Presentation Outline

SIU Presentation SIU Presentation toto

Portfolio Committee: Portfolio Committee: Justice and Constitutional Development Justice and Constitutional Development

17 October 201317 October 2013

Annual Report 2012/2013Annual Report 2012/2013

1

Presentation Outline

1. Preface and Introduction

2. Strategy Overview

3. SIU Investigations

4. Performance over the FY

5. Outcomes on key investigations

5. Civil Litigation Matters

6. Key Operational Challenges

6. Human Resources Overview

7. HR Statistics

8. Employment Equity Status

9. Financial Overview

10. Audit Outcomes

11. Irregular Expenditure

12. MTEF

13. Concluding remarks

2

• Introducing the SIU Team• Introductory remarks by HoU on the need for a new vision for the SIU

following the amendments to the SIU Act in October 2012• Presentation on the SIU 2012/2013 FY performance

Strategy Operations Finance Human Resources Audit 2013

• Concluding remarks by HoU• Questions

3

Preface and Introduction

17 October 2013 SIU presentation to PC on Justice and Constitutional Development

• The current SIU Strategy is outlined in two key strategy documents: Five year Strategic Plan: 2011 – 2016 Annual Performance Plan: 2012/2013

• This Strategy was signed off by the Minister as the Executive Authority• In line with its pre-amendment mandate, the Unit identified its strategic objective as:

To increase the impact of SIU’s forensic services in the public sector by completing investigations successfully

• This strategic objective was to be supported by the following seven enablers/drivers: To achieve optimum institutional form To foster excellent cooperation with our law enforcement partners and stakeholders To develop and effective, accountable and engaging leadership To secure appropriate capacity and funding To align and improve systems and processes To invest in appropriate technological capacity To build an engaged, diverse and competent SIU

• The Unit’s strategic objective is aligned to Government’s Outcomes: Outcomes 3 - All people in South Africa are and feel safe Outcomes 12 - Efficient, effective and development oriented state

4

Strategy Overview

17 October 2013 SIU presentation to PC on Justice and Constitutional Development 5

SIU Investigations

25 active proclamations with seven extensions as per “Annexure A”

6

Performance over FY 2012/2013


Performance Measures 2011/2012 2012/13 % achieved 2012/2013

Savings for financial yearTarget R 30m R 35m

163%Actual R 15m R 57m

Preventions of future lossesTarget R 200m R 210m

180%Actual R 169m R 378.2m

Cash recoveriesTarget R 30m R 35m

490%Actual R 224m R 171.6m

Value of procurement matters where irregularities were found

Target R 20 000m R 1 000m263%

Actual R 5 066m R 2 637m

Evidence prepared for use in civil litigation Target 2 500 3 500

102%Actual 6 412 3 570

Evidence prepared for other remedial actionsTarget 3 000 2 000

173%Actual 5 431 3 454

No of completed investigations contributing to JCPS Output 5

Target 20 30127%

Actual 15 38

Evidence prepared for use in criminal action Target 2 000 2 000

50%Actual 2 499 997

Evidence prepared for use in disciplinary action Target 2 500 3 500

24%Actual 2 731 850

“Value of procurement matters where irregularities were found”• Indicator measures the face value of the procurement contracts that are

being investigated where an irregularity has been identified. • Indicator changed for 2013/2014 financial year to measure the “value of

financial misconduct”. accurately reflect the value of irregularities within procurement matters

• Identified irregularities in contracts with an aggregated value of R 2.6 billion Actual value of the irregularities in these contracts amounted to

approximately R 1.4 billion


Performance FY 2012/2013 cont…

1. National Department of Public Works Procurement processes, mismanagement of contracts & leases and financial

misconduct• 12 Section 5(7) Reports handed to the Department• 35 Systemic Recommendations• 6 Disciplinaries against DPW officials recommended• 7 Criminal matters referred to National Prosecuting Authority (NPA)

2. Department of Public Works (KZN)Procurement processes, mismanagement and financial misconduct related to

contracts awarded• 13 Criminal matters referred to NPA • The value of irregularities identified amounts to R542.5 million• Value of corrupt payments made to DPW official amounts to R134 000• Non delivery on 37 projects amounting to R7.6 million

8

Outcomes on key investigations

SIU presentation to PC on Justice and Constitutional Development17 October 2013

3. Tshwane MunicipalitySupply Chain Management, Service Delivery, Governance, Financial

Misconduct, Waste Management and Recruitment irregularities• Identified collusion in the awarding of several contracts amounting to

R 77.7m• Established that an official received gratification to the value of R

16m• Established that R 286m was paid for work partially completed on

Soshanguve and Giant stadiums• Irregular Expenditure is R340m

17 October 2013 9

Outcomes on key investigations cont…

SIU presentation to PC on Justice and Constitutional Development

4. SASSA (Social Development and ICT contracts)Procurement processes, mismanagement and irregular awarding of beneficiary

grants • Identified irregularities in 4 contracts with a possible civil recovery of R 128m• Actual savings of R 47m following the cancellation of Phase 1 of ICT contract• Prevention of future losses of R 222m• Total cases analysed: 865• Convictions: 855• Removals from the Social Pensions System: 3 454


Outcomes on key investigations cont…

11

Outcomes on key investigations

5. National Treasury Limpopo Intervention:• 41 disciplinary and 5 arrests on the Roads and Transport (GAAL)

amounting to R15 million

6. Eastern Cape Department of Health• Procurement irregularities amounting to R2.9m• 39 cases of tax irregularities amounting to R10.8m referred to SARS

for further investigation • 61 cases of fraud, forgery and uttering amounting to R5.1m referred to

7. Ekurhuleni Municipality• Established payments amounting to R35m for partially or inferior work

for the upgrading of 20 sporting fields during 2010 world cup


Nature of irregularity Potential forum Department/Entity concerned

Proclamation Value of Contracts

Potential legal action

1. Corruption, fraud, secret profit, SCM irregularities

Special Tribunal (or High Court)

Tshwane Municipality R62 of 2010 R77 m Civil action based on contract and/or delict

2. Corruption, Fraud, SCM irregularities


Department of Public Works

R38 of 2010 R637 m Civil action based on contract and/or delict / Application for declaratory orders

3. Corruption, SCM irregularities, Non-compliance with contractual terms


SAPS R42 of 2010 R900 m Civil action based on contract and/or delict

4. Money illegally transferred by consultant

Already finalized in the North Gauteng High Court

Department of Water Affairs

R54 of 2012 R2.8 m Civil action based on theft

5. Ring fenced funds used by Municipality for daily expenses

Arbitration Sunday River Valley Municipality

R54 of 2012 R7.3 m Intergovernmental Dispute resolution

6. Fraud, misrepresentation Special Tribunal (or High Court)

Department of Rural Development and Land Reform

R8 of 2011 R3.9 m Civil action to set aside an administrative award

7. Maladministration Arbitration Limpopo Department of Cooperative Governance, Housing and Traditional Affairs

R7 of 2007 R25.3 m Intergovernmental Dispute Resolution

8. Non-compliance with SCM requirements

Already settled PSETA R65 of 2012 R27.5 m Civil action based on contract

12

Civil Litigation Matters

• 30 April 2013: - 20 Presidential Closure Reports submitted as per Annexure B

• 3 June 2013: - 9 Presidential Closure Reports submitted as per Annexure C

• 12 Reports currently being drafted as per Annexure D

13

Reports submitted to the Presidency


• Need more in-house specialist skills, such as forensic accountants • There is a greater need for specialised expertise on procurement

investigations such as:– Quantity Surveyors– Engineers– Corporate Governance Experts– Business Analysts

• Develop a stronger civil litigation capability to meet the growing demands on our procurement matters

• Need to establish Special Tribunals in key centres • Need to develop a stronger technological infrastructure in Operations • Improve our operational processes and reporting mechanisms• Enhance the operational focus towards stronger civil legal outcomes • Increase the impact of our operations

14

Key Operational Challenges


• Prioritized the filling of long outstanding vacancies

78 appointments and/or promotions

• Converted 104 temporary workers to fixed term contract

employees

• Resulted in strengthening the operational and project

administrative support

• Senior management appointments on track for finalizing in this

financial year

• Employee relations continues to improve

17 October 2013 15

Human Resources Overview


16

Programme 2011/2012 No. of

Employees

2012/2013 Approved Posts

2012/2013No. of

Employees

2012/2013 Vacancies

% of vacancies

Business Management 13 21 18 3 14.3%Business Operations 459 548 465 83 15.15%Business Support 61 100 100 0 0Total 533 669 583 86 12.86%

Employment and vacancies

Reason Number % of total no. of staff leaving

Death 1 3.1Resignation 22 68.8Dismissal 1 3.1 Retirement 1 3.1Ill health 0 0Expiry of contract

7 21.9

Other 0 0Total 32 100

Note: The resignations were primarily motivated by better opportunities elsewhere.

Reasons for staff leaving

HR Statistics

17

Equity Target and Employment Equity Status

Levels MALEAfrican Coloured Indian White

Current Target Current Target Current Target Current TargetTop Management - - - - - - - -Senior Management 1 9 3 3 - 1 6 12Professional qualified .53 84 14 13 20 20 55 72Skilled 90 139 10 25 12 22 6 30Semi-skilled 29 20 - 2 - 1 6 6

Unskilled - 3 - - - - - -Total 173 255 27 43 32 44 73 120

Levels FEMALEAFRICAN COLOURED INDIAN WHITE

Current Target Current Target Current Target Current TargetTop Management - - - - - - - -

Senior Management 2 8 - - - 1 - 4

Professional qualified 18 59 2 6 5 9 35 45

Skilled 41 64 6 12 17 23 30 65Semi-skilled 86 38 7 6 8 3 10 9

Unskilled 12 13 - - - - - -Total 159 182 15 24 30 36 75 123

• The delays in the 2010 recruitments led to a lag in achieving the EE Plan targets

• In 2012/13 Unit made 78 appointments, which improved the EE picture in the middle management and professionally qualified categories.

• Challenges remain at the Senior Management level, where positions remain vacant and previous recruitments could not yield appointments, e.g. for Head: Stakeholder Management, Head of Finance, Projects Director.

• We need to improve senior managerial representativity– Female senior managerial representativity is at 15%

18

Summary on EE Status


17 October 2013 19

Financial Overview


Financial Budget2012/13

Actual2012/13

Variance

R’000 R’000

Income

Government Grant 340 713 340713 0

Project income 75 122 124 642 -65%

CARA Grant 28 497 100%

Other Income 3 815 100%

Total Income 415 835 497 667

Expenditure

Employee Costs 263 205 235 558 11%

Travel and Accommodation 17 359 15 416 13%

Depreciation 22 454 17 473 29%

Debt Impairment 0 29 869 -100%

Finance Costs 0 7 -100%

Other Costs 112 815 116 697 -3%

Total Expenditure 415 835 415 020

Surplus 0 82 647

Cash roll over 81 168

• The emphasis of matter as a result of restating prior year errors, which were corrected in the current financial year.

• Errors include: Employee costs; Rental paid; Intangible assets; Re-assessment of property, plant and equipment

• Notwithstanding the reduction in the number of emphasis of matters structured risk interventions are in place to achieve no emphasis of matters in following financial years.

• Progress on corrective action on 31 AG findings 33% of findings addressed and confirmed by Internal Audit. 24% of findings Work-in-Progress Remainder of findings to be addressed before the end of the financial year

20

Audit Outcomes

2012/13 2011/12 2010/11

Type of Opinion Unqualified Unqualified Unqualified

Number of emphasis of matters

1 2 0


• In Audit 2011/12 the AG makes a finding that SIU should report on eight strategic objectives alternatively obtain express approval from Executive Authority for one strategic objective.

• SIU applied in November 2012 for such express approval .• In the absence of such express approval the SIU advice to report on all

eight strategic objectives • The implications of this is that SIU reports were not fully aligned to its the

strategic plan.• However key performance indicators were in place to measure the strategic

objectives and drivers • This gap resulted in a negative opinion on the performance information for

Audit 2012/13.• The strategy objective (s) will be aligned to the October 2012 amendment of

the SIU Act.

21

AG findings on Performance Information


22

AG findings on Financial Information

• Corrections made after submission on 31 May 2013 to the AG• Irregular Expenditure condonation being obtained• Wasteful and Fruitless:

Forensic report on Memex procurement matter being finalised Rental over- payments of R2 million recovered

• Introduced SCM compliance checklist to avoid recurrence

23

Irregular Expenditure & Fruitless and Wasteful

Incident 2011 2012 2013

Forensic consultant procured outside SCM process 166 862 1 864 825 -

Rendering Services not explicitly authorised - GEMS 243 803 1 267 402 205 281

Expenditure on Temporary employees 13 672 771 15 554 825 8 651 177

Procurement of Forensic Data Analysis - 822 822 -

Non-compliance to SCM process- VIP Training - - 13 338

Non-compliance to SCM process- Accommodation / Repairs and Maintenance - - 337 077

Total 14 083 436 19 509 108 9 206 873

Incident Prior Years Current year 2012/13

Procurement of Forensic Data Analysis Software 0 822 822

Operational Cost on rental agreement 1 616 472 395 871

Total 1 616 472 1 218 693

Irregular Expenditure: R 42 799 417

Fruitless and Wasteful: R 2 835 165

17 October 2013 24

Medium Term Expenditure Framework


Audited Outcome Revised Estimates

Medium-Term Estimates

2010/11 2011/12 2012/13 2013/2014 2014/15 2015/16 2016/2017

Income R’000 R’000 R’000 R’000 R’000 R’000 R’000

Grant Received 171 089 323 191 369 210 305 859 296 813 313 098 329 692

Project Income 141 151 172 481 124 642 226 616 338 328 360 000 380 000

Other Income 1 436 1 665 3 816 3 814 3 852 3 891

Total Income 313 676 497 337 497 668 532 475 638 955 6769 50 713 538

Expenditure

Employee Costs 182 142 208 726 235 558 245 460 372 699 408 478 447 691

Investigative Consultants 56 586 149 232 46 380 82 924 87 070 91 423 95 994

Travel and Accommodation 22 280 25 829 15 416 32 581 34 210 35 920 37 716

Depreciation 9 934 16 578 17 473 25 836 16 954 16 954 25 940

Finance Costs 50 3 7

Other Costs 67 088 97 945 100 187 108 891 128 062 124 175 106 197

Total Expenditure 338 080 496 361 415 021 495 692 638 995 676 950 713 538

Surplus/(deficit) (24 404) 976 82 647 36 783

25

Medium Term Expenditure Framework cont…

Audited outcome

Revised

Estimate Medium-term Estimate

R thousand 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/2017

Business

Support

70 997 104 236 109 227 121 890 134 181 142 160 149 852

Business

Management

13 523 19 854 25 229 23 217 25 558 27 078 28 543

Business

Operations

253 559 372 271 280 564 435 320 479 216 507 712 535 187

Total

Expenditure

338 079 496 361 415 020 580 427 638 955 676 950 713 583

Breakdown of Expenditure per budget Programme

HoU outlines some of the key next steps for the SIU

26

Concluding remarks by HoU


End

Thank You

27SIU presentation to PC on Justice and Constitutional Development17 October 2013

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