DPWI corruption cases: DPWI & SIU update with Minister

Meeting report

Opening Comments
The Chairperson pointed out that she had given an interview on the Sage system that the Committee had discussed previously. She said that the SIU would be briefing the Committee on outstanding cases of alleged corruption.

Minister of Public Works and Infrastructure, Mr Dean Macpherson, introduced the presenters. He noted the report was important as it detailed criminality and inefficiency issues that plagued the department. The meeting would assist in advancing the department’s agenda of transparency and accountability. He argued that criminal individuals or companies should not be protected. The department had met with the SIU to ask for assistance in this matter.

The Minister said that what had been lost should be recovered and that there should be consequences which included prison time. The department identified challenges including capacity constraints, ICT inefficiencies, and inner supply chain management. He acknowledged that this allowed for criminal behaviour. He explained that they were increasing ICT security measures like increasing firewalls and blacklisting corrupt service providers.

The Minister said that the Construction Summit was a success, and the cabinet statement expressed support for it. He argued that the work that department was doing, created confidence in the construction industry and was centred around growth and job creation.

Mr V Reddy (MK) said that the position of the Minister was a big responsibility and was disheartened by the Minister's approach to opposition politicking. He argued that the Minister was personally attacking Committee members. While the Minister was enthusiastic and should be encouraged, his responses to members left much to be desired. The Minister had attacked Ms Kobe and himself. He chastised the Minister for not being able to stay for the entire meeting.

Mr Macpherson said it was unfortunate that Mr Reddy held that position and said he would not take advice from someone who had been part of six parties.

Mr Reddy interrupted the Minister and the two began to argue. The Chairperson asked that Mr Reddy and the Minister to be professional and focus on the presentation.

DPWI / SIU Presentation
Mr Lwazi Mahlangu, DPWI Deputy Director-General: Governance, Risk, and Compliance, provided an update on the DPWI collaboration with the Special Investigating Unit (SIU) on various investigations and challenges. He detailed the investigation process, including collaborations with law enforcement agencies such as SAPS, SSA, and the Hawks. Key areas covered were disciplinary action, civil recoveries, criminal referrals, and notable investigations.

Major issues identified in the investigations were improper pricing strategies, capacity constraints, inadequate use of technology, supply chain management irregularities, construction project inefficiencies, recruitment irregularities and poor control over state assets such as immovable property.

Proposed solutions to address these challenges included strengthening internal controls, improving project and property management, investing in technology, and enhancing recruitment processes. Specific recommendations included market-researched pricing, better ICT security measures, safeguarding state properties, and improving transparency and accountability in the department.

The Sage payment system breach was also discussed, outlining internal and external investigations into fraudulent payments. Actions taken included the seizure of ICT equipment, suspension of implicated officials, and ongoing forensic analyses to mitigate vulnerabilities and recover funds.

The presentation concluded with a call to transform South Africa into a construction hub, emphasising the importance of robust governance and strategic interventions to rebuild trust and ensure efficient management in the department.

Adv Andy Mothibi, SIU Head, and Mr Leonard Lekgetho, SIU Chief Operations Officer, provided an update on the DPWI investigations, covering the proclamations and key outcomes. The SIU discussed eight proclamations related to the DPWI, including investigations into leases, maintenance contracts, state-owned houses, and prestige projects such as Nkandla. These investigations revealed irregularities in procurement, fruitless expenditure, non-performance by contractors, and systemic inefficiencies. The SIU emphasised the importance of adherence to legal and financial prescripts and highlighted challenges such as a lack of department cooperation and capacity constraints.

Systemic challenges included irregular expenditure, circumvention of procurement processes and inadequate project management. The SIU recommended measures to address these problems such as stricter compliance with procurement rules, improved record-keeping, enhanced oversight of project budgets and lifestyle audits for key personnel.

The presentation also provided updates on specific high-profile projects such as the Beitbridge Border Post and maintenance contracts, underscoring the need for stricter controls and accountability. Additionally, it discussed the establishment of anti-corruption forums like the Infrastructure Build Anti-Corruption Forum (IBACF), which fosters collaboration among stakeholders to combat fraud and corruption in infrastructure projects.

In conclusion, the presentation underscored the necessity of systemic reforms, increased accountability, and cross-sectoral collaboration to strengthen governance and transparency in public works and infrastructure management.

See full presentation attached

Discussion
The Chairperson asked how far DPWI had progressed in implementing the SIU recommendations.

Mr Reddy was concerned about the depth of corruption in the department. He said the presentation demonstrated the critical role of independent investigation. He added that it was time to see consequences and justice.

He noted that SIU investigations resulted from the President's proclamations and asked the SIU to include the declaration in the report.

Mr N Nxumalo (MK) noted that the Minister’s actions were becoming unacceptable.

Mr Nxumalo brought attention to contractors abandoning projects, stating that this occurred because companies were not being paid within 30 days. The department had about 3,500 unpaid invoices in the first quarter of the year and this affected how businesses were run. Approximately 68 projects were stalled due to non-payment.

Mr E Bath (DA) said it was concerning that so much money had gone missing. He asked to what extent was DPWI implementing the SIU recommendations. He suggested that the department provide regular progress reports on the implementation of the recommendations.

Mr W Thring (ACDP) agreed that the Committee should receive regular progress reports from the department. It would put pressure on corrupt individuals and companies.

He argued that it would be best to avoid cases going to prosecutions and that prevention was as important as consequence management. He asked that SIU provide a quarterly report.

He questioned if the SIU had capacity challenges and if they could streamline cases that needed to be taken to SAPS or the Hawks.

Mr Thring said that it was important to blacklist people who abandon projects so that they could not continue to get tenders.

He brought attention to projects with several irregularities and asked about the progress in these cases, including the mental hospital in Gauteng, the Cosi Bay barrier wall, and the Telkom Towers.

Mr M Dlelanga (ANC) requested that the department produce monthly progress reports on the implementation of the SIU recommendations. DPWI needed to set up a system where they could detect and prevent corruption. Cases needed to be resolved quickly and the special tribunal should be used to achieve this.

Ms M Letlape (EFF) noted that timeframes needed to be provided for the implementation of the recommendations as Public Works had a corruption issue. The supply chain management policies needed to be looked at as they affected service delivery.

She noted that officials retire or resigned to avoid disciplinary action. Retired officials should still face consequences and not receive their pensions. A system was needed to hold these individuals accountable.

Ms Letlape stated that contractors were not the only reason projects were not completed, political interference could affect project completion.

She said that there needed to be a joint sitting with the Portfolio Committee on Police to discuss the Telkom Towers which was being mismanaged by officials.

Ms M Kobe (ActionSA) brought attention to slide 48 and the daily maintenance of the Servitas building. She noted a trend where the department was billed for maintenance despite buildings not being maintained. She added that Telkom Towers faced a similar issue.

She urged the Chairperson to give a directive to the Minister on how he responded to matters raised in the House.

The Chairperson asked if the SIU had a case against the Telkom Towers.

She said she had expected the SIU to provide timelines for the conclusion of pending cases. She requested that SIU expand on the Mamelodi case details and provide more information on individuals who were suspended or let go.

She emphasised the need for preventative measures, not just prosecutions after the fact. Progress reports should include timeframes and she proposed an in-person meeting with the SIU.

Ministry & SIU response
Mr Sihle Zikalala, Deputy Minister of Public Works and Infrastructure, noted that the SIU was post-facto which created challenges when prosecuting individuals and companies.

The Deputy Minister said that the DPWI report was not as detailed as he would have liked. The cases that the department was dealing with could have been explained in greater depth. He noted that he had asked for a forensic investigation into the Telkom Towers during the Sixth Administration.

The Deputy Minister said that Mamelodi case needed further investigation as there was corruption or collusion. He noted that construction projects were often not completed, and this was due to a systemic failure and the Public Protector or AGSA would need to assist in an investigation.

The Deputy Minister argued that there should be standardised designs for buildings and used the example of a police station.

He emphasised the need to have consequence management and preventative measures in place. He noted that the issues raised by members should be integrated into the accountability framework.

SIU Head Mr Mothibi stated that the SIU would always be available to meet with the Committee and was open to in-person meetings in the future. He agreed that prevention programmes, consequence management, and prosecutions were necessary.

Mr Mothibi noted that the SIU reports included the date of the proclamation and when it was gazetted. He explained that consequence management took the longest to address, as it took the high court time to recover losses.

He agreed that using the special tribunal would help expedite cases. He assured the Committee that the SIU worked with the NPA and the Hawks to ensure timely prosecutions.

The investigative report provided timelines for completing cases and he committed to working with the department to meet those dates.

Mr Lekgetho assured the Committee that the investigations were sufficiently resourced.

He reported that the Servitas building investigation had concluded revealing fraudulent invoices and a referral had been made to civil litigation to recover the money.

Mr Lekgetho noted that the Cosi Bay investigation was complete, with referrals made to the NPA for prosecutions and the civil litigation unit to cancel the contract.

On Telkom Towers, Mr Lekgetho stated that an official had recovered money from the service provider, and the case had been referred to the NPA and the Hawks. He explained that investigations could only cover cases before 2018, as stipulated in the proclamation. He added that the Telkom Towers required further investigation and committed to determining how the SIU could address the matter further.

DDG Mahlangu proposed that the Department meet with the Committee to discuss its 240-page report on departmental investigations.

He said DPWI was addressing weaknesses in its controls through its fraud, risk, and ethics register and implementing contract management. The Department had signed an MOU with the SIU to conduct lifestyle audits of department officials.

Mr Mahlangu explained that the Telkom Towers investigation was at the procurement stage and that DPWI would hold an entry meeting with service providers before year-end while working with the Auditor General to finalise timelines.

Mr Mothibi noted that DPWI had requested data analytics from the SIU to assist in risk management and prevent maladministration and corruption.

The Committee minutes dated 22 and 27 November 2024 were adopted.

Mr Reddy asked that meeting minutes record when members arrived and left the meeting.

Committee members gave their final remarks for the year and the meeting adjourned