Special Investigating Unit 2022/23 Annual Performance Plan and Budget

Meeting report

Special Investigating Unit Annual Performance Plan 2022/23
Adv Andy Mothibi, Head of the SIU, gave an overview of the role of the SIU, which is ridding society of fraud and corruption in state institutions. They provide forensic investigations and civil litigation services to combat corruption and serious malpractices and maladministration to protect the interest of the state and the public.

They have implemented this by collaborating with various state institutions on investigations like disciplinary action referrals, prosecution referrals to the National Prosecuting Authority (NPA) and referrals to other regulatory authorities such as the South African Revenue Service.

The average year on year increase from 2016/17 to 2020/21 in the number of proclamations is 122%. Fourteen proclamations in the current period have been signed and 44 proclamations are projected to be signed by the President. The unit has 56 ongoing proclamations. As at March 2022, it had 48 Covid-19 investigation cases in the Special Tribunal worth R2.2 billion, 119 matters in the Special Tribunal worth R12.8 billion, and 56 cases in the High Court worth R62.3 billion.

In the current financial year, the SIU will develop and implement a Corruption Prevention Programme which, among others, will include corruption risk modelling, data analytics, Article 5 and 6, and other relevant articles of the United Nations Convention against Corruption.

The report spoke to strategic risks faced by the SIU:
-Inability to provide adequate protection of investigators and whistleblowers against intimidation and threats emanating from SIU investigations.
-Inability to provide adequate protection of investigators and whistleblowers against intimidation and threats emanating from SIU investigations.
-Inability to financially sustain SIU operations in the short-and medium-term due to shortcomings in funding model
Inadequate human resource capacity to execute and meet the growing demand of the SIU forensic and litigation services
-Inability to expedite and timeously conclude civil matters and other legal proceedings enrolled at the Special Tribunal
-Failure to complete investigations as per approved project plans and timeframes
Inability to provide adequate monitoring of the implementation of the SIU legal recommendations

See presentation for mitigation plans

The total outstanding debt from state institutions was R650 million as at 31 December 2021. Public entities accounted for R197 million, local government R157 million, provincial government R155 million and national departments R141 million of the total debt. Payments received from April 2021 to January 2022 totalled approximately R151 million. This SIU funding model is not sustainable. The National Treasury and Department of Justice are being engaged in alternatives to the current model. Over the longer term, in the next four to five years, the SIU would run out of cash if this is not resolved.

The presentation outlined that the SIU funding model was not sustainable - National Treasury and Department of Justice are being engaged on alternatives to the current model. Over the longer term, 4/5 years, SIU would run out of cash if not resolved. Various Funding Models have been suggested and will be presented to the Minister of Justice and Correctional Services as well as to the Minister of Finance

The vacancy rate at the SIU as at the end of March 2022 was 12% (compared to 15% in the previous year) against the 13% planned target. During the period under review, a total of 43 successful interns were appointed as junior forensic investigators. The SIU has further onboarded 16 new interns in the enablement business units in January 2022 on a 12-month multi-disciplinary internship programme, plus 6 extra interns to join both in the SCM and legal space.

The SIU constituted a committee (chaired by the Head of SIU) to consider the first three parts of the state capture report and identified matters that will be further investigated to ensure that there is sufficient evidence to proceed.

The Eskom part of the report (part 4) will also be considered. The SIU has extensive Eskom investigations and there are already outcomes in this regard. Nine matters have been identified from part 1 of the state capture report on South African Airways (SAA) and South African Express Airways (SA Express), with an estimated value of R200 million for SA Express. The report on SARS (also part 1 of the state capture report) identified one matter that could lead to civil litigation. The SIU has also identified three potential civil matters, mentioned in passing in part 1, relating to the City of Johannesburg, the Asbestos Project (where civil litigation has already been instituted) with contract value of R255 million, and the Estina Dairy Project. Eleven potential civil matters have been identified from part 2 that deals with Transnet. Three potential civil matters have been identified from the Denel section in part 2.

Discussion
Adv G Breytenbach (DA) asked for a progress update and finalisation timeline on the investigations into the Master’s Office, the Office of the State Attorney, and the New Court Building Infrastructure projects.

She further asked what the status was on recovering monies owed by State institutions and progress on the different funding model, considering that amounts owed are about R650 million with the Department of Justice owing R66 million.

Mr W Horn (DA) commented that the current funding model is not working as it seems like there is constant begging from Directors-General and the Treasury for the Departments to pay. He said the Committee must be vigilant and asked the SIU whether they see progress in establishing a different funding model.

He further asked what happens when, on the basis of a proclamation, the SIU does an investigation and then ultimately finds no impropriety. He asked whether the Department on which the investigation was done was still liable for payment of the invoice because that would seem counter intuitive, he said.

On the human resources department growing their own set of experts and specialists, he said data analytics, forensic specialists and information technology specialists were identified as a need. He asked for progress in this regard, where it would fit in the organogram, and what the current vacancy rate was.

On the memorandum of understanding (MoU) between the NPA, South African Police Service (SAPS) and SIU said that despite progress that has been made, there has been negativity between SIU and SAPS regarding case-ready referrals. He asked whether the MoU was in place, whether it has solved any of these issues and whether a legislative amendment was still necessary.

Lastly, he said that in praying the SUI, the Zondo Commission added that it could be problematic for the SIU to be dependent on the benevolence of the President in signing proclamations. He asked whether there was any move to possibly amend the legislative framework and whether there were any proclamations where the SIU believed it should be held back by the President and not given effect.

Mr S Swart (ACDP) commended the SIU for their incredible work over the years.  He emphasised that it is a concern that the Department of Justice owes the SIU funding. He appreciated that the SIU approached the National Treasury and said it was something the Committee should raise with the Speaker because the SIU is operating at a continued deficit which impacts its performance.

He highlighted that SIU faces the challenge of state institutions and partner agencies not implementing referrals when it comes to disciplinary hearings and other matters. He asked whether there was improvement in this regard. He commented that he appreciated the actions of the SIU following the Zondo Commission but said implementation of some of the things will depend on the coordination strategy with other departments which was a concern.

He congratulated the SIU on its work with the Special Tribunal and on Adv Mothibi's appointment which he said was a crucial step to recover funds, recoveries which the Special Tribunal had been instrumental. He said two of the major concerns which must become a priority are the protection of whistleblowers and the protection of SIU staff. He asked the SIU to comment on how the protection of staff was being implemented.

On the procurement investigation report, he said there were a number of government officials that had been referred to disciplinary action, a number of issues relating to the NPA, and 380 companies recommended for blacklisting which was a matter of concern because very few companies had been blacklisted. He asked what had been done to speed things up and whether the SIU needed some form of support to effect this. He said that it was very concerning that some companies who were recommended for blacklisting by the SIU, but which have not yet been blacklisted, may still receive contracts in the KwaZulu-Natal flooding.

Ms W Newhoudt-Druchen (ANC) referred to slide 13 which shows the growth in proclamations. She asked how many 44Bs had been signed and how many would be processed during the current financial year.

She asked how many interns the unit had in the previous financial year, how many were incorporated into the SIU and what the SIU has done to recruit more interns and train them for specialist roles.

She further asked what the progress was on setting up a mechanism in the President’s office to monitor the implementation of recommendations from the SIU.

Lastly, she asked whether the vacant Head of Department positions had already been filled and if they were not, she asked for a progress update.
 
Mr J Engelbrecht (DA) commented that several problems in the SIU seemed to be systematic in nature which could be fixed by enabling legislation for the SIU to make their job easier.

Regarding blacklisting of service providers, he asked whether there were consequences for accounting officers who failed to implement backlisting.

The Chairperson said that the SIU had reached the point where they needed to compete with themselves, however not a weaker version of themselves. He said the targets the SIU had set were very conservative and encouraged them to push themselves by setting more challenging targets.

He said the norm set on the vacancy rate was 10% and the SIU was still at 12%. He said it was important for them to focus on bringing this figure down.

He further mentioned that there was a certain Ms Zibani who was in the state office and as the SIU was getting closer to her disciplinary, she resigned. He said the Committee would engage the public administration office to enquire whether she was employed anywhere in the state, as it would be counter-productive to people resigning from one department to be employed in another department or municipality when they are under investigation. These people should not be allowed to work anywhere in the public service or private sector and our systems should be able to do this.

He said the Committee would engage the Speaker’s office to intervene in engaging the Minister’s office to recoup monies which were due to the SIU.

He commented, lastly, that the Committee would like feedback on the legislative amendments as this was something the Committee had raised already at the beginning of their term, seeing that the Committee was now at the end of their term. He said a progress report on the prospective Bill was important as it should form part of the outgoing Committee’s final report.

Response from SIU
Adv Mothibi said that investigations relating to the Master’s Office and the other two raised by Adv Breytenbach had made meaningful progress. For the Master’s Office, the SIU had made systemic recommendations which would be sent to the Minister for purposes of overhauling or improving the systems in the Master’s Office. There are also recommendations for disciplinary action.

On the Office of the State Attorney, he said it was published that the former assistant state attorney was ordered to pay R4.4 million which was syphoned through collusion with other legal practitioners. The pension of that former state attorney, R800 000+, was forfeited.

On debt recovery, he said the SIU was working hard and had engaged National Treasury and the Minister. The Minister also alluded to potentially raising this in Cabinet. The SIU is currently in a sound financial position; it is a going concern. However, if the Unit does not recover this debt, it may pose an operational risk to the SIU. In the last financial year, the SIU had received approximately R200 million as recovered debt. There are some who pay, but there is still a big number who do not pay.

He said the funding model had been included in the legislative amendments and the Chief Legal Counsel had confirmed that the Department of Justice was processing these amendments. He said he would try to get the exact timelines of when the amendments would be tabled to the Committee.

He confirmed that there were instances when the SIU finds impropriety. When this happens, the SIU goes back to the state institutions to request payment. This poses potential conflict of interest where the SIU sees an unwarranted delay in payments to the SIU being processed.

The SIU is focused on developing its technical skills in order to reduce its panel of experts. To date, the SIU has appointed a number of forensic accountants, forensic investigators, and cyber forensic investigators. He said the SIU continues in its capacity and capability model to recruit those specialists.

Adv Mothibi thanked the Committee for acknowledging its praiseworthy mention in the Zondo Commission.

He said that coordination with other state entities was in place. He said there has also been progress where referrals are made to the NPA. One of the SIU leaders sits on Case Prioritisation Committee and it is expected that some of the matters will come forward to that committee for prosecution.

The protection of whistleblowers and SIU staff has been included in the risk assessment strategy as a potential risk. He said the SIU depends on these groups of people. He said they are in the process of procuring protection services which will be used as and when threat assessments are made. The SIU will work closely with the crime protection who are assisting with the threat assessments also.

Mr Leonard Lekgetho, Chief National Investigations Officer, added that the timelines for finalising the investigation of the Master’s Office is the end of July 2022. He highlighted that the delay was due to new issues being brought to light.

The finalisation of the investigation of the State Attorney is scheduled for the end of September. The SIU is wrapping up a few civil matters which it will take to the Tribunal.

The investigation on the Building of Courts is finalised. The SIU is reviewing the final report in order to submit it.

Ms Neptune Mashego, Chief: Human Capital, said that the number who had been absorbed in 2021 and 2022 were 43 and 45, respectively, and had started initially in these years.

Adv Mothibi commented that his team would review the targets set so that indeed they keep lifting their delivery bar higher.

He mentioned that Ms Zibani was coincidentally the same person for which the SIU received an order from the Special Tribunal. He said this was where they also implement their resolutions: Where they see people resigning as a result of investigations, their pensions are frozen. This person had been ordered to pay R4.4 million to the SIU and their pension had been forfeited. He added that the SIU was engaging the Department of Public Administration to monitor the phenomenon of resignations.

Closing remarks
The Chairperson thanked Members and the delegation from the SIU for a meaningful report and discussion. He congratulated them on the good work they had done and said the Committee would be much harder and demand more from them because they believe the SIU could achieve it.