Enforcement agencies on Steinhoff, Covid-19 procurement & SOE corruption cases

Public Accounts (SCOPA)

17 March 2021
Chairperson: Mr M Hlengwa (IFP)
Share this page:

Meeting Summary

Video: Standing Committee on Public Accounts, 17 March 2021

10 Feb 2021 SIU investigations into Covid19 PPE procurement by state institutions

28 Oct 2020

SIU & AG on UIF financial management relating to Covid-19

20 Oct 2020

Enforcement agencies (SIU, Hawks and NPA) on COVID-19 corruption cases

21 Aug 2020

COVID-19 procurement corruption: Inter-Ministerial Committee briefing

19 Aug 2020

SIU on terms of reference for COVID-19 PPE procurement

In this virtual meeting, law enforcement agencies briefed the Committee on Covid-19 procurement investigations, state-owned companies’ corruption cases and the Steinhof investigation.

The presentations covered the status of the investigations underway and the actions taken to date.

The Committee requested clarity regarding the settlement agreement between Regiments and Transnet and the impact this had on the litigation and criminal proceedings. The Committee highlighted the need to see tangible impact, especially where corruption was concerned. The timeframes of cases was highlighted as a significant issue, particularly where cases had been on the roll since 2017.

Concern was raised about the willingness of PricewaterhouseCoopers and the Steinhoff company to share their report, given their reluctance the previous time. The Committee requested an update specifically in relation to Markus Jooste former Chief Executive Officer at Steinhoff. The role of the South African Revenue Services was queried - given that they were not mentioned in the presentation as assisting the investigation. The Committee requested clarity about the R30 million that was highlighted in the media as having been paid by Steinhoff to the National Prosecuting Authority for the investigation.

The Chairperson stated that the Committee needed a far more comprehensive briefing on the Steinhoff matters and they should develop a reporting mechanism. The matter had been too protracted and not come to any convincing direction or conclusion. There seemed to be a ‘business as usual’ approach whereas a lot of things went wrong The Steinhoff matter could not linger – because it went to the issue of funding. The NPA had shortfalls as far as funding was concerned. They needed to look at the State’s ability to fund some of the urgent matters which had extensive damage and corruption that had taken place.

Clarity was requested about the ‘ambulance scooter’ matter. The Committee requested an update and progress regarding the uMngeni Local Municipality’s COVID-19 corruption case. Further clarity was requested relating to the witness protection programme given reliance on witnesses to prosecute cases successfully. In terms of the State-Owned Enterprises, the Committee requested that more information be provided about the individual cases

Meeting report

Opening Remarks
The Chairperson stated that the Committee would be getting a presentation from the National Prosecuting Authority (NPA) and the Hawks on matters relating to Covid-19 procurement cases and the investigations thereof. There had been an additional request that NPA present on matters related to Steinhoff.

Adv Shamila Batohi, National Director of Public Prosecutions (NDPP), introduced the team. The NPA would present on the COVID-19 corruption cases, cases related to corruption in State Owned Enterprises (SOEs) and the Steinhoff matter.

With regards to COVID-19 corruption cases, these matters were managed in the Fusion Centre under the auspices of the Anti-Corruption Task Team, and General Lebeya as the Chair of the Anti-Corruption Task Team (ACTT) would do a joint presentation, as they generally worked in a collaborative manner. The SOE matters were dealt with by the DPCI, Specialised Commercial Crimes Unit in the NPA, Investigative Directorate and Asset Forfeiture Unit (AFU) (AFU straddled across all of them).

Investigative Directorate Presentation
Adv Hermione Cronje, Head: Investigating Directorate, NPA presented the report.
Investigations into Transnet and Eskom authorised on 31 July 2019
- The Report of the Public Protector on "State of Capture" dated 14 October 2016;
- Testimony before the SCC alleging serious and high-level corruption within State Owned Enterprises, particularly testimony relating to ESKOM and Transnet; and
- Ongoing criminal investigations into unlawful activities committed at ESKOM and Transnet relating to serious and high-level fraud and corruption;
- Ongoing civil litigation relating to alleged irregularly awarded contracts and payments made by ESKOM and Transnet and related entities; and
- A report submitted in terms of section 27 of the NPA Act on fraud and corruption

Action to date
- Wright J had granted the NDPP a restraint order on 18 November 2019 against Regiments Capital and associated persons and companies on the basis that:
- The defendants were involved in a corruption and money laundering scheme relating to Transnet and the Pension Fund
- The defendants entered into agreements with persons associated with the Gupta family, particularly one Salim Essa  to the effect that Essa and his associates would facilitate the appointment of Regiments companies by Transnet and / or the Fund (among other state owned entities), where they would provide financial services for inflated fees.
- In terms of this order approximately R1.6 billion was restrained. R600 m was released to the Transnet Second Defined Benefit Fund
- On 26 October 2020 Mahalelo J discharged the provisional restraint order on the basis of material non-disclosure of: An order by Vally J in September 2019 in litigation between Mr Pillay, Mr Nyhonyha and Dr Wood, and the respective entities under their control and an (as yet unrecovered) settlement between Regiments Capital and Transnet in October 2019
- The NDPP has been granted leave to appeal the decision on the basis that:
- The documents not disclosed were not material to the restraint order non-disclosure did not warranted the discharge of the provisional restraint, but ought at best to have impacted on the quantum of the restraint.
- The Court’s finding that it was not for the NPA’s deponent to “pick and choose” what to include in a restraint application is unrealistic. In complex matters, there inevitably had to be a selection process. If this is not done, any judge will be utterly overwhelmed by the volume of evidence.
- SARS has intervened in the winding up proceedings of Regiments and its subsidiaries on the basis that it has a claim of at least R48 million, but likely much more.
- The commitment by McKinsey to repay Transnet in excess of R600m at the State Capture Commission in relation to its involvement in the Transaction Advisory Contracts with Regiments will further augment recovery of assets in this matter.

- The Directorate (aka ID) obtained a search and seizure order in November 2019 in respect of the Regiments server and other digital devices.
- The finalisation of the charge sheet has been delayed by protracted disagreement with Regiments regarding the execution of the search warrant as the company claims legal privilege in respect of a wide range of documents on the server. The review of relevant material from the search is currently underway (the volume of documents are huge).
- A forensic report by a private forensic firm appointed by National Treasury and the DPCI prior to the establishment of the ID has been deemed inadequate for a criminal trial by the prosecution team and has to be redone
- The finalisation of the charge sheet is expected to take a further 3 months
- On 9 March 2021, Transnet and the Special Investigating Unit (SIU) brought an application to review and set aside contracts awarded to original equipment manufacturers General Electric, Bombardier Transportation, China South Rail (CSR) and China North Rail (CNR) valued at R54 billion in 2014 on the basis that:
- The procurement “was based on a flawed market demand strategy… and that the laws, government instructions and Transnet policy were deliberately ignored…”.
- And the OEMs were not entitled to benefit from locomotive supply agreements that were awarded to them in an irregular and illegal manner, and particularly not when the (manufacturers) conducted themselves in the manner that CSR and CNR did’.
- General Electric and Bombardier could not ‘claim that they did not or could not reasonably have known that the procurement process and subsequent contracts were irregular and unlawful’.
- The application is a comprehensive account of the wrongdoing at Transnet (the founding affidavit alone is over 800 pages and the annexures are contained in several lever arch files. The application is based on the extraction and analysis of over 29m documents.
- The Transnet/SIU application together with the SARS’s application in December 2020, in which the court froze R2.8bn in local CRRC accounts, following an earlier temporary SA Reserve Bank freeze has catapulted progress in this investigation by many months.
- This indictment will be finalised when the ID is in possession of admissible bank records sought in terms of Mutual Legal Assistance Requests that prove the flow of bribes paid to Regiments Asia and Tequesta in Hong Kong

Synopsis of Case: Eskom
- During the period 2013–2017 Eskom/Rotek awarded contracts to ABB and Impulse International (Pty)Ltd.
- ABB was awarded the Early Works Order and ultimately the Control & Instrumentation (C&I) contract at Kusile Power Station in 2015 to replace Alstom.
- ABB appointed a sub-contractor to conduct work in terms of the C&I contract at Kusile.
- ABB was later awarded Variation Orders at Kusile Power Station and appointed a sub-contractor, Impulse International (Pty) Ltd to complete the work.

Allegations are:
- ABB was awarded the contract after it was included in the submission to the tender committee after the report was finalised;
- ABB received an unfair advantage over its competitors in that it received information which was not available to other bidders;
- In return, ABB a subcontractor who would then ensure that money would be paid to senior Eskom officials. After a fall out between the first contractor and Eskom officials a second contractor was brought on board;
- Further contracts were awarded to Impulse International;
- ABB has accepted responsibility for its wrongdoing and has been cooperating with the investigation. ABB has paid Eskom R1.6 billion for losses incurred as a result of the corruption.
- The investigation into the ABB officials involved in the corruption is being pursued in conjunction with prosecuting agencies in Switzerland, Germany and the United States.
- It is anticipated that the matter will be enrolled in April 2021.

Institutional impediments
- Skilled and capable investigators and prosecutors –who are equal to the scale and scope of the investigations and prosecutions the ID is seized with
- ID dependent on personnel secondments from law enforcement partners, NPA Act and temporary contractors – the NPA Act does not make provision for appointment of investigators in the NPA on a permanent basis.
- Dire skill shortages in the public sector with constraints on employing skills outside of the NPA - recruitment of financial investigators and critical litigation skills at sustainable remuneration rates remains a challenge
- ID has obtained a deviation to recruit skills and capacity from the Commissions, but plans to transition State Capture Commission resources and capability to the ID delayed by Commission extension with significant impact on ID work. Slow procurement processes within the State a further delaying factor
- Digital and Commercial investigation capability critical in cases where terra-bytes of data has to be analysed and processed.

Ms B van Minnen (DA) expressed concern about the settlement issue with Regiments.  She had asked the SIU this question on a number of occasions. She was concerned about the effect of settlement agreements on litigation and criminal proceedings – she requested that they expand on the judgement that was mentioned and the role of the settlement agreement which potentially had an effect on successful prosecutions and litigation.

In terms of the bureaucracy and challenges, she realised this was the case all over the world – such as hiring people with sufficient skills. Were there any attempts to resolve the challenges or was it a potential indication that the bureaucratic barriers were being put up to essentially slow the processes?

Adv Cronje explained that Regiments and Transnet had entered into an agreement to settle the claim that Transnet had in relation to an over-payment made to Regiments. The settlement was R240 million. The investigation was based on the entire award of the transaction advisory contract to Regiments being unlawful. They had felt that the entire R1.6 billion that had been paid over to Regiments was recoverable. In Court, they had felt that the settlement agreement between Transnet and Regiments was not relevant to their agreement – just like when someone stole money from their employer and separately reached an agreement to repay what they had stolen. For the NPA that would be considered separate to their ability to recover the proceeds of the crime. Therefore, the NPA had felt it was not relevant to disclose this information to the Court – as it had no knowledge of what influenced the settlement and what factors were specifically taken into account. All the NPA had was a ‘one-pager’ that stated the full and final settlement that Regiments would pay Transnet, which was approximately R240 million (she stood under correction regarding the exact amount). The Court had not agreed with this and felt that the NPA should have disclosed the relevant amount – and how much Transnet believed was due to it. That was the issue that was currently on appeal. The NPA maintained – there could be commercial considerations involved there and who knows what other consideration – strictly speaking the Court had to rule on the evidence it had put before it to show it that the entire R1.6 billion was the proceeds of corruption. The NPA was simply non-suited because it did not disclose the Regiments settlement.

In relation to bureaucratic difficulties, she agreed with Ms van Minnen’s remark about the ‘the world over.’ In order to comply with prescripts, one had to jump over a number of hurdles. Dealing with multi-billion Rand contracts and seeing the importance of complying with those procedures brought home the importance of going through those processes. In a country and an environment where there was so much concern about how rampant and rife corruption was, when fighting corruption, one was held to a very high standard, in terms of procurement. They were trying to comply but it significantly hampered them – the rules were not flexible. She had been in a meeting recently where they had been trying to approve payments of a contract that had over-run due to the legal processes, through no fault of NPA. To get the procurement processes to interact with that complexity was often frustrating. She had not laid any charges against anyone for ‘frustrating’ procurement processes – but she had certainly come close. This was not because there was objectively criminality there but those processes were hugely frustrating.

Adv Batohi reiterated Advocate Cronje’s statements. This had been one of their biggest challenges – dealing with very stringent procurement processes that needed to be complied with. Unlike some other entities in government, that had the ability to procure services at higher rates than the NPA, they had been really struggling with that. She hoped that with the appointment of the new Deputy National Director Advocate du Plessis who was in charge of Strategy, Operations and Compliance, as well as the new Director General in the Department of Justice Advocate Doctor Mashabane, they would find legal but more creative ways of dealing with those hurdles. The ability to quickly resource and capacitate the Investigative Directorate, was of the utmost importance.

She had also spoken to the Minister earlier in the week about looking at the necessity to create some kind of meeting between himself and other Ministers that could assist in government support from other departments to the Investigative Directorate. Hopefully things would change – it had been a difficult process.

Ms V Mente (EFF) stated that as much as they saw the report and what had been done, the primary task of the NPA was to ensure successful prosecutions of corrupt individuals. If they did not get people behind bars, and they forever had cases that were ongoing in Court then they did not, at the end of the day, make any impact where corruption was concerned. In the past year the SIU had almost 50 referrals on the issues of PPE. Then there were the issues of the SOEs - quite a number of cases. Were they ever going to make an impact? That was her primary concern.

She used an example of the Eskom cases. The Eskom cases, from previous years, such as the Bedfordview case from 2017 were still on the roll – the Committee was not given a complete status update on that case. The timeframe on its own was concerning. Were there any cases that were near finalisation, having had a positive successful prosecution? Out of the cases that were reported – from before 2020 – were there five cases where theNPA had put people behind bars and had a successful prosecution? Those who manipulated procurement processes had a tendency of resigning when they saw they were in a corner. They should know where those people were – they should still be in the country. Therefore, the Committee had only one option to punish them through criminal procedures. Under disciplinary processes they could escape through resigning. Mostly they could not recoup what they took from them because their pension would have been taken as well. Were they getting anywhere? If they had a case that was on the roll since 2017 – it was not promising that they were getting to the point of finalising the case.

Adv Batohi clarified that they had only presented on the ID matters so far and these were the very complex corruption matters. If they got the ID cases to Court within two to three years they were doing extremely well. After that, if those matters got finalised in a year or two that would be doing extremely well. Once the Court was involved with various applications – the processing of the cases took extremely long. When one looked at the people at the top of the complicated ‘ladder/web’ of corruption, it took extremely long.

Regarding the other cases asked for, prior to 2020, she asked that her colleagues in the meeting deal with that. Generally, in terms of impact, no one more than themselves in law enforcement knew and understood the importance of making impact on the cases that they took to Court. Were they ever going to make an impact? Yes, they would. Outside of the ID, a number of cases that were with the Specialised Commercial Crime Unit had been finalised – there they had worked with the DPCI. There were a number of high profile cases sitting in that space. She did not want to go into the detail at present – she was happy to deal with it later – but the questions would be covered in the following presentations.

Mr S Somyo (ANC) stated that the emphasis of Ms Mente’s questions related specifically to impact. The presentation they had received already indicated the intricacies of dealing with matters of fraud and corruption. The Steinhoff matter that would be presented later would rely on that capability. Ms Mente had urged that some results needed to take place relating to those matters.

Adv Cronje stated that the Bedfordview case was on the roll from December 2019 – the first issue related to the volume of documents disclosed to the defence. There were a number of defendants, each with their own legal teams in that matter and they had requested more time to consider the documents. Impact was always uppermost in their minds. They moved from the premise that around the world, the big corruption cases took a long time and you had to come up with other more creative ways to register impact. Asset forfeiture was one such way – where one at least addressed the accused person’s financial benefit. What they had also done in that particular case, was to recognise that it was such a big case and there were so many accused persons, it would run for some time. They had brought separate tax evasion charges in respect of at least four of the accused persons, in that matter. Those were before Court. Tax evasion cases were very document intensive as there were usually not a lot of witnesses – there would likely not be many issues in dispute. They hoped that those cases would resolve speedily. The other issue they were looking at in terms of speeding up the processes was the notion of a ‘corruption court.’ A court that would be dedicated to big corruption matters where they could have a continuous roll, so that the cases could have momentum and then run to finality without interruptions. Currently if there was a postponement, there was a debate about how many lawyers you would try and get on one particular day. Impact was at the top of their minds – in terms of how to do things differently.

Ms N Tolashe (ANC) noted that the advocates had been very consistent in taking the Committee into confidence in terms of the route that needed to be followed. The problem was that they were sitting with a society that was looking forward to seeing those involved in corruption punished. As Members of Parliament they had that sort of pressure. She appreciated the work they were doing especially that they were both women.

Presentation of SIU, NPA & DPCI Report on SOE’s & COVID-19 Corruption Cases
General Godfrey Lebeya, Head: Hawks, stated that Special Investigating Unit (SIU), NPA and DPCI had been requested to provide a progress report in respect of the matters of COVID-19 procurement, PPEs and corruptions cases involving the SOEs. He presented these updates to the Committee.

SCCU Capacity
- The Specialised Commercial Crime Unit (SCCU), in collaboration with other Departments and driven by the DOJCD, arranged for the establishment of SCCU courts in Provinces where no such courts existed.
- In Limpopo, three dedicated SCCU courts started on 1 March 2021 and in Mpumalanga one dedicated SCCU court started on 15 March 2021.
- Northern Cape and North West Provinces will commence on 1 April 2021 with their dedicated SCCU Courts.
- The SCCU has currently 154 filled prosecutorial posts with an additional 21 state advocates on contract, appointed with permission of the DPSA, for a period of three years.
- Nationally, compared to the workload and complexity of the cases within SCCU, it remains a high workload per prosecutor.

AFU Capacity
- The office of the Special Director of Public Prosecution (SDPP) is responsible for operations in the AFU nationally and for overseeing the Regional Offices of the AFU.
- Capacity in the AFU was, and remains, restrained with the natural attrition of experienced managers due to retirement and the resignation of senior operational officials in key position

In an attempt to remedy the problems experienced, the following action was taken:
- The filling of all vacant senior management positions and operational posts have been prioritised. 
- Priority matters are no longer dealt with in ‘silos’ within the AFU but experts in all regions are involved, in a collective approach, to present the best AFU case.
- Outside experts are further consulted in complex matters.
- Matters are prioritised base on impact and urgency.
- AFU is also looking to extend the contracts to a period for three years with permission of DPSA.

The AFU was created in order to ensure that the powers in the Prevention of Organised Crime Act (POCA) to seize criminal assets would be used to its maximum effect in the fight against crime, and particularly, organised crime.
In determining the asset forfeiture potential of any matter, the AFU is guided and relies on:
- Forensic audit reports, FIC reports and/or any other investigation reports by other law enforcement agencies.
- Investigations by the SAPS, DPCI and/or the Investigative Directorate.
- Further investigations/analysis by AFU financial investigators.

Summary: 19
Under investigation: 19

- Three cases emerging from 2015 and for other sixteen, the case dockets were opened in 2019.
- The 2015 cases are awaiting forensic audit reports and in one matter the report on financial flows from the FIC.

Challenges are experienced with forensic audit reports including:
- Resources not always available;
- Persons within a Department sometimes also assist in hindering/delaying the authorisation of the forensic auditing;
- In some matters forensic investigations are commissioned by the HoD and NPA/SAPS have little or no inputs into the scope of investigation;
- Leading to forensic reports contributing little or nothing to criminal prosecution and necessitating the extension of the auditor's appointment;
- No agreements exist upfront for the forensic auditors compiling the reports to testify in the criminal trials; and
- The lengthy process in procuring services of forensic auditors also takes extended time.

Summary: 1
Under investigation: 1
Witnesses are still testifying at the State Capture Commission and investigation continues.

Summary: 1
Under investigation: 1
Several case dockets flow from the Denel referrals which are linked and investigation is ongoing.

COVID-19 Matters (Fusion Centre)
COVID-19 corruption related Incidents and Cases investigated as well as recoveries of the proceeds by Law Enforcement Agencies at the Fusion Centre.
- The number of incidents registered total 142 with 119 under investigation and 23 closed.
- A total of 126 cases are registered with 101 under investigation, 9 were closed and 17 to court with 34 accused persons

COVID-19 Matters: SIU Referrals
- 59 matters received from SIU;
- Relates to 13 various incidents/projects with multiple accused / suspects;
- All matters referred to Divisions (DPP & DPCI Provincial) for registration of SAPS case dockets and are being investigated;
- Referrals received as from 22 September 2020.

Risks and Challenges
- Investigation teams (SAPS Detectives) under-resourced. Resources from current offices are over utilised.  They still have 20-30 case dockets from their respective offices to attend to. Capacity for investigation of large number of UIF cases is not met.
- Over-stretching National Treasury capacity due to a lack of co-operation by Provincial Treasury Offices during SCM related investigations.
- SCM officers of Departments (across government) not providing all relevant information requested by the investigating officers, this causes delays in the investigation as there must be further requests which leads to possibility of document been altered. (e.g. invoice)
- Covid 19 - Isolation, quarantine, decontamination of offices and rotation of staff all contributed to both delays and attainment of evidence e.g. delays in obtaining cell phone communication and bank statements (supported by s236) as staff not always available,
- Reliance on external forensic auditors / companies has several challenges; e.g. appointment process not within the control of DPCI. A joint committee has been appointed to investigate alternative proposals
- Due to different sophisticated concealment methods, proceeds of crime is quickly dissipated.

Mitigating Actions
- SAPS Resourcing: The matter is receiving attention at the highest levels within the DPCI to address the shortage of investigators.
- A decision has been taken by the ACTT Principals Executive Committee to roll out a Fusion Centre Model (such as has been piloted at the FIC to deal with the Covid Corruption cases) nationally. This would allow a more focused and consolidated approach to dealing with the cases.
- National Treasury SCM related risks: Departments will be served with s205 subpoenas in an attempt to mitigate the risk.
- Covid 19 – A number of cases have been identified for joint prioritisation such as the Priority Case list of the Directors of Public Prosecutions, The DPCI Priority Case List and the Top 10 case list. In all these cases the NPA, DPCI, SIU and FIC (as required) work together closely to fast track the cases and monitor progress.
Reliance on external forensic auditors/companies:
- National Treasury has indicated that the tender for the appointment of forensic auditors is very close to finalisation. This will greatly speed up and simplify the appointment of Forensic Auditors.
- The ACTT Principals have established a training committee. The purpose of the Training Committee is to address the shortage of forensic and other financial investigating capacity in Government.

- The ACTT Case Management Committee has been reconstituted and the case selection criteria have been finalised. The function of the ACTT CMC is to evaluate new referrals for inclusion in the ACTT Priority Case list, to monitor the progress on existing cases and to resolve operational issues as they may arise.
- The ACTT Exco has decided that much closer cooperation is required by the different participants to the ACTT. A much greater focus will be placed on joint-reporting to all parliamentary structures. Meeting scheduled by principals of key Departments, senior managers take it very seriously.
- The ACTT Executive committee has commissioned a task team to research and investigate the feasibility of creating forensic capability for the State.
- The work is at an advanced stage, and a detailed presentation was done at the ACTT Executive meeting held on the 9 March 2021. After inputs from the leadership, the task team will review the proposed model for consideration as a matter of urgency.
- Whistle-blowers are still hesitant to come forward; however, discussions with stakeholders such as DPSA are continuing to amend legislation in order to provide better protection.
- Several witnesses are currently in the witness protection programme and NPA will continue to protect witnesses and their families from potential injury or intimidation.

Presentation on Steinhoff International Holdings NV
General Godrey Lebeya presented an update on the Steinhoff investigation.

Audit Report by PricewaterhouseCoopers (PwC)
- PwC report was analysed by the Investigation Team and prosecutors. PwC found that, amongst others, a small group of Steinhoff Group former Executives and other none Steinhoff Executives, let by a Senior Management Executive, structured and implemented various transactions over a number of years which had the result of substantially inflating the profit and asset value of the Steinhoff Group over an extended period.
- PwC report in its current format is an accounting driven report which primarily addresses accounting irregularities. It is not a report that is focused on criminality and criminal court process.
- On 1 April 2020, PwC forensic accountants were appointed by DPCI, with a detailed mandate to investigate and prepare a report which will focus on criminality and criminal court process.

Status of the Investigation (Sandton CAS 612/08/2018)
A total of two hundred and twenty (220) statements have been filed in the docket which include the following:
-Affidavits obtained from witnesses.
-Subpoenas in terms of Section 205 of the Criminal Procedure Act (CPA).
-Statements in terms of Section 236 of the Criminal Procedure Act.
-Affidavits in terms of Section 212 of the Criminal Procedure Act (CPA).

- Monthly case plan meetings with prosecutors on-going.
- Meetings with multi-disciplinary partners ongoing.
- Appointed auditors give monthly progress report to Investigators and prosecutors. The report is 70% complete.
- Assets Forfeiture Unit of the NPA is on board.

Case of Insider Trading relating to Investigation (Sandton CAS 417/11/2020)
- A total of six (6) statements have been filed in the docket which included the following:
- Monthly case plan meetings are done jointly with main case.
- Meetings with multi-disciplinary partners on-going.
- Assets Forfeiture Unit of NPA is on board.

Outstanding Investigation (Sandton CAS 612/08/2018)
- Final Forensic report which is likely to reveal more witnesses to be interviewed.
- Twenty-three (23) witness statements identified through audit process. -Nine (9) witnesses within South Africa
- Fourteen (14) in other countries (Germany, France, Australia and United Kingdom)
- Thirty Three (33) foreign bank account statements identified by the audit process (Germany, Austria, Poland, Switzerland, France, Australia and United Kingdom)

Outstanding Investigation of Insider Trading (Sandton CAS 417/11/2020)
- Four (4) affidavits from financial brokers (all four statements are already in a draft stage)  

Multi Disciplinary Partners
- Financial Sector Conduct Authority (FSCA)
- South African Reserve Bank (SARB)
- Johannesburg Securities Exchange (JSE)
- National Prosecuting Authority (NPA)
- Financial Intelligence Centre (FIC)
- Asset Forfeiture Unit (AFU)

Concluding Remarks
Adv Batohi noted that the payment of money for the forensic audit in the Steinhoff matter had received a lot of publicity. PwC was actually mandated by Steinhoff to conduct the forensic investigation. She wanted to clarify that the NPA did not receive any funding from Steinhoff. The practice of forensic accounting firms being commissioned by companies to deal with those kinds of forensic analyses and exercises were not unusual. In this instance, PwC was involved for a long time to finalise a report on the mandate of Steinhoff – the mandate of that report was not to look for criminality. It was essentially an accounting driven report, so to speak. As a result of the work that had gone into the report and because the Board and those implicated were removed from the Steinhoff structures, Steinhoff had also made criminal complaints regarding certain matters. There was no possibility that they would want to negatively influence the forensic investigation process. This was discussed by the prosecutors and there were various safeguards that were put in place such as the fact that PwC had to sign a certificate in terms of section 4 of the Protection of Information Act. This provided against disclosure of confidential information during the forensic investigation. The findings would be supported by independent objective evidence – such as bank statements, journals, ledgers, databases, emails, memorandums etc. They also agreed, taking into consideration the consequences of section 4 of the Protection of Information Act, that no evidence obtained during the criminal investigation being conducted would be divulged, even to Steinhoff. This was not unusual and had been thoroughly thought through by the prosecutors and investigators.

Mr A Lees (DA) stated that the Committee had highlighted, for a long period of time, the importance of the Steinhoff matter being seen through to conclusion, where everyone involved was held accountable. General Lebeya would remember his irritation with him about a year before when he reported that only one transaction, after a year, had been investigated. Thus, it was very encouraging to see, what appeared to be considerable progress made since then. However, there was not a word there about the main protagonist, Mr Markus Jooste. Where were they with a prosecution of Mr Jooste? Had assets been seized? What was the situation with, what many perceive, to be the mastermind behind the massive corporate fraud?

All the co-partners relating to the Steinhoff investigation were listed in the presentation, but the South African Revenue Services (SARS) was not mentioned. He would have thought that SARS was playing a role - he wanted to know why they were not included. With regard to the PwC report, those who were involved since its inception would recall the new Board’s considerable reluctance to release the PwC report. In the end it was a decision by the Parliamentary Committees – which had stated that the report would be released. He was comforted that there were certain safeguards relating to the forensic investigation – he hoped they would not face the same resistance that they had previously.

With regard to the PPE issues, the ‘ambulance scooter’ as it was referred to on slide 34 of the presentation - who exactly was being charged and what were they being charged with? His question from an SIU point of view was whether there was any conflict of interest that existed between the SIU investigator Glenn Muller and the manufacturers of the ambulance scooter? He wanted some detail on that. He reiterated his earlier question, who exactly was being prosecuted in that matter and for what

The SIU was conducting an investigation into the uMngeni Local Municipality’s use of funding for PPE purposes and misuse of that funding. One of the issues that seemed to be a major problem was that the officials of the municipality and the senior councillors informed National Treasury that the Council had made a resolution to request permission from National Treasury to use funding for PPE purposes. The accusation was that there was never such a council resolution passed by the Council. The request to National Treasury in that sense was at best a misrepresentation and at worst fraud.

General Lebeya answered the question relating to cooperation. There were other partners who were not necessarily permanent. He accepted that SARS should have been shown as assisting on a permanent basis like the others were shown. With regards to the question about the reluctancy or otherwise of the report by PwC – it should not happen as it did in the past. This time around the agreement they had signed – that report was intended for law enforcement only. It would only be provided for the purpose of criminal prosecution. The challenges that may come – might come in court.

With regards to the individuals being charged in the Steinhoff case and the like, generally the practice was that from an investigation point of view – during the process of investigating, they did not name the individuals. His colleagues could talk to the issue of assets. Those names would be public once they were charged.

On the issue of PPE, on slide 34, he thought that the SIU might be able to talk to that matter. From the investigation’s point of view, the slides from 34 onwards had not appeared in Court. They would not name anyone under investigation.

The Acting Head of the AFU stated that with respect to asset forfeiture procedures in Steinhoff, they were working closely with the DPCI and assisting them where they could in their investigations. They were awaiting the final PwC report which was coming out at the end of the month. They still had a certain standard to consider before moving on any asset forfeiture proceedings. ‘Reasonable grounds to believe’ must be present, and ‘unlawful activity’ – this could be related to criminal forfeiture proceedings or in civil forfeiture proceedings.

Mr Lees stated that it was incredibly disappointing given the long period of time that had lapsed with regards to Steinhoff. The next PwC report was due at the end of the month – he hoped they would hear of charges being laid and assets being forfeited soon. He requested an answer to his previous question relating to the ambulance scooters and a conflict of interest relating to the uMngeni Local Municipality.

Adv Andy Mothibi, Head, SIU, addressed the question around the ‘scooter matter.’ The SIU had investigated the matter and found irregularities and that was why they were in Court now. Some of the matters were being handled through the criminal justice system. In terms of the possible conflict of interest, there was no formal report sent to the SIU about any conflict of interest between their investigator and the Company involved. There was a newspaper enquiry by a journalist who had enquired along those lines about the potential socialising of the investigator and Company that dated back more than 20 years. The SIU had to look into that and responded to the journalist. Their investigator was quite emphatic that the matters the journalist referred to had never happened; he had not engaged or discussed anything with the owner of the Company. There was no substantive evidence found by the newspaper in that regard.

He had not prepared any response relating to the Municipality, and requested clarity as to which municipality Mr Lees was referring to. He could submit his response to the Committee at a later stage.

Mr Lees clarified that it was uMngeni Local Municipality, which was part of the Umgungdlovu District Municipality.

Mr Somyo asked for clarity regarding the witness protection programme and how firm the programme was. Committals required a number of witnesses that required protection. In terms of the Steinhoff matter and whether they had cited the CIPC, one of the hindrances was highlighted a year or two before and related to confirmations that needed to be made to CIPC. An update was requested in that regard. Steinhoff initially insisted that the PwC report be held on professional privilege. Steinhoff only permitted the Hawks and NPA to see the report at the time and to read the report but not to take it or ‘own’ it. He questioned whether the same approach was being followed in terms of the hiring of PwC – in terms of criminal specific matters. He requested confirmation as to whether they were attending to those matters highlighted on 19 March 2019. The team indicated that there were some investigations directed at some specific individuals. Was the focus of the investigation still centred around those individuals? He requested further clarity regarding the R30 million that was received from Steinhoff. It looked like the NDPP was saying that no money was received from Steinhoff.

Initially, it looked like there was reluctance – though one individual was prepared to write a statement on behalf of the Company for charges to be levied. Did Steinhoff present a statement for the charges to be referred?

General Lebeya addressed the question regarding the CICP – yes, they were working with it and would include it as one of their partners on the presentation. The PwC report that they previously had problems accessing – related to internal administrative processes. All criminal matters that were already identified at the time of doing that would be included in the report that the PwC was now officially assigned to do. PwC would sift the relevant information from the previous report that related to other aspects of criminality.

He reiterated that they would not name those who were still under investigation – who had not been charged. All matters that related to wrongdoing would be referred to the NPA. Regarding the R30 million that was referred to in the media, the DPCI had said that the work which PwC was going to do was going to be at no cost to the State. Companies that assigned internal auditors to do the investigation from time to time provided the resources. They had not received any R30 million from the Steinhoff in order to pay PwC, the phrasing of the media statement was incorrect. They were getting those services at no cost to the State. In terms of the individuals who were reluctant to provide statement s - they had now received the statements that were needed for the purpose of proceeding with the investigation.

Adv Batohi stated that in terms of the witness protection programme, it was being managed from theNPA presently. It was a robust programme but they did anticipate a lot more pressure on the witness protection programme as they moved forward on a number of the cases. She realised they were in very constrained times – but if they could not provide good witness protection services, they could forget about trying to prosecute many of the cases. Many of the cases would put witnesses, investigators, prosecutors etc at risk.

In terms of the Steinhoff matter she wanted to emphasise that it was at no cost to the State. She realised people were concerned that a company that was being investigated was essentially paying the firm to investigate. Given the safeguards and the composition of the Board – the Company was cooperating and was regarded as a complainant in many of the cases that had been opened. They did not see a risk that there would be an attempt by the Company to prevent persons from being held accountable.

Mr Somyo stated that the Steinhoff case had become an issue of national significance and he appreciated the responses provided.

The Chairperson gained connection

The Chairperson stated that the Committee needed a far more comprehensive briefing on the Steinhoff matters and they should develop a reporting mechanism. The matter had been too protracted and not come to any convincing direction or conclusion. There seemed to be a ‘business as usual’ approach whereas a lot of things went wrong The Steinhoff matter could not linger – because it went to the issue of funding. The NPA had shortfalls as far as funding was concerned. They needed to look at the State’s ability to fund some of the urgent matters which had extensive damage and corruption that had taken place.

Ms Mente stated that she agreed with the Chairperson in that they needed further presentations/reports where Steinhoff was concerned. They had held meetings together with NPA and other law enforcement – there were issues. In terms of the processes that were undertaken by the law enforcement of South Africa– they needed to know from March 2019 – what had been done and how far were they?

She realized they had no business mentioning the names of people who were under investigation but the Committee ought to know what was preventing them from unearthing the people involved, for such a long time. It had been three years – and they still did not know exactly who was involved. In South Africa, certain ‘races’ were treated differently from other ‘races.’ Even now with law enforcement, during COVID-19 when everything was shutdown, the manner in which Black Africans were dealt with by law enforcement in comparison to White people was an issue.

The Steinhoff matter should at some point be finalised. What were the stumbling blocks? Why did they not know who the culprits were? She was not comfortable when the NPA said that they did not foresee the Steinhoff management blocking them or manipulating them – with the outcomes and investigation they were driving. Remember, they were investigating Steinhoff, the people who were managers there – the NPA did not have any clue of the relations between the people that were involved and the people who were currently holding office. They could not be gullible and say that they would not try tricks etc. especially where PwC was concerned. They all knew the integrity of audit firms in South Africa and how they had manipulated information to the favour of certain individuals, in particular ‘to the favour of big corporations that were led by White people.’ Therefore, the NPA could not rely fully and tell the Committee that their information would make the investigation reach a desirable outcome. It was easy for them to manipulate information and give them exactly what would work in favour of the culprits. Therefore, they wanted law enforcement to be the ones investigating fully. They needed impact on big accounts as well as small ones. She did not buy that they were cooperating with NPA, they could cooperate, but NPA could not rely on what was given in order to make up the investigation and cases.

Regarding the R30 million, she remembered that the Minister in one of the sittings of the Justice Committee tried to explain – and came up with some explanation that even in Home Affairs, money was taken to assist the NPA. That was inter-governmental. But when it came to a private person whose aim was to maximise profit at whatever cost – it was not the same thing. The two had different missions – the one worked on maximising profit, the other on ‘bettering the lives of the People.’ If it was inter-governmental she did not see an issue because they were the ones who also needed to deal with disciplinary matters. That was the same government with the same goal.

The presentation would have to come back as well. The previous presentation stated the dates. In this presentation dates were only provided to the slide that referred to Eskom – that however was also not complete though. There was ‘no case number,’ no referral date –the Committee could not measure performance. It needed to state the details – such as postponements, dates etc. No details were provided relating to the other SOE’s.

With regard to the witness protection – they would get nowhere if people who had information were not protected. They would not report anything. She had listened the previous week to a witness who gave information on the issues in KwaZulu Natal (KZN) – a whistle blower – instead of being protected all his details were presented out there. The witness protection was a Bed and Breakfast (B&B) in the area he frequented. He was known in that area – he did not find himself protected there. There was someone from the NPA – she was not sure if it was a senior official on that radio show from the NPA who said they were dealing with the regulations of the witness protection in terms of strengthening the regulations and ensuring better witness protection.

Mr Somyo suggested they delay the matter so that they could have an extensive discussion on it. He gave an opportunity for last responses. They would need to find a day to deal with other substantive matters in the report – especially the Steinhoff report.

Adv Batohi stated that she would respond to the issue relating to witness protection. She agreed completely with Ms Mente regarding the importance of witness protection. There was no way they would be able to prosecute without sound witness protection. In terms of the particular case mentioned by Ms Mente, she requested that details be sent to her so that she could properly consult with those in charge of witness protection and find out what exactly happened and respond fully with regards to that particular matter.

On some of the straightforward cases that were mentioned, it was important to understand that when cases were investigated in the SIU space, and then in terms of the SIU Act, they were referred to the NPA. What happened in practice was that those matters had to be registered in terms of a docket. In terms of the Act, when any evidence was discovered that showed criminality – they would then refer the matter to the NPA. The NPA had no criminal investigative powers or investigators. The NPA then referred the matter to the DPCI following which dockets got registered and it got investigated and then went back to the NPA for them to make a decision on those matters. She requested details on those specific matters so that she could respond.

Regarding the receipt of funding from within government and from outside of government – she agreed that there was a difference between inter-governmental assistance and receiving assistance from the private sector. Private sector assistance to government entities was nothing knew across government. This was also the case for the NPA, where the Specialised Commercial Crime Court was setup with a lot of support from the private sector. It continued to happen. Given the seriously constrained fiscal and financial environment that they were operating in, there was a need to engage with the private sector to assist with donor funding. It was important that they were also able to provide assurances that the funding received from the private sector in no way influenced the decisions made by the NPA or other law enforcement entities. At the NPA they were setting up a donor oversight mechanism that would have external people that would review funding received by the NPA and would be able to provide public reports on those issues.

She agreed with the comments made about the Steinhoff matter, it was understandable, everyone was anxious for the case to get to a point where, if the evidence showed there was sufficient grounds to prosecute, that they could proceed. It had taken a long time, it was a complicated investigation. They had suffered serious resource shortages and many investigators were overstretched – it had been a challenge to ensure that the cases moved. When she took Office two years before and had a conversation with the prosecutors about the Steinhoff matter – they lamented the fact that there were only three investigators. General Lebeya had worked really hard to improve capacity to deal with the matter because it was so important. The forensic report that would come at the end of the month, would make a huge difference in moving the case forward.

Closing Remarks
Ms Mente requested that the aspect of the report that dealt with SOEs would need to be explained further at their next meeting. All the cases must be accounted for in detail.

Mr Somyo stated that the Committee had met with the various entities including, Eskom, Denel, PRASA etc. This kind of report was an add-on to a number of such instances that had qualified for either investigation or prosecution. In terms of the expectations moving forward, the proposal that was made by Members in terms of detailed updates was in order. The Committee appreciated that when a call was made for them to meet in this manner, they gave attention to the areas they were required to report on. They all wanted to see the state machinery move forward in dealing with such matters of interest to find a stable governance.

The meeting was adjourned.


Download as PDF

You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.

See detailed instructions for your browser here.

Share this page: