Progress by DOD on cases of fraud and corruption and consequence management; Committee’s annual report and performance plan

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Defence and Military Veterans

25 May 2022
Chairperson: Mr V Xaba (ANC)
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Meeting Summary

In a virtual meeting, the Committee received a briefing from the Department of Defence (DOD) on progress in dealing with cases of fraud and corruption. Members were particularly concerned about the number of members suspended with pay. They noted that some had been suspended since 2012. It was an unnecessary cost. Concerns were expressed about incomplete cases and whether effective steps were taken to recover stolen funds. DOD officials briefed the Committee on the interaction between military and civilian law in dealing with cases. Committee Members said a lack of consequence management resulted in officials not being held accountable for financial mismanagement. 

The Committee resolved that all suspension cases must be reviewed and a report made to the Committee. This included the 56 members that remained on suspension. The report should provide a reason why each member’s suspension was justified. A status report from all the chiefs of the different divisions should be submitted and presented to the Committee. This was to hold those chiefs to account. There had been investigations with findings and recommendations. So why was no action being taken or implemented? A report on cases should also be provided on a quarterly basis. Consideration should be given to making completion of a financial management course a requirement for promotion.

The Committee also considered and adopted its annual report and performance plan. 

Meeting report

Department of Defence: Status of corruption and fraud in the DOD

Rear Admiral Mokgadi Maphoto, Provost Marshal General (PMG), SANDF, briefed the Committee on the irregular expenditure identified by forensic audits.

He had some technical difficulties, and another official took over.

The official reviewed the status report by the Department of Defence (DOD) on fraud and corruption, including cases that had been finalised. The cases of irregular expenditure related to:

-1 Military Hospital refurbishment

- irregular awarding of contracts on DOD asset management

-irregular expenditure on catering school

Admiral Maphoto returned and provided a summary of the cases of fraud and corruption in the DOD, fraud and corruption expenditure, convictions and the officials on suspension.

He said the DOD remained committed to the fight against fraud and corruption.

(See slide presentation for details on cases, values and status of investigations)

Discussion

Mr S Marais (DA) said a lot of concerning information had been presented. He asked what period the list of cases covered. He asked whether the case about the purchase of Cuban medicine was included in the figure of R400 million. He asked for a comparison of the value of money that was lost and the value of money that was recovered or recoverable in relation to fraudulent cases. Several cases had been closed due to the suspects having died. Were there claims against their estates? There were very few convictions compared to the number of cases. This was a huge concern because very few senior officials were being held accountable. Were there disciplinary or other investigations of senior people? One suspect had confessed, but the case was withdrawn. How did this work? Was the case withdrawn due to a lack of evidence?

Mr Marais raised a concern about suspensions that dated back to the early 2000s. Only a few officials had been suspended without pay, meaning the other officials were suspended with pay and enjoying increases on a yearly basis. How would this be justified not only to National Treasury, but Parliament and the taxpayers of South Africa? Were there policies in place to prevent suspended employees from having another job? Were there any checks and balances to ensure this? If they received full payment and then found another job, how could they be subsidised by the taxpayer?

Ms M Mothapo (ANC) shared the sentiments of Mr Marais about a case being withdrawn after a confession had been made. She said there were many cases where there had been a decision not to prosecute. She requested that reasons be provided as to why the case had been withdrawn. She raised concerns about the Makhado Air Support Base (ASB).  She asked if there were any internal systems or policies in place to deal with such cases. A cashier was found guilty and sentenced to five years of imprisonment, suspended for three years. There needed to be a movement to recoup taxpayers’ monies. She asked for clarity on the cases of three officials where the value was reflected as zero.

Admiral Maphoto said the values were zero because the officials were suspended without pay.

Ms Mothapo asked what criteria were used to decide whether an official was suspended with or without pay.

Dr M Basopu (ANC) asked what the DOD did if it was not satisfied with the outcome of a case. A culprit wanted to confess, meaning that there was a case, but the case was withdrawn. It was stated that there was no intention to commit fraud. What had the DOD done in terms of internal processes and consequence management regarding this case? Tenders at ASB Makhado had been awarded to families and friends of officials. That was wrong. Another case dealt with a suspect who showed fraudulent receipts for accommodation. It was stated that the case docket was still with the senior public prosecutor, but then it was stated that the case had been withdrawn. Why was contradictory information provided? Another case involved the submission of a will at the Bank of Lisbon in Pretoria. It was said that the investigation was ongoing, but then it was said that the case was ready for closure. How could it be that, on the one hand, the investigation was ongoing and, on the other, it was being prepared for closure? There needed to be consequence management.

Fraudulent documents were used to purchase medical equipment. There was evidence that fruitless and wasteful expenditure occurred, but the case was withdrawn. Fraudulent documents were processed for the transfer of payments. There was a mention that the case would be discussed with an advocate, but then it was said that the case was being closed. These cases showed that there needed to be consequence management. What happened to the cashier who was sentenced to five years imprisonment, suspended for three years? The briefing by the DOD showed that there were many challenges and that processes were being abused and manipulated.

Mr T Mmutle (ANC) asked for clarity about fraudulent activities in the office of the former Minister of Defence. He asked what kinds of fraudulent activities took place. There were cases that dated back to 2007. How did the DOD allow a situation where a member was suspended for about 15 years without prioritising the resolution of that particular matter? A person was being paid for about 15 years for staying at home. If that person was only found guilty 15 or 20 years later, how was the money going to be recovered? Were there policies or guidelines in place that allowed a maximum number of years for which a person could be suspended?

The Chairperson noted that when this matter was submitted to the Committee back in March, there were 56 uniformed members on suspension with a value of R30.6 million. Two months later, the same information was presented to the Committee. When was the report updated? It did not look as if any progress had been made in these investigations. Recommendations were made that the majority of finalised cases be sent to the Chief of the Defence Force for implementation; this had not been done. This spoke to consequence management. Recommendations were attached and they were not put into effect. It was clear that people were not being held accountable. Those that did wrong were still in employment with no action taken against them. There should not be investigation for the sake of investigation. Investigation was there to identify the people who did wrong and hold them to account. Investigation for the sake of investigation was an unnecessary cost and became wasteful expenditure for the DOD. This was where the problem lay.

The matters that had been reported to the Hawks investigation unit were still pending. The Hawks should be invited to comment on the progress of these assigned matters. He suggested that the DOD consider adding a condition that before a person was appointed to senior management they must have completed a financial management course. This would help the DOD safeguard the finances of the state. The presentation showed that the DOD was unable to maintain and refurbish equipment because there was no money. Money fell into the cracks. How could this be subsidised by the taxpayers? Was there a plan to ensure that this did not happen?

Responses

Admiral Maphoto said that the commencement and end dates of the investigations were reflected in the presentation.

Mr Marais said that he had looked at the presentation and could not find whether these cases listed were up to December 2021 or March 2022.

The Chairperson asked Admiral Maphoto whether these are the same cases that were reported back in March. Was the DOD still dealing with the backlog of information?

Admiral Maphoto said that they were indeed the same cases. He confirmed that the case involving Cuban medicine was not part of the R400 million. That case was being dealt with by the office of the Chief of the National Defence Force and the Public Protector.

The amount of money recoverable depended on convictions. The overall money recoverable could be looked into and a report could be provided. The issue of claims on the estates of deceased suspects was something that could be looked into. The cases were mostly handled by the specialised commercial crimes courts. Some cases had been withdrawn because the accused had died.

He agreed that convictions were slow in terms of the value of the money that was lost. More junior officials than senior ones were suspended. There were officials suspended without pay. The accused who confessed was informed by the investigator that there were some technicalities involving an attempted shortcut in the case which resulted in it being thrown out. Details could be provided at a later stage. On the cases dating back to the early 2000s, he said that when money was lost and the cases were lengthy, the accused could not pay back the money.

Brig Gen Sunita Solomons, Director: Military Prosecutions, said that the list of cases provided was up until the end of the financial year, which was March 2022. She stated that the Cuban medicine case was not part of the R400 million.

She addressed the issue of the money actually recovered. She explained that when it came to a criminal investigation, matters were investigated, set for trial and, based on the findings, there was either a guilty or not guilty verdict. When there was a guilty verdict, the fraud and corruption had been proved. Whether the case involved a matter inside or outside the Defence Force, the prosecutor would invoke a section of the Criminal Procedure Act for the state to recover the money based on the conviction of the individual. In the case of a not guilty verdict, the individual was not held responsible for the theft and the money could not be recovered.

Claims against the estates of deceased people were a civil matter. In civil proceedings, a claim could be made against a deceased estate but that depended on whether court papers were filed before the person died. In criminal proceedings, once the accused had died and had not pleaded or not been convicted by a court, then money could not be recovered from that person. This was because the person could not stand in a court of law and defend themselves. If charges were filed when a person was alive when found guilty and died later, a claim could be made, because the court would have made an order that the individual owed the state the money.

The concern about only a few superior officers being held accountable depended on the evidence. If the evidence pointed to a senior officer, there would be an investigation, and the person would be charged. People could only be suspended if they were charged. However, not every situation dictated that an individual should be suspended. If policy indicated a person be suspended, that person would be suspended. If the Chief of the South African National Defence Force instructed that a person be suspended, they would be suspended and held accountable.

In the military structure, if a uniformed member was charged with an offence, there would be a disciplinary hearing chaired by the officer commanding where a guilty or not guilty plea would be made. Non-disciplinary offences or criminal offences did not go to disciplinary hearings because the maximum fine in these hearings was R600. Serious matters went to the military court.

Disciplinary hearings were for members holding ranks from private to staff sergeant. It must be a voluntary election to have a disciplinary hearing.

In the case where the accused confessed, the confession was withdrawn due to a lack of evidence. Military judges and magistrates were allowed to take confessions, but the person would have to come to them freely and voluntarily and not raise any defence. Sometimes an accused wanted to confess, but during the course of the confession, they started to raise a defence in law. The judge was then forced to abandon the confession in good conscience because the person had raised a defence. The confession could not be accepted because the person did not unequivocally admit to the crime. Why other cases had been withdrawn was something that would be interrogated and a report would be made to the Committee.

She agreed that something must be done about those that were still being paid while they were suspended and not rendering any services. A lot of matters were referred to specialised commercial crime units and the magistrates courts because they involved not just uniformed members but civilians too. The military courts did not have jurisdiction over civilians. Certain cases were delayed for reasons such as the accused being sick or a change of attorneys. There would be an investigation into long suspensions without convictions.

Mr Marais asked the DOD to respond to his question on whether there was a policy to ensure that the suspended members did not work somewhere else during that time.

Brig Gen Solomons said that a process was in place. The suspended member must apply to his officer commanding to take on other work. The application must be completed in writing. She was not aware that people had made such an application before. These members received a full salary while they were suspended. This meant that they were still under command and would be called to attend court cases without the suspension being lifted. 

The Chairperson said that suspension was a precautionary measure because the person’s continued presence at work might interfere with the investigation. If the matter was concluded and the case was court ready and the findings made recommendations, it did not seem justifiable to keep the person on suspension, especially in the case of long suspensions from 2012. This could mean two things. First, their suspensions had been forgotten or they were kept on suspension because they were not wanted back at work. Secondly, the DOD did not want the person to interfere with the investigation and witnesses at work. The person was then placed on suspension for a very long time, suggesting that work was not being done. The suspended members would not complain if the matter was not being investigated or took long, because they were still receiving a salary. He asked the DOD to investigate these lengthy suspensions and to report back to the Committee. Was it still a precautionary suspension when the person had been suspended since 2012? Was there a policy that stated how long a person could be on suspension?

Chief of Staff, SANDF, said that they did not suspend uniformed members until they were charged. Being charged meant that there was evidence, and that evidence showed that the member was guilty. This was when suspension came in. People were suspended, and sent home. Then, when the matter went to court, the court would send them back. This was an uncomfortable situation because these members then interfered with people who were possible witnesses. There had been a discussion about how to deal with such matters. If these members were back at work, it would create the impression that that person was a winner and then other people would start doing the same things.

The military law in South Africa had changed, so discipline by law could no longer be done in the way that it had been done before. Another thing was that defence force members belonged to unions. There was a code of conduct that was read at every parade and members should be seen to be acting accordingly. That was what society demanded of the SANDF.

Ms Gladys Sonto Kudjoe, Secretary for Defence (SecDeF), said the issue of consequence management gave her sleepless nights. She said she had been brought to the DOD to implement control measures, to act, and assist. However, all this time she had only been working on historical cases on a daily basis. This was frustrating. There was little opportunity to really deal with the matters at hand. For instance, the presidency had listed both military and civilians in matters involving the procurement of personal protective equipment. There were about 27 members of the military and there had not been any movement there. The disciplinary hearings prevented the accounting officer from dealing with the issues at hand, and this showed that the organisation was not working effectively. There would be a meeting with the chiefs of different divisions to discuss issues of consequence management. Some of these chiefs were new to their positions, and when she came in as SecDef, there were only historical things to deal with.

The DOD was paying R69.7 million for being audited for the 2021/22 financial year, but when the report came in, cases from 2013 had to be dealt with. To what extent would this be allowed to happen? Some of the people involved had passed on or retired. Although cases had been referred to the Hawks, it took time. They had been requested to move quickly and prioritise these cases. But the Hawks said the cases would be processed according to when they had been submitted. There were other people in the line and therefore the cases took forever

She emphasised what Brig Gen Solomons and the Chief of Staff had said about the suspended members. There were precautionary suspensions when it was clear that there would be attempts to manipulate the evidence. There would be disciplinary hearings from 2 June 2022 for which the members had not put on precautionary suspension because the investigation had been done and all the information needed was already there. Members appeared before disciplinary hearings or the courts. Cases were referred to the National Prosecuting Authority (NPA). It took time to gather evidence. Justice delayed was justice denied. The cases could not continue forever.

Every year at the end of April, financial disclosures were required from those in the Senior Management Service and those below this level. If suspended members wanted to work somewhere else, they needed to apply for authorisation to do outside work. The process was reactive in the sense that there was only a response to requests.

The SecDef referred to a case dealing with a Microsoft licence to the value of R21 million. There had been some discussion about recovering money. It would be done in two parts, the first starting at the beginning of the next financial year. The case was still ongoing because more people had come forward. The rest would be recovered once the matter had been closed. Money could only be recovered if the judgement itself said that money was recoverable.

She acknowledged that it was wrong that people were not being punished for crimes. There was no consequence management, and this needed to be worked on. What incentive was there for those who actually worked hard and did everything to protect the organisation? What message did it send to them if those doing wrong were not being punished?

She was happy that Brig Gen Solomons had had an opportunity to explain things from a legal perspective. She said that some form of policy on how to deal with civilians that were in the uniformed environment was needed. Who did they account to? The head of the division? She mentioned that she had not met any of the people suspended. Cases were sent to law enforcement, and there was no clear indication of how many cases were dispatched to them. She suggested that in future when reporting to the Committee, there should be a report about the number of cases, how many had died and how many had been arrested. This report should also include the number of suspensions and the amount of money paid to those suspended.

There would be a meeting to look at the issues of material irregularities. She agreed with the Chairperson on the financial management course. She added that it was not only about financial management but management itself. At every level, management had to account for both human resources and financial resources. Once money was used it must be accounted for.

Mr Mmutle repeated his question about fraudulent activities in the ministry.

Admiral Maphoto said that this involved two car rentals from different companies.

Mr Mmutle was not satisfied with this answer.

Admiral Maphoto explained that it was related to car hire and movements. The money involved in these fraudulent activities was spread over many years, not just one year. It involved vehicles given to junior officials who sometimes did not qualify for these categories of vehicles.

The Chairperson summarised what was discussed. He said all suspension cases must be reviewed and a report made to the Committee. This included the 56 members that remained on suspension. The report should provide a reason why each member’s suspension was justified. A status report from all the chiefs of the different divisions should be submitted and presented to the Committee. This was to hold those chiefs to account. There had been investigations with findings and recommendations. So why was no action being taken or implemented? A report on cases should also be provided on a quarterly basis. He said consideration should be given to making completion of a financial management course a requirement for promotion.

 Mr Marais agreed with the Chairperson. What measures were in place to ensure that those suspended with pay were not working somewhere else without making an application to do so? If they had been suspended since 2013, and nobody bothered to contact them, they might just go on with their lives. The fact that the majority of cases involved uniformed members should be looked into. There was a challenge with the cost of employees. The DOD and its entities could not afford to have a uniformed member on suspension while a reserve force member did the work of the suspended person.

Dr Basopu said that he had noticed that the DOD took a long time to respond to questions. This should not be the case. There were gaps in the report that had been received. This should not happen in future. There should be a detailed report when a person was suspended. So much money could not be spent on people who were suspended and just sitting at home doing nothing. It was the responsibility of the accounting officer to know about those things whether she was appointed yesterday or not. He requested that in the future this should not happen again.

The Chairperson indicated that the year a person was suspended was included in the report. There should be a review of the employees suspended with pay because it was an unnecessary cost and burden. Most of the matters had been investigated and the backlog was being dealt with. This was good. Chiefs of the divisions must be held accountable for the progress of these matters. There would first be a discussion with the chiefs so that the Chief of the SANDF could consider those measures. He reiterated that people could not remain on suspension, whether they were uniformed members or not. There was no reason for them to remain on suspension for a very long time. If there was assurance that people would not tamper with evidence then they should be brought back to do the duties they were appointed to do in the first place. The member could also work in a different unit.

Consideration of Committee’s annual report and annual performance plan

Mr Peter Daniels, Content Advisor, presented the Committee’s annual report and performance plan.

 Members were happy with the report and there was no debate. The report was adopted as is.

The meeting was adjourned. 

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