods and services. Contract variations and expansions can be allowed up R15 million or 15 %, and for construction R20 million or 20%, whichever was the lowest. Exceptional cases for deviations are allowed, with prior approval from the relevant Treasury.                                                                                                    

Mr Mathebula explained the procurement legislative framework section was encompassed by the tabling of the Public Procurement Bill to Cabinet for approval and in the Gazette for public comments. The Public Procurement Bill was intended to provide for consolidation of the fragmented procurement legislative environment to create a flexible, agile and expanded scope of service delivery, economic empowerment, transparency and good governance. There was also a roll-out of the revised Framework for Infrastructure Delivery and Procurement Management (FIDPM).

The reason for many deviations was poor planning, and contract management which was being revised. There were deviation guidelines that were currently being revised by the Department which incorporate a draft guideline document to better manage deviations, variations and expansions. This was currently being consulted with provincial treasuries 

Supply chain management policies and procedures were being modernised to issue instructions in line with policy interventions and proposed designated products or categories to enhance industrial policy. Monitoring and evaluation of SCM performance would see management of deviations, expansions and variations of contracts, the publication of procurement plans to improve transparency, and a review of high value and contentious bids to ensure compliance with norms and standards
Strategic procurement involved developing sourcing strategies for different types of commodities. Transversal contracting facilitates the arrangement of transversal term contracts to derive economic benefits out of economies of scale. SCM processes were modernised and automated through management of the Central Supplier Database (CSD) and publication of procurement plans and the e-tender portal.                                                                 


Mr M Dirks (ANC) said he had raised a matter on 20 August regarding corruption. His concern was the fairness of the system – it did not promote inclusivity. The Department should eradicate exclusion because it promoted corruption. The people should be enabled to participate in the country’s economy.

Ms D Peters (ANC) asked why there was selective allocation of contracts in the public sector, as it was evident that small businesses were job creators, so opportunities should be given to people regardless of whether or not they were politically connected in any way. This would prevent people from marching on the streets. She questioned the matter of unpaid invoices within 30 days and the government owing municipalities for rates. She also asked how the OCPO fitted with other investigatory bodies such as the Public Protector.

 Mr X Qayiso (ANC) commented that the policies looked good on paper, but in reality there was no implementation.  When was National Treasury going to align its policies with what was said by the President to eradicate youth unemployment? How effective was the Department in re-aligning its policies with government?

Mr O Mathafa (ANC) was concerned about the fact that the presentation was at a very high level. Regarding the institutions that get support from NT, the focus of the presentation was at the provincial level, and did not touch on the local government sphere. His concern was the issue involving local government borrowing in order to augment their capex budgets He asked how NT interlinked the borrowing and rolling over of grants. If the budget could not be spent and one ends up rolling back, why borrow from the market and expose taxpayers and residents to borrowing costs?

Regarding the instruction notes, he asked if the presentation was making reference to what was normally referred to as “circulars” from NT. If yes, how did NT ensure that the institution that was given the instructions complied with this note? Was it in a position to monitor that the instructions that were given had been complied with? When there was no compliance, how did NT ensure that implementation of this particular instruction note was expedited?

Mr Mathafa asked for NT's view on the sovereign debt and how it was being serviced. Was the servicing only focusing on the interest part, or was the principal debt also taken into consideration? Given the stagnant economy now, did the effort made towards sovereign debt servicing put the country in a position to achieve all the key priorities that were set by the President and his Cabinet to ensure that the economy was growing?

Regarding Eskom, NT had not mentioned the challenges that were being raised by the media and other industries, especially about plans that may not necessarily work after they were completed because either the plans were wrong or their designs were faulty. There was an article in one of the newspapers which said that South Africa may have to raise another R80 billion in order to comply with the World Bank conditions for Eskom. Did the planning incorporate the possibility that South Africa had to start the work that was shoddy from scratch? When that was done, would there be the need to come back to the fiscus, or would the faulty plans be pursued? What was the approach as far as this issue was concerned?

Mr A Sarupen (DA) was concerned about the effectiveness of the guidelines of the circular, particularly in terms of the Municipal Finance Management Act (MFMA). Did they actually have any teeth?

Many years ago, when he was in local government, circular 58 required municipalities to stop giving, as part of overseas travel, unlimited subsistence allowances among other things. However, it did not have any teeth in that it could not stop Municipalities from doing whatever they were doing. They said that they were just guidelines, and that was how they were treated at local government. What teeth did they have and how did NT ensure that the circular was actually enforced, because by in large, they get issued and they get ignored by the people who receive them?

He said the late payment to suppliers resulted in accruals that accumulate over the years. This could lead to a situation in an annual report where a particular department had more accruals than the annual budget could carter for. What was actually going on in terms of accrual management from the way NT dealt with government departments and entities on accruals? How did NT ensure that when budgeting planning was done that they actually plan to pay those accruals?

Mr Sarupen asked for clarity on the issue of bail out money given to state-owned entities (SOEs). How did NT monitor it? Did it attach conditions? Bailouts for some SOEs involved the use of taxpayers’ money. Eskom, for example, charges people for electricity but then they also pay taxes and the taxes are then used to pay for electricity. So, they end up paying double.

Mr S Somyo (ANC) also pointed out that the late payment to service providers resulted in accruals. The presentation had a very light way of looking into these late payments. The meeting was a friendly one, and there were other questions that he would have asked if it were a different meeting.

He asked for clarity regarding the central supplier database and doing business with the state. He was concerned about the deviations in the guidelines. Once they were labelled “guidelines”, whatever notice that was issued was not enforceable, because it was just a guideline. Why was NT still issuing guidelines, rather than coming up with some kind of a notice on aspects that were very critical?

The Chairperson was concerned that deviations were becoming the norm, rather than an exception. What was NT doing to facilitate a process which made sure that these deviations did not become a norm? He recalled that in the main application that the previous SCOPA reviewed, NT had cited all sorts of concerns about the requests. The approval and the rationale was inconsistent. Whilst there may be headwinds in making sure that there was compliance with stakeholders, NT should try to make sure that there was not a runaway train of approvals.

He said that the 30-day payment problem was an old headache. The worry was the effect that this had on small businesses. The economy relied on small businesses for job creation and economic development, so what recourse was there to make sure that there was compliance regarding the 30-day payment?

Ms Peters was not impressed with the issue of officials coming to this Committee in acting positions. Something should be done about it. She was concerned about the non-payment of invoices. When the Committee was doing oversight, people complained that they were not receiving their payments, and this could escalate up to two years. In the case of human settlements, there were companies that were waiting for their payment, and they were forever waiting. Just a day ago, there was someone from Polokwane who said that he was still waiting for his payment and he had done everything he was expected to do. Something should be done to assist the people doing the work.

Mr S Buthelezi (ANC) said the Committee was very interested in what NT was doing. Members of Parliament should not be the security guards of the budget. For the financial year 2019/2020, there was a budget of about R1.4 trillion. For the coming year, it would be R1.5 trillion, and R4.65 trillion over the medium term expenditure framework (MTEF) period. The budget was the tool that NT had, to transform the economy. However, the worry was that all the indicators were going in different directions.

National Treasury’s response

Ms Mseme said that the work of Treasury, while it was wide ranging, was very specific in its technical competencies. NT did everything, including tax matters, procurement matters, assets and liability and state-owned company (SOC) matters. If a question was asked by the Committee, and the technical people were not in the delegation, NT would commit either to bring them to the Committee next time to answer the questions or the answers to the questions would be sent to the Committee in writing. This would prevent NT from giving the Committee a vague response that was not technically substantive.

She highlighted the matter of transformation of the control measures of the economy. NT was making a contribution towards that transformation, which was a national imperative and a priority for NT. Part of that contribution was located in the OCPO's office and in the initiative that they carried out. There was other work NT dud in other divisions. The suggestion was  that NT should return to the Committee to speak on the matter of transformation to address inequality and unemployment. They were such important matters for a country and they deserved a session of their own. These would be attached to talk that NT would be giving the Committee on the work that NT was doing around growth.

Ms Mseme asked if NT could come back to the Committee with answers on the questions regarding borrowing and the capex budget, as well the questions around sovereign debt and bail outs. The reason was that bail outs were better addressed by the assets and liability deoartment -- that was their technical competency. The matter of grants and borrowing was the responsibility of intergovernmental relations (IGR).

Ms Mseme noted the concerns regarding acting positions that had been voiced by the joint committee.  NT recognises the challenges of this long overdue process and the impact this had on the stability of the institution. She assured the Committee that the matter would be taken back to the executive authority, where matter currently lay.

Ms Kubheka said the role that NT played in the municipal finance space was critical, and the MFMA was a robust framework available to it. There were technical committees with officials who engaged with the office of the AG in ensuring that NT were performing in developments in the municipal finance space. One of the key programs that it was currently engaged in was the municipal finance improvement programme, which looks at the outcry with regard to transgressions, non-payments and poor performance in certain municipalities. There were those programmes which internally were also in conjunction with, or in partnership with, the IGR.

There were also grants that were responsible for ensuring that the work of the municipality was done and service deliveries were provided. The key programme that dealt with the municipal finance improvements was under the Office of the Accounting General (OAG), as well as also the audit outcomes from the MFMA, and this ensured that the MFMA was given the attention that it deserved. Recently, NT had issued a gazette on the cost containment measures on the municipal side. This was also NT's intervention on ensuring that circulars were being applied and adhered to. In addressing the challenges, Treasury was also undergoing a process of amending its regulations. The aim was for it to be published by November 2019. Currently it had been finalised and it had to be circulated for public comments as a final draft. NT was trying to ensure that all the circulars that had since been issued had been incorporated into those changes so that they were enforceable in terms of compliance and in terms of legislation. Circulars become a guide, and they were not as powerful in comparison to instruction notes. Because of all these reasons, NT was making sure that it was updating its pieces of legislation.

Ms Kubheka referred to borrowing, and said NT did not approve, and the legislation did not require NT to approve. However, the legislation required NT to note and provide technical advice, assistance and analysis in looking at the facts and the cases that were brought to it prior to a municipality's borrowing. That was where NT consulted through the IGR, who would be key and instrumental in providing the advice from the operations side.

Ms Kubheka said the 30 days’ payment of invoices issue was becoming a concern. However, there was confidence that the new administration, as well as the new changes, would assist the officials in the process of ensuring that NT enforced the compliance with the 30 days. The OCPO was also tasked with ensuring that it wrote to each entity. There was hope that the new process would strengthen the process in ensuring that departments did pay within 30 days.

Mr Mathebula said that the issue around payment or non-payment of suppliers was, in terms of the law, a financial misconduct. This was provided for in the Treasury regulations, and it was also provided for in the MFMA. It was a financial misconduct and it was a serious issue.

Regarding instructions and circulars, the aim of the Public Procurement Bill was to consolidate all the instructions which institutions may not be able to implement, into a single regulatory framework. Currently, instructions and circulars were used to augment where there was a gap in law. However, when one builds house and keep adding a room, one may lose the original structure of the house. This was what had had happened to the legislation. So many instructions had been issued and as a result it was difficult to comply, because some of the instructions contradicted each other. The review of this whole process was to eliminate instructions and put everything into a single over-arching national legislation -- that was the purpose of that bill.

Mr Mathebula added that the bill also addressed issues of transformation which were quite critical. There were many pieces of legislation that try to deal with issues of transformation. There was a chapter in that bill that would deal with the issue. There was also some form of flexibility for provinces to issue their own transformation system, but within the ambit of the national framework, given the dynamics of different provinces.

Regarding deviations, it could be the choice of words as to whether it was called a framework or a guideline. That was the reason why NT was currently consulting with other colleagues. There may also be the need to extend consultation to local government to ensure that the framework reflects the input of everybody in the country. The reason NT wanted to have the framework was that deviations was not only the responsibility of the office of the Chief Procurement Officer. There were other equally important divisions within the Treasury. The idea was to have a committee to look at all these things to ensure that there was a multiplicity of ideas. In this way, when Transnet, Prasa or Eskom applies to deviate, there would be a collective that looked at the application. That committee would then make a recommendation as to whether they approved a particular deviation, or not. That was essence of that framework.

Mr Mathebula said that the central supplier database (CSD) was not a gate keeper. It was not that if one was not registered on CSD then one could not do business with the state. The database was used for questions. Where people needed quotations, they looked at those who were registered on the CSD, but for open competitive bids above a certain threshold, open competitive bids were issued. This included other suppliers who may not be registered at the time the tender was issued, but who were eligible to participate in that process. Once the process had been done and the supplier had been selected, that service provider must register and comply with everything that goes with the CSD. NT encouraged the rotation of suppliers to ensure that economic opportunities were spread to the broader society instead of repeating one and the same kind of service provider

Induction and Orientation by Special Investigating Unit (SIU)

Adv Andy Mothibi, Head: Special Investigating Unit (SIU), said the SIU was established in terms of the Special Investigating Units and Special Tribunal Act, 74 of 1996. The unit’s principal mandate was to investigate 'serious malpractices or maladministration in connection with the administration of state institutions, state assets and public money, as well as any conduct which may seriously harm the interests of the public'. Alongside other state departments and institutions, the SIU was responsible to uphold the Constitution and to be of service to the people.

The vision of the SIU was to be the state's preferred and trusted forensic investigation and litigation agency. Its mission was, with integrity, to investigate serious malpractices or maladministration in the administration of the state, as well as any conduct which may seriously harm the interests of the public, and institute and conduct civil proceedings in any court of law or special tribunal in its own name or on behalf of state institutions.

He described the case assessment phase, where the SIU:

  • follows up on and/or receives allegations;
  • assesses and verifies the allegations and any evidence available;
  • gathers additional information as needed to support a motivation for proclamation;
  • draftd the motivation for the proclamation and schedule to the proclamation which sets out the scope of the SIU investigation, and submits it to the Presidency via the Department of Justice;
  • Whilst the proclamation approval process is underway, the team continues with desktop analysis of the available documentation, project set up and investigation planning;
  • on publication of the proclamation, the team id ready to commence with the investigation.

Adv Mothibi explained the SIU delivery model. It assesses and verifies the authenticity of the claims based on evidence available. It 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 under way, 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 mentioned that the SIU had identified governance improvements, and those improvements were reflected as part of auditing, so it would try and maintain a clean audit..


In 2017, the unit had achieved eight of its nine operational targets, failing to meet only one target in relation to “the actual value of money and/or assets recovered.” This target was linked to the strategic objective of “facilitating appropriate remedial action.” In order to address this deviation, there had been a number of investigations which had been identified, in respect of which actual recoveries still had to be determined. Meetings had been held with the state institutions concerned for them to conduct a full reconciliation and confirm the final amounts that had been recovered. In 2018/19, based on performance, there had been an improvement.


Based Adv Mothibi presented the total number of referrals that have been made to state institutions for disciplinary, executive and/or administrative action for the period 1 April 2014 to 31 March 2019.

In 2018/2019, there had been 331 National Prosecuting Authority (NPA) referrals and 335 disciplinary referrals. The total value of the matters in respect of which evidence was referred to the institution or defence/opposition of civil proceedings for the year 2018/2019 was R7.9 million.


The SIU also focused on operations at an international level, and participates in the following organisations so that the country meets its regulations:


  • African Union Anti-Corruption Working Group;
  • Southern African Development Community (SADC) Anti-Corruption Working Group;
  • Commonwealth Africa Head of Anti-Corruption Agencies Forum;
  • Commonwealth Secretariat Anti-Corruption Initiatives;
  • BRICS Anti-Corruption Working Group;
  • G20 Anti-Corruption Working Group;
  • United Nations Office on Drugs and Crime;
  • United Nations Conventions Anti-Corruption Implementation Working Groups.


From time to time, there were initiatives on the African continent and international anti-corruption initiatives to which the SIU was invited.


The SIU worked closely with the Department of Public Service and Administration (DPSA), the Department of International Relations and Cooperation (DIRCO) and the Anti-Corruption Task Team (ACTT) on the above work.

The SIU was the Convener of Programme 4. It had identified vulnerable sectors to fraud and corruption through collaboration with other ACTT stakeholders, informed by the AG and Standing Committee on Public Accounts (SCOPA) reports. He pointed out that the annual performance plan (APP) reflected everything that they had outlined in the presentation.

He added that the relationship with stakeholders should be monitored and built.

The presentation then briefly touched on the APP review.

 Adv Mothibi said that the SIU would like to collaborate with the SCOPA in terms of:


  • Support for proposed amendments to the SIU Act (funding model, preliminary investigations);
  • Assistance with the implementation of the SIU’s recommendations for remedial action (systemic recommendations, recommendations for disciplinary/administrative action);
  • Assistance with the recovery of outstanding debt owed to the SIU by state institutions;
  • Assistance with securing additional funding to capacitate the SIU;
  • SCOPAcould refer matters to the SIU for investigation;
  • SCOPA should encourage all state institutions to refer matters to the SIU for investigation and litigation services.



Ms B Zibula (ANC) said that the Committee required information on those institutions that had been investigated.

Mr Dirks was concerned about the prioritisation strategy of the SIU. According to its presentation, it was prioritising the health sector, the construction sector and SOEs. He pointed out that the most vulnerable sector was local government, and it should be top priority. Local government had terrible style of operation and there was no consequence management. Local government officials must know that in every municipality, the SIU was watching them.

Ms A Beukes (ANC) was interested in knowing how the SIU interacted with the public. The public was beginning to lose trust in all state organs. As a result, there were protest actions almost each and every day. They protested because they were frustrated. Local government should be prioritised. The SIU should interact with people directly so that people understood what the SIU was doing. SIU was doing very good work, but because there was lack of trust in the government, every government organ was being tarred with the same brush, and it seemed as if every government official was not doing their job. There should be a situation where people could point at the SIU and say that it was doing well. Now that there was a public protector, people were looking at those organs that could assist because it was difficult to deny the fact that corruption was rampant in the country. The presentation had mentioned that monitoring and evaluation was one of the SIU's objectives. It should be doing that, and it should be known by everybody

Ms Beukes asked if the SIU had timelines for the amendment of the SIU Act. It was beginning to be more effective and as such, it was beginning to identify gaps that needed to be addressed in order to make it sharper. Now that there was the process of the amendment to the Act, there was a need for a timeline.

She commented that according to the presentation, the SIU was improving its governance, and she hoped that it had identified effective ways of maintaining this.

She pointed out that corruption was happening at the provincial level. It would be lovely to see that what the SIU claimed to be doing was really happening. The Mandela funeral scandal, in the Eastern Cape, was a scandal of a lifetime which was everyone's concern. Now that the issue was with the SIU, there was the need to move with speed to ensure that the matter was concluded. If the SIU could not conclude the Mandela funeral scandal, then there was not much that it could do. She added that in the Eastern Cape, there was a department whose budget was exhausted because they were paying bogus lawyers for bogus things. It would be good if the SIU could speak eloquently all the time about where they were with such matters. Let there be relevance in what the SIU was doing daily regarding what was happening in the provinces in so far as corruption was concerned.

She suggested that the Committee should meet the SIU frequently so that it could monitor the commitments that had been made in the past financial years. This would assist the Committee in accepting that there had been progress.

Mr Dirks called for more interventions by the SIU. He gave an example of an incident that occurred in one of the municipalities in KZN, where the administrator was trying to set up a meeting with the council, but the council did not want the meeting to be set up. The situation became so chaotic to the point that a stun grenade was thrown into the chamber. The SIU should intervene in such cases.

Mr Somyo said that according the meeting the Committee had held the previous day, the AG had sampled 16 departments, and had come up with matters of material irregularity. Looking at the report on the investigation that the SIU had done with SABC, a number of matters had been shoddily concluded. There were referrals which have been made out there. There were costs, and therefore the value of the investigation was somewhat costed. There were some matters that had been critically found and these matters ought to be referred one way or another -- either for disciplinary or criminal charges, or civil cases. Follow through on those matters was critical.

He gave an example of a municipality that SIU had investigated on a “yellow fleet” matter which had bankrupted that municipality and had almost led to the closure of the municipality because of the challenge of having to pay salaries and service providers. That municipality had been one of the models, even in terms of its own liquidity. It had somehow, through that contract alone, become non-functional and close to non-existence. There were now some interventions going on. The investigations and the findings had happened years ago and yet even today, nothing had happened in terms of such outcomes. Had the SIU paid those who were involved in coming up with these investigations? There was another invoice that had just come in for them to be paid. If they made findings and had these civil matters, why could they not follow these instances to get the money back? Why bother to pay them if they could not follow the findings?

He commented that the SIU had provided the Committee with the cost of its investigations into civil claims of about R14 billion, which was a critical amount in relations to the country’s current financial state. There was money going down the drain and the follow through had been minimal. The SIU's collaborative efforts must be strengthened by other institutions. Other institutions had to do the other work, as the SIU did not have powers to arrest or prosecute.

Mr Somyo said that it would be great if the Committee could be provided with a spreadsheet which was indicative of all the matters that the SIU had followed -- those that had been closed, those that were still in process, their status, how long they had been at that point and the expectations going forward.

He had once been mayor of a municipality. When he left, there had been reserves, and it had been very painful to find out how those reserves had been siphoned off. They went through decisions which had not been well thought of, and as a result there would be findings that eventually led to criminality. That same municipality today did not have a cent for its own infrastructure, because hundreds of millions of rands had gone out to contracts. There had been a finding against them in the Public Protector’s reports. It was public knowledge and there had been a referral from that office to the SIU regarding the amount involved. These were the kind of things that were derailing development in these areas. These were things that were frustrating people out there

Ms Beukes said that there seemed to be a choice as to who should investigate -- either the SIU or somebody else. There was a need for clarity on this issue. Why should there be this organ that had to compete with everybody else as far as the eradication of corruption was concerned, especially in this day and age, where even the much respected people in the public sector and auditing firms were no longer as clean as one always thought they were?

Ms Zibula said that she was from a certain municipality, but she could not talk about it because the issue was still sub judice. However, things were happening. The Members who were talking about their provinces spoke from the bottom of their hearts. It looked like no one wanted to listen to the Members. No one wanted to listen to those poor people who were voting every time. How was this going to be stopped? People did not have fear for the law. The cases were taking too long.

The Chairperson said the presentation had been very good in contextualising the issues. The Committee would be meeting Eskom the following week and would be meeting the auditors on Monday evening before departing. He asked that the Committee should get a briefing on Monday on the Eskom matter. The aim was to get the auditors and SIU's perspective on the matter

He supported the proposal that the Committee should be provided with information on the cases. It needed to know here each case was so that it could see where it could get involved to unlock where there were stumbling blocks, especially with the SA Broadcasting Corporation (SABC). The Committee had communicated with SABC and had agreed to a meeting. There was correspondence between the Corporation and the Committee, so there would be need to tie it down in so far as those issues were concerned.

He said that he liked the slide on possible SIU collaboration with SCOPA. SCOPA’s strategic partner was the AG – it worked on the basis of AG reports, so when it received the reports in September/October, there would be many of them and it would have to sit through them. It would be good to go through the process, guided by an established model of operation in terms of how cases were referred. There was need for SIU representatives to be present so that they could hear the Committee’s approach and its thinking from inception. The SIU would then be able to understand the process of the Committee. If the SIU was walking parallel with the Committee and seeing what was being done, it would help. For the Committee, the issue was consequence management. There was a need to demonstrate seriousness on the matter. The money lost must be recovered

SIU’s response 

Adv Mothibi agreed with the Member regarding the vulnerable sector. What the SIU team meant to say was that each and every sector there was important, but there was the need to find a sector which would be the starting point for creating a model which could be replicated in the other sectors. The team had started out with health, and was already having investigations that were already going on in the Gauteng health environment, which had created so much consternation among the public. The SIU was already dealing with some allegations that were coming from the Health Professions Council, where there were irregularities in doctor registrations, and these irregularities were creating bogus doctors -- and those bogus doctors were operating on members of the public. SIU had investigations going on now into the Health Professions Council.

Adv Mothibi agreed that there was a need to prioritise local government, so the SIU was going to kick off with that to make sure that it could demonstrate results in the same way that it could demonstrate them in health and construction. SCOPA had indicated the previous day that it would be meeting municipalities, and the Department of Cooperative Governance and Traditional Affairs (COGTA) would be part of that meeting. SIU requests that the Committee notify it of the session. As part of starting to prioritise local government, the SIU could take insights into that and begin to act on them.

Regarding interacting with the public, Adv Mothibi said that SIU had created a platform. There was an opportunity to improve other platforms of interacting with the public.

Ms Nazreen Pandor, Head: Communications and Stakeholder Management, said the SIU currently had a stakeholder forum that took place once a year. It could certainly improve on that. It had been having forums in different provinces and various stakeholders had been invited, such as members of the community, and the SIU communicated to them what the mandate was and it tried to create awareness. There was also a hotline where it encouraged the public to report any transgressions. The SIU also had platforms like Twitter and Instagram, so that when there was any whistle blower or any information that needed to come forth, it advertised on its platforms and people were able to get hold of it.

Adv Mothibi said the SIU had actually held stakeholder forums in all the provinces, with the exception of Free State and Mpumalanga. Once it had the stakeholder engagements, matters seemed to start slowing down. Of importance was that the SIU could receive all of these matters and investigate, but if there was no consequence management and no action, the SIU might as well close up shop. However, it was not about to close up shop because it was determined to make sure that there was action.

The SIU had measures for people to be disciplined and officials held accountable as a way of demonstrating consequence management. It would continue to make sure that there was improvement on that, in collaboration with the other agencies. After SIU's meeting the previous day with SCOPA, it had convened with the agencies to discuss what was going to be improved.

Adv Mothibi said that there might still be some improvements in identifying other channels where the SIU could target the public directly. So far it had done some work and could probably identify even more channels that could help it to interact directly with the public.

He said monitoring of the objectives was something that the SIU wanted to do, and strengthen it to make sure that actions were taken. The fight against corruption required people to know that that there was monitoring, investigations and action taken, and there was prosecution or a disciplinary process. The SIU had spoken to the NPA about it because they were the custodians of the asset forfeiture unit. Even before the process kicked off, there was a need to make sure that the SIU released the asset forfeiture unit to freeze the asset. Perpetrators made it their project to ensure that the asset they had stolen disappears. There was need to make sure that the tools that were available in government worked for the public so that it could freeze and get these assets back to as quickly as possible.

Regarding the timelines around the SIU Amendment Act, the SIU had started this in the previous administration, but it had been informed by the Department of Justice that the legislative programme was full and they were able to take only those that had been finalised at the end of the 5th administration. The SIU was ensuring that it was on the front part of this year’s legislative programme so that it could start engaging on that bill.

Ms Caroline Mampuru, Deputy Head: SIU, referred to the Mandela funeral investigations, and said there had been investigations in several municipalities. The SIU had concluded the investigations and the report would go through the policy review process in the organisation, and from there it would release them. One of the entities the SIU was looking at, where money had been spent, was the provincial treasury.

Adv Mothibi commented on the need to move with speed on the investigation. The SIU would really appreciate an introduction or link up with the provincial SCOPA so that it could also provide information to it.

Regarding the issue of bogus lawyers in the Eastern Cape, the SIU had carried out investigations there, and some of the lawyers were up in arms. There was a lawyer that had been arrested, and he was out on R80 000 bail, and there were other lawyers that were going to follow. The SIU had been working with the Department of Health in the province, and it had found that the issue was also prevalent in other provinces, particularly Gauteng. The SIU had received similar allegations from the Northern Cape, so it was working now on a national proclamation so that it could deal with the matter.

The SIU had also engaged with the AG regarding the amendments to the legislation. There was now an iteration where the AG would start referring matters to SIU so that it could act on those referrals.

Adv Mothibi said the SIU had investigated the matter of the “yellow fleet.” It had got outcomes as well, particularly the civil litigation at one of the municipalities where this had started. The yellow fleet had been contracted, but it had just been standing there not being used. Members of the public had started to ask what was happening, because money was being paid to this service provider. At the time when the SIU had started its investigations some few years back, it had written to the municipality that they must initiate the cancellation of the contract, because the SIU had established that contract was fraudulent. The owner of the company that had contracted with the municipality had made as though he was the owner of the yellow fleet. As a result, there had been some fraudulent transactions which the SIU had identified and gone to court and stopped it. As it started investigating in the Eastern Cape, it had noticed that this was happening in North West, as well as in other provinces. It had got a proclamation going on in the other provinces. It was believed that the SIU had been able to stop further contracting of these yellow fleets as a result of their intervention. However, it was of importance to determine whether there had been any collusion between the municipalities and the service provider, and to ensure that that was also dealt with.

Adv Mothibi said that SIU had also taken the issue of follow-through to heart. It was part of the strategy to make sure that there was a constant up to ensure that referrals were acted on and implemented.

Regarding the recovery of the R14.7 million, he said the SIU understood that it was a big number. If it could recover that money, it would help government in terms of service delivery initiatives. It had been established that the delays were in the courts. The courts were clogged, which was why the SIU had initiated the establishment of the special court, although in the legislation it was referred to as the special tribunal. This special tribunal was going help the SIU so that while these matters had not started in the ordinary courts, it would be able to channel them through to the special tribunal and see speedy recoveries. The judges that were going serve on the special tribunal had been appointed, as well as a tribunal president. The SIU was just waiting for the regulations to be completed so that it could start functioning by October.

The SIU had found that some state institutions still appoint private companies, and do not take action when they leave the work as incomplete, because they do not have the powers that law enforcement agencies have . State institutions should be encouraged to refer these matters to the SIU. This should be built into the legislation.

Adv Mothibi said that there was a new proclamation, and SIU would prepare a comprehensive presentation on Eskom which it would share with the Committee.

Regarding the SABC, the SIU was prepared to interact with the Committee at an appropriate time so that it could take it through the matter in detail.

The SIU had started to strategically review the length of time it took to convert matters into proclamations. It accepted that there were inefficiencies in the process. In 2017, the issue was raised with the Department of Justice and with the Presidency, at the SIU was then able to conclude a memorandum of understanding where there were now timelines. If the whistle blower reported to the SIU, measures had to be taken to ensure that it went through the proclamation process so that it was legal in that sense. There were two ways -- either to propose in the amendment to do away with the proclamation process; or, if the proclamation process was appropriate and works, the SIU must make sure that the time it takes to convert the allegations into proclamations is not lengthy. This was what the SIU had done to make sure that it gave timelines from the time of the drafting of the proclamation to the Department of Justice and to the President, so that there was a structure that monitored that process.

 The meeting was adjourned.


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