Follow up meeting with SIU on investigation into COVID-19 PPE procurement by state institutions

Meeting report

The Chairperson said that this morning the Committee would be meeting with the SIU to provide an update on the investigations into PPE procurement and the issues that were raised the previous day. The new updates might not be in the presentation that the members received on Monday.

He welcomed the SIU and advised it to take into consideration the Presidency Budget Vote in the afternoon when giving the presentation.

Briefing by the Special Investigating Unit on to the Procurement of Personal Protective Equipment (PPE) for COVID-19 pandemic

Adv Andy Mothibi, Head of the Unit: Special Investigating Unit, briefed the Committee on the procurement of PPE for the COVID-19 pandemic. The presentation detailed the COVID-19 expenditure statistics according to National Departments, provinces and local government. The value of alleged irregular contracts under SIU investigation and the value of matters referred to the Special Tribunal was presented. The total actual COVID expenditure was R126.7 billion between April 2020 and March 2021. The total value being investigated by the SIU was R14.3 billion. Of the R14.3 billion under investigation about R614.3 million had already been referred to the Special Tribunal in order to set the contracts aside and recover losses.

The presentation also detailed the most urgent limitations facing the SIU. These included the destruction of evidence, some state institutions closing their offices because of COVID-19 infections, witnesses feared victimisation or felt unsafe and were hesitant to be interviewed, provide statements and evidence.

An update was also provided on new civil litigation matters, orders granted in the Special Tribunal, actual outcomes and new matters finalised since the previous briefing of the Committee.

The number of PPE contracts awarded for COVID-19 related services under investigation by the SIU was currently 4117. These contracts were awarded to 2251 service providers. By value, 40% of these contracts have been finalised, 54% are currently being assessed and 6% have yet to commence.

The current estimated costs of the SIU investigation to end August 2021 which includes the current investigations and those yet to commence is estimated at about R182 million. This figure excludes an estimate of about R85 million for additional short-term contractors, as well as an estimated figure of R75 million for civil litigation costs. The total estimate therefore is R 341 million, which is slightly down from the previous estimate of R386 million.

(See Presentation)

Discussion

The Chairperson thanked the SIU for the comprehensive presentation and not the extent of the work that the SIU had been doing. The presentation painted a gloomy picture of how daring and bold the corrupt elements were across the spectrum of Government. That was worrying. This cost the SIU R182 million and that was a concern for the Committee. It costed money to recover money. The public were ‘screwed over twice’. The work of fighting corruption, while necessary, was in itself a costly exercise. He thanked the SIU for their work. He then discussed the correspondence sent the previous day. He wanted to dispense with that matter. The matter concerned the Minister of Health and Digital Vibes. He wanted that matter to be discussed before the members asked questions about the comprehensive presentation. He asked the SIU to comment on the Minister of Health and Digital Vibes.

Adv Mothibi said that the Committee also needed an update on where the SIU was with regards to the Gauteng Department of Education.

He discussed the National Department of Health. The investigation was ongoing. The SIU had gone public to say that the investigation was at an advanced stage. The SIU’s investigators had been going through the procurement process that was conducted in the Department. The investigators had gone through all the prescripts. To date the SIU could report that the procurement process was found to be irregular. The SIU had determined the accountability levels of who was involved in the actual procurement process and those referrals would be made to the Department. The SIU would also look at the various allegations that were made in respect of the other officials in the Department including the executive authority in the Department and the service provider that had been identified, Digital Vibes. At this stage he was really constrained to go into detail. The investigations were progressing well. The Minister had expressed his cooperation. The investigating team was still following some of the legal provisions in the SIU Act where they would call various witnesses to be interviewed under oath. The SIU was at a critical stage of the investigation. The SIU did not want to go into further detail as that would have the potential to prejudice the investigation. It was important to indicate to the Committee that the SIU envisaged that although the overall investigations into PPE would end by August this investigation they would like to conclude by the end of June. The SIU continued to get information that came through by whistle-blowers and other means. The investigating team was duty bound to look into those allegations and make an appropriate pronouncement. At this stage that was the indication that the SIU could give to the Committee. The SIU was investigating all of the allegations, gathering the evidence that was required so that it could reach an appropriate finding by the end of June. If the investigation ended before the end of June the SIU would ensure that the report was prepared, handed to the President as expected and the Committee would know that the investigation was concluded.

He discussed the Gauteng Department of Education. The investigation was ongoing. The investigating team had given a progress update similar to the investigating team in the National Department of Health. The investigation involved a number of service providers. The Department spent R431 million on decontamination and used about 269 suppliers throughout the province. The investigation had to look at all those procurement processes. At this stage the SIU could report that the supply-chain management process, that was the procurement process itself, had been concluded to be irregular. The SIU needed to dive deep and determine who was accountable so that it could make appropriate referrals for consequence management. This would include continuing with the interviews of all the officials including the executive authority. The SIU aimed to have all of those conducted and completed. The investigating team indicated that this would be concluded by the end of August. He urged them to fast track the investigation so that the SIU could bring out some of the findings by the end of June. The SIU had lined up the interviews which would include an interview with the executive authority so that it came to a conclusion that was credible based on the evidence that was collected from all of the witnesses. He was pleased to report that on 24 February the SIU registered the investigation with the Fusion Hub to assist with bank accounts and the profiling of service providers. The SIU decided to prioritise the top 40 service providers that received the most payments. 14 bank accounts with an amount of R40.7 million have been frozen by the Special Tribunal on 17 May 2021. The SIU had briefed Counsel to review and set aside the appointments of these service providers. That related to the procurement process that had been found to be irregular. The SIU would make appropriate referrals following the investigation that was ongoing. The investigation was still ongoing. That was the best that the SIU could report and update the Committee. He was informed that the Committee needed an update on SASSA. The National Investigations Officer would provide an update on that matter.

Mr Leonard Lekgetho, Chief National Investigations Officer, SIU, provided an update on SASSA. He indicated that during the week the SIU had engaged with SASSA regarding the matter that was raised in the Eastern Cape. The SIU agreed to second the SASSA members so that investigations could be done into the matters that had been raised. The SIU had sent a secondment agreement to SASSA and responded with their comments. Currently, the SIU legal team was looking into the secondment agreement. The team was engaging with the SASSA officials in the province. This was the team identified to be seconded. The SIU would be attending to this matter in terms of secondment so that it was able to assist SASSA in terms of the investigation.

There were matters in the public that pertained to SAPS. There was only one matter pertaining to SAPS that the SIU had dealt with and it had been reported. With the other matters that were in the media space it was confirmed with the Hawks the previous day and they were busy dealing with those matters. The matters had not been reported to the SIU as of yesterday.

The Chairperson noted what Adv Mothibi had said in relation to those high-profile investigations. The Committee would await the finalisation of those matters at the end of June. He opened the floor for the Committee to ask questions. He said that the challenges of Eskom had a ripple effect on everything from the economy to parliamentary oversight. It was a socio-economic and political problem which was an absolute mess.

Ms B Van Minnen (DA) thanked the SIU for their comprehensive report. It was a report that the Committee was going to have to interrogate thoroughly because there was some very important work there. She thanked the SIU for the work that they were doing. She asked what was the total amount that was currently the subject of the preservation orders and the freezing of accounts? She was very concerned where funds got transferred, was potentially frozen or made subject of a preservation order for a length of time before the court makes a decision about the money and it is repaid. She wanted to know the total quantum of monies that were currently subject to a preservation order and/or freezing of accounts.

Adv Mothibi said that this matter was discussed under the civil litigation part of the presentation. He asked the Chief Legal Counsel to respond to the question on the total amount of the preservation orders.

Dr Jerome Wells, Chief Legal Counsel, SIU, said that the only preservation and forfeited amount was the amount that was granted in the Ledla matter. The quantum of that forfeiture was R26 million. The rest of the freezing orders that the SIU had obtained in the investigations which had not been translated and was still the subject of litigation was the freezing that related to pensions.

Adv Mothibi said the information on the orders that had been granted was on slide 29. The legal team was on brief to ensure that it executed the orders that had been granted by the Special Tribunal. He said the question was about the overall amount of the preservation orders which also included the freezing orders. He asked Dr Wells what the overall amount was. He told the Committee that the SIU would be able to give that total amount before the close of the session today.

Ms N Tolashe (ANC) appreciated the good work done by the SIU and everyone who was making sure that corruption was exposed and fought in a professional manner. The members always appreciated the work of the SIU but today its work was extraordinarily good. She suggested that the Committee did not have enough time today to interrogate the report. She requested that the Chairperson organise another meeting so that the Committee could panel beat the report and make sure that it was done with it. The Committee would then wait for the August report that was going to provide the exact programme that had been implemented out of all of the investigations. She requested that the Chairperson consider another meeting of this kind where the Committee would be able to ask question in an extensive way. That was her plea. Her first question was on the timing between the Special Tribunal and the SIU. When the SIU sent matters to the Special Tribunal how much time did it take? Was the SIU happy? Were there any bottlenecks that were experienced? If yes, how best could the Committee assist? She said it sounded like Adv Mothibi was happy with the protection of witnesses and the laws that related to the protection of witnesses. Was that the case? She asked this question because of the experienced picked up in the Zondo Commission. The witnesses were the most important people who decided to come out and give evidence without fear or favour. The witnesses’ lives were at stake. Was the SIU happy with the kind of protection that the witnesses received?

She then discussed the outcome of the Dr Masuku case and said that it was unprecedented. She wanted to know what the SIU had learned from that? Since the dawn of democracy, the executive went off scot-free and the administrators were the ones that had to take responsibility. Therefore, the Masuku matter was a very positive breakthrough. She wanted to hear more from Adv Mothibi and the team about what they learned so that the Committee could prepare for the AG who now had teeth. The AG could use this breakthrough in all other matters relevant to the Masuku outcome.

She wanted to hear more about the OR Tambo matter. The members read in the newspapers that that municipality was having two parallel leaderships. That was nothing but trying to escape what was coming. How best could the SIU and Committee work to ensure that whatever was taking place that the work of the SIU was being allowed to carry on? The work of the SIU needed to carry on even if it needed to go to court. Whoever came in at a particular time needed to take full responsibility about what was to be investigated.

She said that in the Free State, in particular, the executive did things to slow down the implementation of the outcomes of the SIU like the disciplinary processes. She suggested that those affected political principals be brought before the Committee so that they could give an update and the progress made with regard to the SIU report. The Committee would ask those political principals whether they were willing to implement or not. She feared that them taking longer to implement was going to open up into what was said earlier on with the freezing of pensions. Some information was getting lost in the process. She thought that those political principals should be brought before SCOPA for them to give the Committee information on what they were doing with regard to this matter. She said that in Departments in Mpumalanga there was also the tendency of a slow pace of responding to implementation of matters that were referred to them. She hoped that her proposal would be considered for the Committee to hold another meeting so that it dealt with a very important and informed report.

The Chairperson noted Ms Tolashe’s proposal. She was offline. The Committee would decide on that proposal later.

Mr S Somyo (ANC) compared the cost of the SIU’s work against the actual alleged amount which was under investigation. It showed the extent of the balancing act that at times the agency was exposed to. He appreciated the SIU’s commitment. Whatever the SIU was tasked with doing it produced results. The services which were paid for were services which had value. He considered the question of the entire cycle insofar as the deterrent measures were concerned against matters of maladministration, fraud and corruption. The SIU was involved to investigate these matters and choose a route for civil litigation. The success rate of the referrals to the Tribunal was something that was enjoyed on the qualitative instance of work which was put into the overall process. This was something that the Committee needed to appreciate. He discussed the Auditor-General and the referrals made to the Fusion Centre of a number of infringements which had gone over 8000 matters in relation to PPE procurement. That displayed the extent of such activities which ought to be looked into further. The work of the report required some effort from the Committee to ensure that it dug deeper into consequence related matters.

He heard his colleague make mention of some provinces. All provinces had referrals and they failed to follow disciplinary processes as referred to them in various instances. This work followed the President’s signature on determination of those areas which ought to be investigated. That determination was the determination that told the Committee where the accountability lied in these various instances. If the Committee was going to be found wanting everywhere then the members would be like headless chickens. He appreciated what the President had done in that there was a fight against matters of corruption. The Committee needed to be given a proper report from the Ministerial Committee which had been set up to deal with these matters. Rather than inviting everybody into this Committee, it needed to go where the accountability lied. This was a commitment which had been made at a difficult time facing the country when it was challenged by the pandemic and it sought to put up measures which were going to assist and protect the lives of communities. The Committee needed to follow the structures which had been laid for this process. He proposed that when the Committee looked into this kind of report that the Ministerial Committee should be invited rather than inviting a number of Ministers or MECs or Premiers. The Committee should just deal with things in that kind of sequence. He thought that there were other referrals that were made after the SIU’s investigations which were referring to other State-related institutions which ought to deal with those matters. Those institutions had to be invited and that was where the slow pace was. That was where another deep problem lied. When things were investigated in this way cracks were found and it became difficult to find the end of the line. The Committee needed to assemble that team and find a way of closing these matters going forward.

He then discussed the depth of the SIU’s investigations and success of investigations. There were legal instances that were found through some of these investigations. It might be necessary that some correlation may be found on the legal lapses and on new things which arose out of the findings which related to the matters of accountability. The Committee needed to line up those instances so that it found relevant institutions that the Committee could deal with going forward. That was his proposal.

Ms B Zibula (ANC) welcomed the detailed report from the SIU. She thanked the SIU for doing such a good job. She said that the progress to date had been slow when it came to actions against the officials. There were cases that took place last year but disciplinary hearings have not commenced as yet. Other cases were also waiting for their outcomes. She asked Adv Mothibi how the SIU could overcome this problem?

The Chairperson said that Ms Zibula’s question was important if the investigations did not translate into consequence management after having spent so much money. The recoveries were good but the consequences had to be commensurate with the deed of corruption. He handed over to Adv Mothibi to respond. He noted the three proposals which had been made. He also wanted Adv Mothibi to comment on the proposal that the Committee find another time where it would pose questions on the issues in the report. If the Committee rushed it may not do justice to the report. There was the issue that the Committee needed to consider on how it would get a consolidated update on the part of those who now had to implement these things. He handed over to the SIU to provide comment.

Adv Mothibi said that the SIU would be available to further engage and respond to the questions that the members had upon further consideration of the report. It was only fair to be able to engage prudently and in detail. The SIU had prioritised the investigations into PPEs given the importance of the PPEs to the lives of South Africans. This was similar to the SIU prioritising the Health Sector Anti-Corruption Forum. It was because the corruption in this space threatened people’s lives. The SIU was not diminishing the other investigations that it did. The SIU prioritised this so that it could dig deep and bring out the findings. The SIU would be pleased if all those who were responsible, political principals, accounting officers and authorities were held accountable. The SIU Act did not provide any next steps. The next steps the SIU was doing was administrative in nature. The SIU followed up administratively to ensure that the actions were taken. The SIU would really like to see its findings being implemented and those responsible to be held to account. While the SIU had the administrative process available there was nothing preventing the SIU from instituting legal proceedings to compel accounting authorities to do their work. That was the very last option and that would possibly not be invoked given what the Committee would do in holding accounting authorities to account in implementing the actions and disciplinary hearings that they were duty bound to implement.

He responded to Ms Tolashe’s question about the time taken between the Special Tribunal and when the SIU instituted civil proceedings. He had requested the SIU’s Chief Legal Counsel to note that and respond to it. At the moment the SIU did not have material issues to report relating to matters that it referred to the Special Tribunal. Initially when the Special Tribunal started to operate the SIU immediately recognised that it needed to increase the resources in the civil litigation space. The SIU had gone some way in improving those resources. Case administration was viewed as an important aspect of the litigation process because it enabled the judges to determine whether the matter was ready for hearing or not. That was the part that was suffering a few months ago. This was pointed out by the Special Tribunal which said that the SIU had to up its game with regard to that matter. The SIU had engaged with the State Attorney. The SIU had since built its own capacity to be able to drive that space. It was going well at the moment. At the moment the SIU had several cases that it had enrolled at the Special Tribunal over and above the COVID-19 cases. Those matters were worth more than R7 billion and there were about 60 cases. The judges had indicated to the SIU that they were willing and reading to adjudicate on all those matters. From a process perspective there were no deficiencies or issues that the SIU could report as being problematic as to delay the litigation process.

He discussed the ruling of the matter of the former MEC of Health, Dr Masuku. It was a ruling in the Masuku case. It was unfortunate that that was how it would be referred to. As a ruling it was a ground-breaking decision which required all executive authorities to understand so that they were able to execute their functions appropriately. The SIU’s civil litigation team was preparing a briefing note which would eventually turn into a presentation which the SIU could present to the Committee in the next meeting. It had a whole host of implications which the SIU wanted to outline by unpacking that ruling and court decision. The SIU would like to prepare that so that it could indicate to the Committee what it had learned and what the implications of that decisions were. The SIU would prepare a comprehensive presentation that it could present to the Committee relating to the implication of that ruling. The SIU would be monitoring the OR Tambo Municipality matter. The extent to which it prejudiced the investigation or the implementation of the SIU’s outcomes would be recorded and would be raised in accordance with the process and with the executive authority responsible. The SIU would ensure that where it really prejudiced its outcomes and investigation it would determine what legal recourse it had.

He responded to the Free State matter where a disciplinary matter was referred and an official was transferred. The SIU had received a progress report from the Free State team. He agreed with the Committee that accounting and executive authorities responsible could be requested to appear before the Committee and explain what they were doing to ensure that the recommendations were carried out. There were various instances where the progress to date the SIU had received indicated that no disciplinary actions had yet been instituted. This was an unnecessary delay. If there was a disciplinary process to be taken it needed to be taken speedily. The SIU appreciated that it had to be taken within a fair legal process but it had to start. It had to be implemented so that it was demonstrable that consequence management was being implemented.

He appreciated the comments made by Mr Somyo. The SIU would be paying particular attention to the recoveries. The SIU needed to make sure that wherever the orders were given to make recoveries by the Special Tribunal it sped up the process to make sure that those orders were converted to actual monies that were recovered. It was going to be the case that by August even when the SIU almost completed the investigations on hand that it would still be having a roll at the Special Tribunal. There were quite a number of results that were on the table. The SIU just needed to make sure that those results were actualised. Whether that was a referral to a disciplinary process, referrals to the NPA or referrals to the Special Tribunal. That was what would make an impact in terms of all these investigations. The resources that the SIU had to make sure that it investigated as speedily as possible was important. Now the impact had to be felt by implementing those referrals. The SIU would ensure that the recoveries were sped up. He appreciated the concept around the entire cycle of deterrents. The cycle of deterrents that Mr Somyo referred to had aspects in it. There needed to be effectiveness in implementing disciplinary hearings, prosecution and recoveries. There needed to be effectiveness in proactive measures of preventing the occurrence of corrupt activities and maladministration. He appreciated the comments on consequence management. Without consequence management the SIU would not make an impact. The SIU had made referrals to other State institutions like the Competition Commission, SARS, SAHPRA and other regulatory authorities. The SIU would also like to hear from the accounting authorities on what they were doing with the referrals. The SIU wanted to receive feedback from those regulatory bodies on how they were handling their referrals. He handed over to the Chief Legal Counsel to make further comments on the timing with regard to the Special Tribunal and if there were bottlenecks.

Dr Wells confirmed what Adv Mothibi mentioned. At this point in time the SIU had additional resources to deal with all the matters. There was an escalation of matters due to the outcome of COVID investigations. The SIU managed to recruit additional resources and was managing that process. There were currently no bottlenecks at the Tribunal. All cases were properly case managed and were being heard by the Tribunal. The cases were also properly managed from the side of the SIU based on the personnel that had been accommodated within the environment of the State Attorney. One additional concern was a jurisdictional aspect that had been dealt with in the Ledla matter. The Tribunal confirmed that it was a court. That had been emphatically dealt with. In addition to any potential bottlenecks or frustration with any processes of the Tribunal the SIU had now finalised its draft legislation which would ensure further efficiency and effectiveness within the Special Tribunal.

Adv Mothibi said that the SIU had submitted the draft amendments the previous day to the Department of Justice and Constitutional Development to put them through the legislative programme. Among the draft amendments deals with this issue around the Special Tribunal being a court or not being a court. It was ruled that the Special Tribunal was a court. The SIU also needed to deal with this issue around the binding nature of the SIU referrals. The SIU wanted to ensure that the implementation of its referrals was strengthened. The draft legislation would be interrogated. The SIU hoped that in the end it gave the SIU these provisions that would ensure that the referrals were implemented. The amendments dealt with various other enablement provisions. At an appropriate time in the legislative process the Committee would have site of those amendments.

The Chairperson thanked Adv Mothibi and his team. The Chairperson suggested that because the SIU transmitted its reports to the Presidency, and that is the point when the affected parties were informed, that a link needed to be made. Mr Somyo made the point about the Ministerial Committee. The Committee would have to look at the modalities of that. If the Committee was going to call all of those implicated persons it might end up being an exercise in futility in the absence of a coordinated approach. The Committee needed to enforce the outcomes of the SIU reports. There also needed to be an interaction with the NPA in relation to the prosecution of some of these matters. The Committee would take it forward in that fashion. The Committee would advise the Presidency that it would be receiving these reports and would like an update on their implementation. The Presidency would be able to solicit some of the action steps being taken to implement some of these things. The Presidency or the IMC would have to brief the Committee on these issues. Or the Committee could dispatch correspondence to all the affected parties and ask them to provide the Committee with an update. Those were the options open to the Committee. The Committee would be in touch with the SIU on a date for the members to interrogate the report. It was an extensive presentation. The Committee would hate to not do justice to it. The Committee did not want to rush it. The Committee would look for a date in consultation with the office of the SIU. There would be a meeting to take these matters further.

The issue of the OR Tambo Municipality was a perennial headache. There were other developments there following the Committee’s oversight visit. He had been trying to get in touch with the Chairperson of the Portfolio Committee on COGTA because the Committee may need to go back. Since the Committee left, in the last three weeks, there had been issues which emanated which did not inspire confidence that the situation would be resolved. Further intervention by the Committee may be required. The members needed to be on standby for that. The Committee would consult the House Chairperson. The issues that were being raised by the SIU were in part going to be compromised if the situation was not stabilised for the better. The Committee did need to deal with that particular matter. The Committee appreciated the fact that there was blacklisting and noted the referrals the SIU had made. The Committee needed to find ways and means of strengthening the SIU. It was concerning that the investigations cost as much as they did. The Committee would consider a date to interrogate these matters further when the Committee met next week because the Committee would also be meeting to discuss the matter of DBSA. He thanked Adv Mothibi and his team for the comprehensive presentation which illustrated the great amount of work that had been done. The Committee appreciated the fact that there had been recoveries and that there would be potential recoveries. The Committee would await the next report and before then would be interacting to discuss some of these issues.

The meeting was adjourned.