PRESENTATION TO THE PORTFOLIO COMMITTEE ON JUSTICE...

PRESENTATION TO THE PORTFOLIO COMMITTEE

ON JUSTICE AND CORRECTIONAL SERVICES

Annual Report 2016/17

11 October 2017

1

Presentation Outline

SIU Annual Report 2016/17 Presentation to PC J & CS

1. Annual Performance Information

2. Ongoing Investigations

3. Civil Litigation Matters

4. Governance

5. Human Resources

6. Financial Overview

7. Organisational Review

2


1. ANNUAL PERFORMANCE

INFORMATION

3

REPORT OF THE ACCOUNTING AUTHORITY

4SIU Annual Report 2016/17 Presentation to PC J & CS

The SIU recognises that improvements to our organisational framework requires:

• stability to the operation environment,

• robust accountability,

• attaining growth through operational excellence, and

• demonstrating significance in our changing environment.

Organisational Review commenced to reflect on critical issues including; the organisation’s long-term

strategy through short term measurable goals, concrete steps to mitigate and overcome these challenges;

the necessary change management required of the organisation and steps the SIU has taken this far;

and the added value the SIU is providing in the multi-agency sector.

The project aims to improve the organisation through the determination of an organisation design, aligned

remuneration structure, adequate job designs and career paths as underpinned by a robust strategy and

changing culture where the SIU, as a whole, realises its role within a changing environment. This will

improve SIU capacity to fight corruption both in the public sector and in the private sector.

p.06

THE AUDIT OPINION

SIU Annual Report 2016/17 Presentation to PC J & CS 5p.86-88

REPORT OF THE AUDITOR GENERAL

• SIU received a clean, unqualified audit report for the 2016/17 financial year by the Auditor General:

– Audit opinion: ”In my opinion, the financial statements present fairly, in all material respects,

the financial position of the SIU as at 31 March 2017, and its financial performance and

cash flows for the year then ended…”

– Performance information: “I did not identify any material findings on the usefulness and

reliability of the reported performance information for the following objectives…”

– Compliance to legislation: “I did not identify any instances of material non-compliance with

specific matters in key legislation, as set out in the general notice issued in terms of the

Public Audit Act.”

– Internal control deficiencies : “I did not identify any significant deficiencies in internal

control”

YEAR ON YEAR AUDIT OPINION

SIU Annual Report 2016/17 Presentation to PC J & CS 6

2012/13 2013/14 2014/15 2015/16 2016/17

Type of

Opinion

Unqualified Unqualified Unqualified Unqualified Unqualified,

Clean

Number of

emphasis of

matter

1 1 1 0 0

• Clean Audit Report for the 2016/17 Financial Year.

• The SIU has developed an action plan to clear the audit

findings as raised by the Auditor General during the

audit and is currently progressing positively against the

end of financial year deadline.

p.86-88

Key Performance Highlights

137

The number of referrals

made for disciplinary, executive

and/ Or administrative action

The number of referrals

that have been to the NPA for

Prosecution and the AFU for

forfeiture orders

The value of matters in respect of

which evidence was referred for the

institution of defense/opposition of

civil proceedings (including

arbitration or counter civil

proceedings)

The value of four contracts (s)

and/or administrative

decision(s)/action(s) set aside or

deemed invalid as a result of the

SIU’s intervention(s)

The value of payments that were

not made in four matters as a

result of the SIU’s intervention(s)

The actual value of money

and/or assets that has been

recovered for the State

The potential value of

money that may be

recovered for the State

The number of final

investigation reports submitted

to the Presidency

7p.07

ANNUAL PERFORMANCE

INFORMATION 2016/17


Estimate for National Expenditure Financial Report - 2016/2017 Financial Year

SIU Business Operations

Core Mandate

Combatting Corruption

Key Performance Indicator Actuals Annual Target Deviation

The number of investigations closed out 1,186 800 48%

The number of reports submitted to the Presidency 6 5 20%

The value of money and/or assets potentially recoverable 126,920,485 240,000,000 -47%

The actual value of money and/or assets recovered 43,500,706 140,000,000 -69%

The value of potential loss prevented 106,527,223 18,000,000 492%

The value of contract(s) and/or administrative decision(s) / action(s) set

aside or deemed invalid 4,014,630,241 600,000,000 569%

The value of matters in respect of which evidence was referred for the

institution or defence/opposition of civil proceedings (including arbitration

or counter civil proceedings) 3,816,540,390 1,200,000,000 218%

The number of referrals made to the relevant Prosecuting Authority 108 60 80%

The number of referrals made for disciplinary, executive and/or

administrative action 137 75 83%

The number of SIU member(s) participating in Joint Operation(s) or

seconded to assist State Institutions 54 30 80%

ACTUAL PERFORMANCE

2016/2017

8p.18


ANNUAL PERFORMANCE

INFORMATION 2015/16

Final Estimate for National Expenditure Financial Report - 2015/2016 Financial Year

SIU Business Operations

Core Mandate

Combatting Corruption

Key Performance Indicator YTD Actuals Annual Target Deviation

Number of Proclamations Issued 5 12

-58%

Percentage of Issued Proclamations Finalised 0% 60%

-100%

Potential Value of Cash and/or Assets Recoverable 73,026,879 220,000,000

-67%

Actual Value of Cash and/or Assets Recovered 52,016,396 120,000,000

-57%

Number of Civil Matters Instituted in Court or the Special Tribunal 5 15

-67%

Number of Referrals made to the National Prosecuting Authority (NPA) 307 45

582%

Number of instances where potential disciplinary matters were bought to the

attention of the relevant State Institution

68 60

13%

2015/2016

ACTUAL PERFORMANCE


NUMBER OF INVESTIGATIONS

CLOSED OUT

10p.20

No Proclamation No Proclamation Name

5 R21 of 2010 Gauteng Department of Health

63 R62 of 2010 Tshwane Metropolitan Municipality

9 R8 of 2011 Department of Land Reform

81 R53 of 2011 Department of Land Restitution

1 R54 of 2012 Department of Water Affairs

21 R7 of 2014 extended by R599 of 2015

Department of Rural Development and Land

Reform and the State Information Technology

Agency: Deeds Office

9 R10 of 2014 Department of Communications (Media Corner)

4 R57 of 2014 Department of Transport

173 R59 of 2014 National Department of Public Works (Leases)

7 R62 of 2014 Department of Communications

2 R40 of 2015 Buffalo City Metropolitan Municipality

769 R27 of 2015 National Department of Public Works

20 R598 of 2015 extended by R17 of 2016 Eastern Cape Department of Education

16 R19 of 2016 Construction Industry Development Board

6 R23 of 2016 KwaZulu-Natal Department of Transport

1186

The target of investigations closed out was 800. The total

number of investigations closed out was 1,186 which means

that the target for the year was exceeded by 48%

This is the number of final investigation reports that are submitted to the Presidency. 6 reports were finalised

and submitted between 1 April 2016 and 31 March 2017. The target for the year was 5 reports which means that

the target for the year was exceeded. Reports were submitted in respect of the following proclamations:


NUMBER OF REPORTS SUBMITTED

TO THE PRESIDENCY

11p.20

No Proclamation No Proclamation Name Date Submitted Outcomes No Value

1 R62 of 2014 Department of Communications 11-Oct-16 Disciplinary recommendations 3

Criminal referrals 5

Referral to the State Attorney 1

Systemic recommendations

2 R63 of 2010 Ekurhuleni Metropolitan Municipality 03-Nov-16 Disciplinary recommendations 12


AFU referral to recover proceeds of

crime 1 R27 million

3 R54 of 2012 Department of Water Affairs 15-Dec-16 Disciplinary recommendations 7


AFU referrals to recover proceeds of

crime 6 R10 million

Repayment of debt owing as a result of

the SIU's intervention R5,8 million

4 R38 of 2010 National Department of Public Works 02-Feb-17 Disciplinary recommendations 7


Lease declared void ab initio 1

Civil Proceedings 1 R8 million

AOD signed 1 R1 million

5 R598 of 2015 Eastern Cape Department of Education 10-Mar-17 Disciplinary recommendations 7

extended by R17 of 2016 Criminal referrals 6

SARS referral 1

Referral to SITA 1

Referral to the Mustek board 1

6 R21 of 2010 Gauteng Department of Health 30-Mar-17 Irregular expenditure R920 million

Disciplinary recommendations 4


AFU preservation order 1 R800 million

Actual savings R800 million


VALUE OF MONEY AND/OR ASSETS

POTENTIALLY RECOVERABLE Continued

12p.21

This measures the value of money and/or assets that may potentially be recovered for the State and/or

relevant third parties.

The target for the year was R240 million. The actual amount recovered was R126.9 million which

means this target was not met.

Root cause analysis:

• There were challenges with matters referred to AFU (i.e. quantifying losses). Orders in excess of

R300 million were effected by this;

• SIU engaged the AFU which is awaiting the outcome of the AC Industrial matter wherein the

magistrate has to make a decision on the quantum that the state may claim;

• There were delays in finalising the just and equitable leg of civil matters; and mitigation strategy to

this is- engagement with Judiciary (Judge Presidents) and to assist with case management,

• There was a change in the profile of matters under investigation (previously the SIU investigated

South Africa Social Security Agency (SASSA) and the Department of Land Reform which made

significant contributions to this indicator); and

• Review the target in the next financial year APP.


VALUE OF MONEY AND/OR ASSETS

POTENTIALLY RECOVERABLE

13

Continued

p.21

No Description Value

1 8 Acknowledgement of Debt documents (AODs) signed R 519,799

2 3 AFU Preservation Orders R 46,419,423

3

Payments for parking bays that were never allocated;

Landlords not VAT registered but charged VAT;

Overpayments on lease agreements R 62,566,699

4 171 Acknowledgement of Liability documents (AOLs) R 2,221,843

5Letters of demand issued to firms who benefitted unduly for amounts that

were erroneously overpaid for professional fees R 11,582,171

2 members of a CC were charged with unlawfully and intentionally stealing

property and were found guilty of theft. R 485,725

6

Service providers who had been contracted to provide goods and services,

claimed and were paid VAT but were not VAT registered or did not use

active VAT numbers. R 3,124,825

R 126,920,485


ACTUAL VALUE OF MONEY AND/OR

ASSETS RECOVERED

14p.22

The target for the year was R140 million. The actual amount recovered was R43.5 million which means

this target was not met.

Root cause analysis:

• There were challenges with matters referred to AFU (i.e. quantifying losses). Orders in excess of

R300 million were effected by this;

• SIU engaged the AFU which is awaiting the outcome of the AC Industrial matter wherein the

magistrate has to make a decision on the quantum that the state may claim;

• There were delays in finalising the just and equitable leg of civil matters; and mitigation strategy

to this is- engagement with Judiciary (Judge Presidents) and to assist with case management,

• There was a change in the profile of matters under investigation (previously the SIU investigated

South Africa Social Security Agency (SASSA) and the Department of Land Reform which made

significant contributions to this indicator); and

• Review the target in the next financial year APP.


ACTUAL VALUE OF MONEY AND/OR

ASSETS RECOVERED Continued

15p.22


1 AOD Enforcement Department collected payments from debtors R 11,506,503

2 4 final AFU Forfeiture Orders R 30,126,196

3

Payments for parking bays that were never allocated;

Landlords not VAT registered but charged VAT;

Overpayments on lease agreements R 1,729,295

4Liability of outstanding licence fees that was paid upon identification by the

liable owner R 138,712

R 43,500,706


VALUE OF POTENTIAL LOSS PREVENTED

Continued

16p.23

This measures the prevention of loss generated as a

result of the SIU’s action or through the use of SIU

evidence.

The target for the year was R18 million.

The value of the potential loss prevented was R106.5

million which means the target was not only met but

also far exceeded.


VALUE OF POTENTIAL LOSS PREVENTED

17p.23


1

The SIU was mandated to investigate allegations of irregularity in respect of an agreement

which was awarded to a service provider. As a result of the SIU’s investigation payments

were stopped and suspended in respect of the agreement R 83,470,380

2

It was established that an individual contacted two officials and claimed that he was an SIU

member and attempted to change bank details so that a payment of R7 559 994 could be

diverted to him for his benefit. A criminal case was registered and the Department was

advised not to make any further payments until further verification could be done. R 7,559,994

3

A hire purchase agreement between a service provider and a Local Municipality was

cancelled as a result of the SIU’s investigation. The value of the contract was R107 404

471 over the full 36 month period. The total amount paid out under this contract was R92

487 183 which means that R14 917 288 was not paid out as result of the cancellation of

this contract. R 14,917,288

4

The SIU had established during its investigation of the procurement of a lease concluded

that the Department had incurred a loss because it had paid rental for more space than

what was actually being leased. The SIU recommended that the loss be recovered and

that the lease agreement be rectified. The SIU has received confirmation that the

Department has attended to the recovery and has rectified the lease. R 349,167

5

The SIU investigation found that the landlord was overpaid in respect of parking bays which

constituted a loss suffered by the Department. The overpayment identified by the SIU was

not paid to the landlord for rental. The number of the parking bays on the system were also

adjusted which reduced the monthly rental that was to be paid to the landlord. R 230,395

R 106,527,223


VALUE OF CONTRACTS AND/OR ADMINISTRATIVE

ACTIONS SET ASIDE OR DEEMED INVALID

18p.24

• This measures the value of contracts and/or administrative decisions/ actions, e.g. tender awards or

appointments, set aside, deemed invalid, terminated or prevented, as a result of the SIU’s actions or through the

use of SIU evidence.

• The SIU’s ability to institute civil action in its own name or on behalf of the State institutions has contributed to the

success of achieving this target.

• The target for the year was R600 million. The value of contracts set aside or deemed invalid for the financial

year in respect of 4 contracts is R4 billion.

R600 Million

4 billion

0

1

2

3

4

5

Target Achievement

Target vs Achieved Performance

target set achieved




Proc R10 of 2014: Department of Communications

In 2012 the Department awarded a tender for rendering services in respect of the public

awareness campaign relating to the Broadcasting Digital Migration Process Project to

Media Corner (Pty). In September 2016 the High Court of South Africa found that the

decision to award the tender is reviewed and set aside. The value of the tender award is

R756 000 000.

Proc R7 of 2014 extended by R599 of 2015: Department of Rural Development and

Land Reform (DRDLR) and the State Information Technology Agency (SITA)

The award of a contract to Gijima was declared to be invalid. Due to a pricing error made

during the bid evaluation process, the bid was awarded to the incorrect bidder. In doing so

the principles regulating public sector procurement as set out in section 217(1) of the

Constitution was breached. The value of the contract was R651 225 771.

Continued

19p.24




Proc R57 of 2014: Department of Transport

In 2001 the Department awarded a contract to Tasima to provide traffic management services and

functions with eNaTIS. In 2010, the Department extended the contract for a period of five years. The

Department sought to transfer the eNaTIS and associated services to the Road Traffic Management

Corporation (RTMC) in 2012. Tasima approached the High Court seeking an order to enforce the

extension, pending the outcome of a dispute resolution which was agreed to in the contract. An order

was granted. The Department opposed Tasima’s application by way of a counter application, seeking

to review and set aside the extension of the contract. The High Court found in favour of the

Department but this was overturned by the Supreme Court of Appeal. It concluded that reactive

challenges are not open to organs of state and that the counter application was brought too late to be

considered. It further found that even if the extension could be set aside by way of a reactive

challenge, this would not insulate the Department and the RTMC from complying with the court orders

enforcing the contract. The Department then took the matter to the Constitutional Court. In November

2016 the Constitutional Court handed down judgement and overturned the Appeal Court order and

ordered Tasima to hand the eNaTIS and associated services to the RTMC. The value of the contract

was R2 500 000 000.

Continued

20p.24




Proc R31 of 2016: Amahlathi Local Municipality

In September 2016, the SIU recommended to the Municipality that they should not make

any further payments to Kwane/Laman Financial Services, because this would defy all

business sense and is bound to constitute a reckless incurrence of fruitless and wasteful

expenditure. Section 62(1)(d) of the Municipal Finance Management Act, No 56 of 2003

(MFMA) obliges a municipal manager to take all reasonable steps to ensure “that

unauthorised, irregular or fruitless and wasteful expenditure and other losses are

prevented.” Sections 172(1)(a)(i) and (iii) of the MFMA render the deliberate or grossly

negligent failure to comply with section 62 a criminal offence. In November 2016, Kwane

was informed that by concluding an agreement with BLC Plant Company where BLC

would acquire ownership of the equipment, they had repudiated the hire purchase

agreement concluded with the Municipality. The Municipality has therefore decided to

cancel the hire purchase agreement and all equipment will be returned to Kwane. The

value of the contract is R107 404 471.

Continued

21p.24


VALUE OF CIVIL MATTERS

This measures the value of matters in respect of which the SIU instituted or facilitated

civil proceedings or where civil proceedings (including arbitration or counter civil

proceedings) were instituted or opposed/defended by means of SIU evidence. The

target set R1.2 billion, achieved R3.8 billion which means that the target was

significantly exceeded.

22p.25

1.2

3.8

0

0.5

1

1.5

2

2.5

3

3.5

4

Target Achievement

Target vs Achieved Performance

target set achieved



Proclamation R5 of 2014: South African Post Office (SAPO)

In May 2016 an application was lodged to review a decision to award a lease to Centurion

Vision Development (Pty) Ltd and to set aside the resulting ten year lease agreement and

any addenda. The value of the ten year lease contract is R484 892 453.

Proclamation R38 of 2010: National Department of Public Works (DPW)

A notice of motion has been prepared by Counsel for an order to, amongst others:

• Set aside the agreement and any amendments thereto, as being unlawful, invalid and

of no force and effect. The value of this agreement is R1 993 004 143; and

• Declare that the respondents are liable to reimburse the applicant of all monies paid

pursuant to the agreement. The value of the recovery is R103 003 696.

Continued

23p.25



Continued

Proclamation R38 of 2010: Department of Public Works (DPW)

• A summons was issued in the High Court, Gauteng Division in the matter between the SIU and MareeEls and Partners CC and Muhammed Mayet Architects. The SIU intends to recover an amount of R3138 951 which was overpaid by the Department in the bona fide and reasonable, but mistaken, beliefthat such amount was due, owing and payable to the defendants.

• A summons was issued in the High Court, Gauteng Division in the matter between the SIU andAurecon South Africa (Pty) Ltd and JH System Engineers Pretoria Inc. The SIU intends to recover anamount of R704 762 which was overpaid by the Department in the bona fide and reasonable, butmistaken, belief that such amount was due, owing and payable to the defendants.

• A summons was issued in the High Court, Gauteng Division in the matter between the SIU andConsultium Project Planning and Management CC. The SIU intends to recover an amount of R111050 which was overpaid by the Department in the bona fide and reasonable, but mistaken, belief thatsuch amount was due, owing and payable to the defendants.

• A summons was issued in the High Court, Gauteng Division in the matter between the SIU and Llale& Company Quantity Surveyors (Pty) Ltd and Mahlati Quantity Surveyors (Pty) Ltd formerly MahlatiLiebetrau (Pty) Ltd. The SIU intends to recover an amount of R6 869 608 which was overpaid by theDepartment in the bona fide and reasonable, but mistaken, belief that such amount was due, owingand payable to the defendants.

24p.25


Proclamation R59 of 2014: DPW: Leases

• The State Attorney has been requested to act on behalf of the SIU and to brief suitably qualified and

experienced Counsel and to furnish an opinion regarding the continuation of the lease concluded by

the Department. The value of the matter is R12 042 187.

• Evidence was referred to the State Attorney requesting that they brief Counsel to act for and on behalf

of the SIU, relating to the SIU’s investigation of a lease procured by the Department on behalf of the

SAPS from Silver Moon Investments. Silver Moon has instituted action against the Department for

payment of money which they allege is due. The SIU investigation has obtained evidence and wishes

to intervene in the proceedings and join as a third defendant. The value of the litigation is R37 617

938.


of the SIU relating to the SIU’s investigation of a lease procured by the Department on behalf of

Statistics South Africa from Silver Moon Investments. Silver Moon has instituted action against the

Department for payment of money which they allege is due. The SIU investigation has obtained

evidence and wishes to intervene in the proceedings. The value of the litigation is R1 395 864.


of the SIU. The SIU contends that the lease is tainted because a proper procurement process was

not followed. The SIU is seeking an opinion on DPW’s recourse in this matter. Counsel has been

briefed and is busy preparing papers. The value of the litigation is R6 382 128.

Continued

25



Proclamation R59 of 2014: DPW : Leases

• Evidence was referred to the State Attorney requesting that they brief Counsel to act for and on behalfof the SIU. The relief that the SIU is seeking is that the lease agreement entered into must bereviewed, set aside and declared invalid and that the excessive rental amounts paid, be recovered.The value of this litigation is R609 million.

• Evidence was referred to the State Attorney requesting that they brief Counsel to act for and on behalfof the SIU. The relief that the SIU is seeking is as follows:

– The decision to conclude a lease agreement be declared unlawful and set aside;

– Or declare that the lease was concluded without a valid needs assessment being concluded orwithout the signatories being authorised to sign the lease;

– Or declare the lease null and void;

– Or declare that the lease agreement was unlawful without declaring it void and ordering thatrentals payable be recalculated and the difference between the rentals actually paid be correctedand offset against corrected future rentals.

The value of the litigation is R151 211 439.

• Evidence was referred to the State Attorney requesting that they brief Counsel to act for and on behalfof the SIU to institute legal proceedings to recover losses suffered by the Department. The value ofthe litigation is R15 260 690.

Continued

26p.25



Proclamation R62 of 2014: Department of Communications

• During the course of the SIU’s investigation, evidence was obtained, which in our view,necessitates the institution of civil proceedings against an official in relation to traveland accommodation expenses or other benefits which were irregularly paid by theDepartment in respect of a person who does not qualify therefore. The value of thematter is R693 857.

Proclamation R54 of 2014 amended by R44 of 2015: DPW: Prestige situated in the

Western Cape

• Evidence was referred to the State Attorney requesting that they brief Counsel to actfor and on behalf of the SIU. The referral was as a result of a verification of the finalaccount and related evidence, in respect of a Prestige project in the Western Cape. Itwas found that the contractor was not entitled to certain payments which were claimedfor and which were incorrectly allowed/condoned. The value of the litigation is R4 738249.

Continued

27p.26



Continued

Proclamation R18 of 2016: Department of Correctional Services (DCS): Electronic

Monitoring System

• Evidence was referred to the State Attorney requesting that they brief Counsel to act for

and on behalf of the SIU relating to the SIU’s investigation into a contract that was

awarded to Engineered System Solutions for the electronic monitoring of eligible

prisoners. The value of the litigation is R365 million.

Proclamation R598 of 2015 extended by R17 of 2016: DOE: Eastern Cape Province

• A summons was issued in the High Court, Grahamstown against four defendants in

relation to the Siegesmund Trust and the relief sought is an order declaring that the

procurement of goods as well as the Service Level Agreement (SLA) is unlawful and void

and thus so is the payment of the profit calculated at R12 578 703. The value of the

litigation is R59 261 488.

28p.27



Proclamation R20 of 2016: DCS

• Evidence was referred to the State Attorney requesting that they brief Counsel to act

for and on behalf of the SIU relating to the SIU’s investigation into the appointment of

MSW. The relief being sought by the SIU is as follows:

– The appointment of MSW by the Department in respect of the renovation project is

irregular and invalid;

– The appointment of Masetloaka Scott Wilson (Pty) Ltd (MSW) by the Department

in respect of the Government Immovable Asset Management Act, No 19 of 2007

(GIAMA) assessment project is irregular and invalid; and/or

– The abovementioned appointments stand(s) to be: declared unlawful and invalid

ab initio; and set aside by a court of law;

– The SIU is also seeking to recover any losses suffered by the Department.

• The value of the litigation is R65 215 583.

29p.27

NPA REFERRALS

SIU Annual Report 2016/17 Presentation to PC J & CS 30p.28

Proclamation No Proclamation Name Nature of Offence No Status

Proc R72 of 2009 North West Province Municipalities Fraud 7 Files pending

Proc R43 of 2010

(extended by R49 of 2012) KZN DPW Fraud and Corruption 8

Referred to Regional Head;

Files pending

Proc R62 of 2010 Tshwane Metro Municipality Fraud 1 Investigation to be finalised

Proc R8 of 2011 National DRDLR: Land Reform Fraud 17


Files awaiting decision

Proc R33 of 2011 Midvaal Local Municipality Fraud 2 File pending

Proc R21 of 2012 National Limpopo Intervention Contravention of section 17(1) of PRECCA 1 Referred to Regional Head

Proc R53 of 2012 National DRDLR: Land Restitution Fraud 4


Files pending

Proc R5 of 2014

(amended by R56 of 2014) SAPO Contravention of section 17(1) of PRECCA 1 File pending

Proc R51 of 2014 Vhembe District Municipality Contravention of section 173(1)(a)(iii) of the MFMA 3


Cases opened for investigation

Proc R59 of 2014 DPW: Leases Fraud, forgery and uttering 19


Files pending

Proc R62 of 2014 Department of Communications

Contravention of section 86(1) of the PFMA, as

read with section 38(1)(a)(iii), 38(1)( c)(ii) and

38(1)(n) 1 File referred to DPCI

Proc R27 of 2015 National DPW Fraud 11 No update available

Proc R598 of 2015 ECDOE: Siegesmund Trust

Criminal offence in terms of section 86(1) of the

PFMA 5 Referred to Regional Head

Proc R19 of 2016 CIDB

Fraud, forgery and uttering;

Contravention of section 30(1)(a) of CIDB

regulation;

Contravention of sections 3,4,10 and 21 of

PRECCA 26


Files pending

Proc R31 of 2016 Amahlathi Local Municipality Fraud 2 File pending

Total 108

MEMORANDUM OF UNDERSTANDING

(MOU): SIU AND NPA


• MoU signed on the 28 August 2017 and the monitoring committee was set up

Purpose of the MoU

• For parties to establish a working methodology in connection with the case referred by

the SIU to the NPA.

• Understanding between the parties to adopt and implement reporting mechanisms in

respect of the cases.

• Understanding between the parties of the need to ensure that the cases referred by

the SIU to the NPA are prioritized.


DISCIPLINARY RECOMMENDATIONS

32p.29


Proc R21 of 2010 Gauteng: Department of Health

Contravention of the PFMA and the Public Service

Act (PSA) 1 Disciplinary proceedings have begun

Proc R43 of 2010

(extended by R49 of 2012) KZN DPW

Contravention of regulations C4.1, C4.4 and C4.9

of the Code of Conduct for the Public Service 2 Recommendation made for disciplinary action

Proc R62 of 2010 Tshwane Metro Municipality

Misconduct in terms of Section 2(b) of the Code of

Conduct of the Municipal Systems Act No 32 of

2000 (MSA) 1 Recommendation made for disciplinary action

Proc R33 of 2011 Midvaal Local Municipality

Unprofessional, dishonourable or unworthy

conduct in terms of section 71 of the Attorneys Act 2 Recommendation made for disciplinary action

Proc R21 of 2012 National Limpopo Intervention

Contravention(s) of Annexure A of the Disciplinary

Code and Procedures for the Public Service;

Regulation C4.6, 14(d) of the Code of Conduct for

the Public Service Regulation 16A8.4 of the

Treasury Regulations 11 Recommendation made for disciplinary action

Proc R53 of 2012 National DRDLR: Land Restitution

Did not qualify for a Land Claim and was not

entitled to compensation 11

Decision taken not to institute action - 1

Still considering legal opinion - 4

HR still considering matter - 4

Found guilty - 3

Update not available - 1

Proc R7 of 2014

(amended by R599 of 2015) DRDLR and SITA: Gijima

Contravention(s) of Section 217(1) of the

Constitution of SA; Sections 38(1)(a)(i),(iii),

38(1)(b), 38(1)(c)(i),(ii),(iii), 38(1)(d), 38(1)(n),

45(a),(b),(c), 41, 80, 81(1)(a) and 81(1)(b) of the

PFMA; Section 7(3) of the SITA Act, No 88 of

1998; Regulations C1.1, C1.3, C4.4 and C4.9 of

the Code of Conduct for the Public Service;

Regulations 15.10.1.2(b) and/or (c) and 11.5.1 of

the Treasury Regulations; DRDLR’s SCM

Delegations of Authority and Vulindlela Project

Charter 4 Recommendation made for disciplinary action

Subtotal 32



33p.29


Proc R7 of 2014

(amended by R599 of 2015) DRDLR and SITA: Deeds Office

Contravention(s) of Regulation 68(1) of the Deeds

Registries Act, no 47 of 1937; Section 3(1)(b) of

the Deed Registries Act; Section 10A(1) of the

Housing Amendment Act 4 of 2001; Regulations

C1.1, C1.3, C1.4, C4.1, C4.4 and C4.9 of the

Code of Conduct for the Public Service; Section

118(1) of the MSA 8 Recommendation made for disciplinary action

Proc R49 of 2014

(amended by R16 of 2015) KZN Treasury

Contravening the code of Good conduct for the

Public Service 1

Department settled with the employee. Final

written warning issued

Proc R51 of 2014 Vhembe District Municipality

Contravention of section 30(1) of the Public

Service Act; Contravention of regulation C5.5 of

the Code of Conduct for the Public Services;

Contravention of section 33(1)(b) of the

Employment of Educators Act 2 Recommendation made for disciplinary action

Proc R52 of 2014 Greater Tubatse Municipality

Contravention of Section 78(1),(2) and

171(1)(a),(b),(c) of the MFMA Act 56 of 2003 2 Recommendation made for disciplinary action

Proc R57 of 2014 Department of Transport

Contravention of the PSA and the Public Service

Regulations 19

Employee found guilty and dismissed - 1

Disciplinary hearings in progress - 18

Proc R59 of 2014 DPW: Leases

Contravention of the Disciplinary Code and

Procedures for the Public Service; Annexure A of

the Disciplinary Code and Procedures for the

Public Service; Section 45(c) of the PFMA;

Regulation C4.4 of the Code of Conduct for the

Public Service; Administrative action: Promotion of

Administrative Justice Act, Act 3 of 2000 (PAJA) 19

Allegations not pursued due to inconclusive

evidence - 2

Charges have been referred to the attorney

dealing with the Nkandla matter - 1

Written warnings issued - 1

Disciplinary proceedings have been scheduled -

9

Found no guilty - 1

Recommendation made for disciplinary action -

4

The employee left the Deparment and the case

will be referred to her new employer - 1

Subtotal 51

Continued



34p.29


Proc R62 of 2014 Department of Communications

Contravention of the Disciplinary Code and

Procedures for the Public Services; Contravention

of section 45( c) of the PFMA; Contravention of

regulation C4.4 of the Code of Conduct for the

Public Services 1 Recommendation made for disciplinary action

Proc R27 of 2015 National DPW Contravention of section 30(1) of the PSA 1 Recommendation made for disciplinary action

Proc R598 of 2015 ECDOE: Siegesmund Trust Administrative action: PAJA 1

Matter referred to the Office of the Premier to

make the decision to institute disciplinary

proceedings

Proc R598 of 2015

(extended by R17 of 2016) ECDOE

Gross negligence; Contravention of section 38 1

(b) and section 38 (1) (c) (ii), 45(a), section 45(b)

and section 45(c) of the PFMA; Fraud 2

Matter referred to the Office of the Premier to

make the decision to institute disciplinary

proceedings - 1

1 employee resigned and is not employed at

any other State institution

Proc R19 of 2016 CIDB

Administrative action: PAJA;

Contravention of regulation 30(1)(a) of CIDB

regulations 49 Matters being dealt with by CIDB

Subtotal 54

Total 137

Continued


JOINT OPERATIONS OR SECONDMENTS

35

No State Institution / Department / Joint Operation Count

1 SIU members participated in joint operations at ACTT 14

2 Members seconded to EC DOE 13

3 Members seconded to DPW in GAU and WC 10

4 Members seconded to National Department of Co-operative Governance 3

5 Members seconded to the EC Dept of Health 11

6 Member seconded to the NPA 1

7 Members seconded to PSETA 2

54

p.29


JOINT OPERATIONS OR SECONDMENTS

36

No

State Institution / Department /

Joint Operation Status

1 National DPW

The SIU team made numerous recommendations related to recovery of lost

funds, referrals for criminal and disciplinary actions as well as systemic

recommendations to the DPW. The DPW referred three matters to the SIU

for investigation under current proclamations

2 Eastern Cape DOH

Finalized the investigation of three cases and identified fraudulent claims in

respect of these three cases, totaling R45 million;

Identified possible fraudulent claims in respect of a further two matters,

which are still being investigated;

Additional information required for a motivation for a proclamation is being

gathered

3 ECDOE

The EC DOE secondments were not completed as there was a change of

leadership, a new SG was appointed, and the secondments were halted.

The SIU is engaging with the SG to determine the way forward


2. ONGOING INVESTIGATIONS

37


ONGOING INVESTIGATIONS:

NATIONAL GOVERNMENT


No Proc Number Dept/State Institution Status Outcomes No Value End Date

1 R20 of 2016

Department of Correctional

Services (DCS) Investigation ongoing Civil matters 1 R65 million 31/10/2017

No of investigations closed out 16


NPA referrals 49

3 R18 of 2016

Department of Correctional

Services (DCS) Investigation ongoing Civil matters 1 R365 million 31/10/2017


The value of contract(s) and/or

administrative decision(s) /

action(s) set aside or deemed

invalid 1 R651 million



Value of money potentially

recoverable R11.5 million

Civil matters 2 R2 billion

NPA referrals 11



Civil matters 1 R693 857

NPA referrals 1


30/04/2018

6 R62 of 2014 Department of Communications

Report submitted on

11/10/2016 11/10/2016

31/05/2018

5

R27 of 2015 extends

R38 of 2010

National Department of Public

Works (DPW) Investigation ongoing

4

R599 of 2015

amends R7 of 2014

Department of Rural Development

and Land Reform (DRDLR) and the

SITA Investigation ongoing

2 R19 of 2016 Construction Industry Board (CIDB) Investigation ongoing 31/03/2018

National Government Investigations



NATIONAL GOVERNMENT





recoverable R63 million

Actual value of money

recovered R1.7 million

The value of potential loss

prevented 2 R579,562

Civil matters 7 R832 million

NPA referrals 19






invalid R2.5 billion


9 R55 of 2014

Department of Labour and the

Compensation Fund

Final presidential

report being

prepared 31/03/2018

10 R20 of 2014

Universal Service and Access

Agency of South Africa (USAASA)

Final presidential

report being

prepared 31/03/2018





invalid R756 million11 R10 of 2014 Department of Communications

Final presidential

report being

prepared 31/03/2018

Outcomes are being finalised

No criminal, disciplinary or civil action is

recommended

8 R57 of 2014 Department of Transport

Final presidential

report being

prepared 31/03/2018

7 R59 of 2014


Works (DPW) Investigation ongoing 31/03/2018


Continued



NATIONAL GOVERNMENT



12 R6 of 2014

Department of Co-operative

Governance and Traditional Affairs

(COGTA)

Report submitted on

12/09/2017 12/09/2017

13 R54 of 2012 Department of Water Affairs (DWA)

1 Final presidential

report submitted

1 investigation

ongoing No of investigations closed out 1 30/11/2017






NPA referrals 4


15

R73 of 2011 extends

R42 of 2010

South African Police Service

(SAPS)

Final presidential

report being

prepared 31/03/2018






NPA referrals 17

17 R27 of 2010

South African Social Security

Agency (SASSA ICT)

Final presidential

report being

prepared 31/03/2018

18

R5 of 2007 extends

R18 of 2005

National and all Provincial

Department(s) of Social

Development

Final presidential

report being

prepared


recoverable R52,230 31/03/2018

31/03/201816 R8 of 2011

National Department of Rural

Development and Land Reform

Final presidential

report being

prepared

No outcomes for the period under review


31/03/2018


14 R53 of 2012

National Department of Rural

Development and Land Reform and

its agents (DRDLR)

Final presidential

report being

prepared


Continued



PROVINCIAL GOVERNMENT



1 R9 of 2017

KZN Provincial Department of

Agriculture and Rural Development

and Mjindi Farming (KZN DOA) Investigation ongoing 31/03/2018

2 R32 of 2016

Independent Development Trust

(IDT), the Dept of Basic Education

(DBE) and the Dept of Education

for the Free State (DEFS) Investigation ongoing 31/03/2018





recovered R138,712

4 R22 of 2016

Department of Human Settlements

Gauteng Province (NDOHS) and

Lepelle Northern Water Investigation ongoing 30/11/2017



prevented 1 R7.5 million

Civil matters 1 R59 million

NPA referrals 5

Disciplinary recommendations 3 5

R17 of 2016 extends

R598 of 2015

Eastern Cape Department of

Education (EC Education)

1 Report submitted

on 10/03/2017

1 Final presidential

report being

prepared

3 R23 of 2016

KwaZulu-Natal Provincial

Department of Transport (KZN DOT) Investigation ongoing

Provincial Government Investigations




31/08/2018

10/03/2017

31/03/2018



PROVINCIAL GOVERNMENT



6

R44 of 2015 extends

R54 of 2014


Works (DPW): Prestige

Directorate, Western Cape

Final presidential

report being

prepared Civil matters 1 R4.7 million 31/03/2018

7

R16 of 2015 amends

R49 of 2014

KwaZulu-Natal Provincial Treasury

(KZN Provincial Treasury)

Report submitted on

11/05/2017 No of investigations closed out 1 11/05/2017

NPA referrals 8


NPA referrals 1




9 R21 of 2012 Limpopo Province Intervention

Final presidential

report being

prepared 31/03/2018

10 R21 of 2010

Gauteng Department of Health

(GDOH)

Report submitted on

30/03/2017 30/03/2017

31/03/2018

Department of Public Works for the

KwaZulu-Natal Province (KZN DPW)

Final presidential

report being

prepared8

R49 of 2012 extends

R43 of 2010

Provincial Government Investigations

Continued



LOCAL GOVERNMENT



1 R10 of 2017

Harry Gwala District Municipality

(HGDM) Investigation ongoing 31/03/2018

2 R8 of 2017 Mopani District Municipality (MDM) Investigation ongoing 31/03/2018

3 R59 of 2016

Greater Sekhukhune District

Municipality (GSDM) and the Elias

Motsoaledi Local Municipality

(ELML) Investigation ongoing 28/02/2018


prevented 1 R14.9 million

Value of contracts set aside 1 R107 million

NPA referrals 2

5 R21 of 2016 Msunduzi Local Municipality (MLM)

Final presidential

report being

prepared 31/03/2018

6 R40 of 2015

Buffalo City Metropolitan

Municipality (BCM)

Final presidential

report being

prepared No of investigations closed out 2 31/03/2018

18/08/2017

Report submitted on

18/08/2017Amahlathi Local Municipality (ALM)R31 of 20164


Local Government Investigations






LOCAL GOVERNMENT



7 R52 of 2014 Greater Tubatse Local Municipality

Final presidential

report being

prepared Disciplinary recommendations 2 31/03/2018

NPA referrals 3


9 R8 of 2014

Bushbuckridge Local Municipality:

Mpumalanga Province

Final presidential

report being 31/03/2018

10 R63 of 2010

Ekurhuleni Metropolitan Municipality

(EMM): Gauteng Province

Report was

submitted on

03/11/2016 03/11/2016


NPA referrals 1


12 R72 of 2009

North West Province Municipalities

(NWM)

Final presidential

report being

prepared NPA referrals 7 31/03/2018



31/03/2018

31/03/20188 R51 of 2014 Vhembe District Municipality

Final presidential

report being

prepared

11 R62 of 2010

Tshwane Metropolitan Municipality

(TMM): Gauteng Province

Final presidential

report being

prepared

Local Government Investigations

Continued



STATE OWNED ENTITIES



1

R53 of 2014 amended

by R15 of 2015

State Information Technology

Agency (Pty) Ltd (SITA)

Final presidential report

being prepared


prevented 1 R83 million 31/03/2018

2 R2 of 2012 Eskom Holdings Ltd

Report submitted on

12/07/2017 12/07/2017

State Owned Entities



3. CIVIL MATTERS

46


SUMMARY OF CIVIL LITIGATION MATTERS

47

No Proc Number Dept/State Institution Civil Matter Description Status Value

1 R59 of 2013 National Dept. of Public

Works: Prestige Project:

Nkandla KwaZulu-Natal

Action proceedings were instituted in the High

Court to claim back a loss of R155 million suffered

by the State due to the conduct of the principal

agent overseeing the security upgrades at

Nkandla.

Pleadings have closed. The SIU

served its discovery affidavit (92 000

pages). The next step is the pre-trial

conference, whereafter the matter will

go to trial.

R155 million

2 R5 of 2014

amended by R56

of 2014

South African Post Office

(“SAPO”)

An application has been lodged in the High Court

to review the awarding of a lease to Centurion

Vision Development (Pty) Ltd and to set aside the

resulting 10 year lease agreement. The matter is

opposed by the Respondents.

The pleadings have not yet closed. R778 million

3 R21 of 2012 Limpopo Province

Intervention:

Sankhyaa Learning Private Limited instituted

action proceedings in the High Court against the

Limpopo Department of Education. The SIU

investigations revealed that there was non-

compliance with public sector procurement

prescripts. The SIU successfully applied to be

joined as a Defendant in this matter.

Provincial Treasury; Health and Social

Development; Roads and Transport; Education

and Public Works

Pleadings are still being exchanged

and the matter is not yet ready for trial.

R85.5 million

4 R53 of 2014

amended by R15

of 2015

State Information

Technology Agency

(“SITA”)

The iFirm contract of R302m was investigated and

the matter is in court in order to declare the

contract invalid and to set the contract aside.

Proceedings are delayed by an appeal

to the Supreme Court of appeal in

another SITA-matter where the same

technical issues raised in the iFirm

case, is the subject matter of the

appeal. The matter is currently

postponed sine die pending the ruling

by the Supreme Court of appeal.

R302 million

p.66

SIU Annual Report 2016/17 Presentation to PC J & CS48p.66


No Proc Number Dept./State Institution Civil Matter Description Status Value

5 R10 of 2014 Dept. of Communications

(Media Corner)

In September 2016, the High Court ruled that the

awarding of a tender by the Department of

Communications to Media Corner was invalid.

The second leg of the matter, consequential relief

in the form of a just and equitable order, aimed at

the repayment of overpayments is now being

pursued.

The matter is almost ready for trial,

but a trial date has not yet been

applied for.

R752 million

6 R7 of 2014

amended by

R599 of 2015

Dept. of Rural

Development and Land

Reform and the SITA

An application was brought in the High Court to

challenge the award of a tender to Gijima to

provide services to the Department of Rural

Development and Land Reform. In September

2016 the court found the award to be invalid.

The second leg of the matter, which

is the consequential relief of

recovering overpayments, is still

ongoing and not yet ready for trial

R364 million

7 R54 of 2014

amended by R44

of 2015

National Dept. of Public

Works: Prestige situated

in the Western Cape

Action proceedings were instituted in the High

Court to claim back certain payments that a

contractor was not entitled which were claimed

for and which were incorrectly allowed/condoned.

The matter is proceeding R4.7 million

Continued

SIU Annual Report 2016/17 Presentation to PC J & CS49


8 R38 of 2010

extended by R27

of 2015


Works

Lebombo Border Post – An application was

lodged to seek a declaratory order setting aside

the contract awarded on the basis that the award

was in violation of the Constitution. The prayer

for relief also seeks to recover R103 million which

it is alleged amounts to an overpayment.

All applicants are opposing the

matter and have served notices

seeking documentation. Currently

these notices are being dealt with.

The matter is accordingly not yet

ready for trial.

R1.9 billion

9 R38 of 2010

extended by R27

of 2015


Works

Skilpadshek Border Post – The action seeks to

recover R50.8 million that was an overpayment

to the contractor. The matter was before court

from 31 Oct 2016 to 11 Nov 2016.

The matter is currently part heard

and a new date of set down is

awaited.

R50.8 million

10 R38 of 2010

extended by R27

of 2015


Works

Union Building – The SIU is assisting the

Department in defending an action brought by

the Plaintiff for the recovery of outstanding

amounts due for work allegedly completed. The

SIU assisted in providing the evidential material

required for compiling the plea and counterclaim.

The plaintiff has now raised several

exceptions, but has not yet set these

exceptions down for hearing.

R54 million

p.66-67


Continued



11 R38 of 2010

extended by R27

of 2015


Works

This is an action that was instituted by DPW

seeking the cancellation of 4 leases concluded

with a Mr. Mia and or his associated companies

together with a claim for damages.

Pleadings have closed and a trial

date has been applied for.

R8 million

12 R38 of 2010

extended by R27

of 2015


Works

Empangeni Ramp – Application to recover

overpayments and damages based on fraud,

alternatively negligence.

Proceedings have been delayed by

interlocutory applications. These

have now been dealt with and the

defendants have been placed in

terms to file their plea.

R11.6 million

13 R38 of 2010

extended by R27

of 2015


Works

Salu Lease - Papers have been issued in the

North Gauteng High Court and filed on the

respondents. The landlord is opposing the

Application. DPW has chosen to comply with

whatever decision the Court makes.

The SIU is required to file the record

whereafter the landlord is obliged to

file its answering affidavit.

R151 million

p.67


Continued



14 R38 of 2010

extended by

R27 of 2015

National Dept. of

Public Works

Wachthuis Lease - Papers have been

issued in the North Gauteng High Court and

filed on the respondents. The landlord is

opposing the Application. DPW has chosen

to comply with whatever decision the Court

makes.

The SIU is required to file the

record whereafter the landlord is

obliged to file its answering

affidavit.

R600 million

15 R38 of 2010

extended by

R27 of 2015

National Dept. of

Public Works

A summons was issued in the High Court,

Gauteng Division. The SIU intends to

recover an amount which was overpaid by

the Department in the bona fide and

reasonable, but mistake, belief that such

amount was due, owing and payable to the

defendants.

The matter is being defended R3 million

16 R38 of 2010

extended by

R27 of 2015

National Dept. of

Public Works


Gauteng Division. The SIU intends to

recover an amount which was overpaid by

the Department in the bona fide and

reasonable, but mistake, belief that such

amount was due, owing and payable to the

defendants.

The matter is being defended R704 762

p.67


Continued



17 R38 of 2010

extended by R27

of 2015


Works


Gauteng Division. The SIU intends to recover an

amount which was overpaid by the Department

in the bona fide and reasonable, but mistake,

belief that such amount was due, owing and

payable to the defendants.

The matter is being defended R111 050

18 R38 of 2010

extended by R27

of 2015


Works


Gauteng Division. The SIU intends to recover an

amount which was overpaid by the Department

in the bona fide and reasonable, but mistake,

belief that such amount was due, owing and

payable to the defendants.

The matter is being defended R6.8 million

p.67


Continued

4. GOVERNANCE

53

GOVERNANCE; ENTERPRISE WIDE

RISK MANAGEMENT

SIU Annual Report 2016/17 Presentation to PC J & CS 54p.70

• A Risk Management Committee is in place and is led by an independent chairperson;

• As a unit we are putting efforts to ensure that risk management and related processes are

embedded into the operations of the unit;

• Each business unit also has a duly appointed Risk Champion to ensure effective

management of operational risks;

• The leadership and staff of the SIU have discussed and documented the risks facing the

organisation in accordance with SIU Public Management Framework.

• These risks were specifically highlighted as they could potentially affect the SIU’s ability to

achieve its strategy and business plan objectives; and

• Risks were identified from both a high-level strategic and a more detailed operational

perspective.

Top Risks Heat Map

1

2

3

4

67

8

9

10

5

Below are the key top 10 risks that may affect achievements of the strategic goals contained in the programs that were

identified and the appropriate actions to mitigate these risks were also identified and actioned in detailed action log

1. Inability to achieve targets as per the APP and strategic plan

2. Non implementation of remedial actions by the NPA and

other state institutions

3. Inability to cooperate effectively with other law enforcement

entities which delays the investigations

4. Competition with the private sector (those cases were the

state institutions wants quick turn around impacts from

investigations)

5. Delays in Civil Litigation process

6. Low Proclamation flow

7. Inability to collect revenue (high debtors book)

8. Ineffective stakeholder management

9. Non compliance with applicable legislation

10. Inability to provide security over SIU critical information 55p.70

GOVERNANCE: ENTERPRISE WIDE

RISK MANAGEMENT


• The Special Investigating Unit (SIU) has an Audit Committee which is consisting

of four (4) Audit Committee members while it is supported by three sub-

governance committees as per the graph below:

• All sub-committees are chaired by independent none executives that are also

reporting to the Audit Committee

5

3 3 3

0

1

2

3

4

5

6

Audit Committee Risk Management Committee Human Resource ManagementCommittee

IT Governance Committee

Number of Meetings

56p.72

AUDIT COMMITTEE REPORT

Continued

• Audit Committee notes with great joy the AG Audit opinion on the AFS and is of the opinion that the

audited AFS be accepted and read together with the report of the AG. The Committee has also

reviewed the performance information as included on the AG report together with the management

letter and has congratulated the Accounting Authority and challenged him to develop a strategy to

maintain this excellent performance.

AUDIT COMMITTEE REPORT

No. Audit Names From To Status

1 Performance Review (EEE) 01 August 2016 30 September 2016 Completed

2 Performance Information Quarterly Two Completed

3 Supply Chain Management 01 August 2016 30 September 2016 Completed

4 Revenue Collection 01 October 2016 15 November 2016 Completed

5 Governance Review 20 January 2017 28 February 2017 Completed

6 Human Resources 15 September 2016 30 October 2016 Completed

7 Screening and financial interest

disclosure

15 February 2017 30 March 2017 Completed

8 Adhoc’s Investigations 01 April 2016 31 March 2017 Completed

9 Follow Up Reviews 01 April 2016 31 March 2017 Ongoing

57SIU Annual Report 2016/17 Presentation to PC J & CSp.72

Continued

5. HUMAN RESOURCE MANAGEMENT

58

HUMAN RESOURCE MANAGEMENT


Continued

59p.78

EMPLOYMENT

EQUITY

RACE

AFRICAN COLOURED INDIAN WHITE

TOTAL

GENDER

GENDER PERCENTAGE

FEMALE 152 11 26 67 256 49

MALE 157 24 29 57 267 51

TOTAL RACE 309 35 55 124 523

PERCENTAGE 59 7 10 24

100%

523

404

119

TOTAL STAFF OPERATIONS STAFF SUPPORT STAFF

Staff complement as at 31 March 2017

EMPLOYMENT EQUITY

SIU Annual Report 2016/17 Presentation to PC J & CS60p.78

EMPLOYMENT EQUITY AFRICAN COLOURED INDIAN WHITE

TOTAL PERCENTAGE

GENDERFEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE

Top Management 0 1 0 0 0 0 0 0 1 1

Senior Management 4 4 1 2 2 2 3 10 28 5

Professionally Qualified 22 49 1 14 4 16 28 41 175 33

Skilled Technical 36 75 5 8 13 11 27 3 178 34

Semi-Skilled 78 28 4 0 7 0 9 3 129 25

Unskilled 12 0 0 0 0 0 0 0 12 2

Total 152 157 11 24 26 29 67 57 523

Percentage 29 30 2 4 5 6 13 11 100%


6. FINANCIAL OVERVIEW

61

REPORT OF THE AUDITOR GENERAL


• SIU received a clean, unqualified audit report for the 2016/17 financial year by the Auditor General:

– Audit opinion: ”In my opinion, the financial statements present fairly, in all material

respects, the financial position of the SIU as at 31 March 2017, and its financial

performance and cash flows for the year then ended…”

– Performance information: “I did not identify any material findings on the usefulness and

reliability of the reported performance information for the following objectives…”

– Compliance to legislation: “I did not identify any instances of material non-compliance with

specific matters in key legislation, as set out in the general notice issued in terms of the

Public Audit Act.”

– Internal control deficiencies : “I did not identify any significant deficiencies in internal

control”

AUDIT OPINION

ANNUAL FINANCIAL STATEMENTS


Description Notes 2016/17 2015/16Increase/

(Decrease)

R’000 R’000 %

Income

Grant Income N1 316 732 304 458 4%

CARA Funds N2 427 4 148 -90%

Project Income N3 181 675 174 044 4%

Interest & Other Income N4 15 079 6 971 116%

Other Income N5 4 872 5 095 -4%

Total Income 518 785 494 716 5%

Expenditure

Employee cost N6 (322 683) (300 570) 7%

Debt Impairment N7 (55 310) (62 914) -12%

General Expenses N8 (101 140) (81 314) 24%

Total Expenses (479 133) (444 798) 8%

Surplus 39 652 49 918 -21%

p.91

STATEMENT OF FINANCIAL PERFORMANCE

NOTES TO STATEMENT OF FINANCIAL PERFORMANCE



• N1: Grant income is determined by National Treasury.

• N2: CARA Funds decreased due to the fact that funds relating to accommodation and rental of ICT

equipment was depleted during the 2016/17 Financial Year.

• N3: Project income is driven by the number of proclamations active. Lesser proclamations were

active in 2015/16 as compared to 2016/17.

• N4: Interest income is income earned on positive bank balances.

• N5: Other Income: This relates to the actual rental paid on behalf of the SIU for the East London

Offices. The amount is dependent on the actual paid by the Department of Public Works.

• N6: Employee costs increases is driven by performance and cost of living adjustments.

• N7: Debt impairment is provided for based on an analysis of the debt outstanding at year end, taking

into account the responses received from State Institutions on follow ups done during the year.

• N8: General Expenses: the increase is due to the annual increase on rental of premises and an

increase in depreciation and amortisation costs relating to PPE.

p.95-130

Statement of Financial Position as at 31 March 2017

2017 2016- Restated

Assets R R

Current Assets

Receivables from exchange transactions 131 068 992 143 028 687

Cash and cash equivalents 293 021 334 242 224 668

Bank balance - Recoveries 25 059 827 30 238 829

449 150 153 415 492 184

Non-Current Assets

Property, plant and equipment 45 346 405 36 990 450

Intangible assets 2 913 843 3 079 642

48 260 248 40 070 092

Total Assets 497 410 401 455 562 276

Liabilities

Current Liabilities

Other financial liabilities 398 538 253 300

Operating lease liability 726 640 743 431

Payables from exchange transactions 24 709 443 23 644 232

Provisions 23 834 116 17 653 005

Payables - Recoveries 25 059 827 30 238 829

74 728 564 72 532 797

Total Liabilities 74 728 564 72 532 797

Net Assets 422 681 837 383 029 479

Accumulated surplus 422 681 837 383 029 479

STATEMENT OF FINANCIAL POSITION


p.90

2017 2016- Restated

R R

Cash flows from operating activities

Receipts

Sale of goods and services 143 650 682 188 167 389

Grants 316 732 000 304 458 000

Interest income 15 051 512 6 929 595

Other receipts 27 605 41 000

475 461 799 499 595 984

Payments

Employee costs (322 683 382) (300 569 643)

Suppliers (87 787 533) (68 843 614)

(410 470 915) (369 413 257)

Net cash flows from operating activities 64 990 884 130 182 727

Cash flows from investing activities

Purchase of property, plant and equipment (14 194 218) (11 913 734)

Proceeds from sale of property, plant and equipment - 2 648 624

Net cash flows from investing activities (14 194 218) (9 265 110)

Net increase/(decrease) in cash and cash equivalents 50 796 666 120 917 617

Cash and cash equivalents at the beginning of the year 242 224 668 121 307 051

Cash and cash equivalents at the end of the year 293 021 334 242 224 668

CASH FLOW STATEMENT


p.93


STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS

Notes Approved Budget Adjustments Final Budget Actual Amounts

Differences between final

budget and actualR R R R R

Revenue

Revenue from exchange transactions

Rendering of services N1 250 908 000 (87 585 995) 163 322 005 181 675 671 18 353 666

Interest received 5 000 000 9 129 256 14 129 256 15 051 512 922 256

Other income - - - 27 605 27 605

Total revenue from exchange transactions 255 908 000 (78 456 739) 177 451 261 196 754 788 19 303 527

Revenue from non-exchange transactions

Transfer revenue

Government grants & subsidies 316 732 000 - 316 732 000 316 732 000 -

CARA funds - 426 739 426 739 426 739 -

Rental of premises paid on behalf of SIU N2 - - - 4 871 910 4 871 910

Total revenue from non-exchange transactions 316 732 000 426 739 317 158 739 322 030 649 4 871 910

Total Revenue 572 640 000 (78 030 000) 494 610 000 518 785 437 24 175 437

Expenditure

Employee related costs N3 (369 269 000) - (369 269 000) (322 683 382) 46 585 618

Lease rentals on operating leases (44 566 523) 5 000 000 (39 566 523) (38 116 495) 1 450 028

Depreciation and amortisation (8 867 000) 1 123 000 (7 744 000) (5 929 160) 1 814 840

Debt Impairment N4 - - - (55 309 869) (55 309 869)

Loss on the disposal of assets - - - (74 900) (74 900)

Repairs and maintenance (1 010 000) 500 000 (510 000) (398 777) 111 223

Professional services (450 000) - (450 000) (480 174) (30 174)

General expenditure N5 (148 477 477) 71 407 000 (77 070 477) (56 140 322) 20 930 155

Total expenditure (572 640 000) 78 030 000 (494 610 000) (479 133 079) 15 476 921

Surplus before taxation - - - 39 652 358 39 652 358

Actual Amount on Comparable Basis as

Presented in the Budget and Actual

Comparative Statement

- - - 39 652 358 39 652 358

p.94

FINANCIAL RESULTS OVERVIEW : NOTES TO BUDGET VS. EXPENDITURE

68

N1: Rendering of Services

Revenue from services rendered is based on the recovery of fees from State Institutions for services rendered under issued Proclamations. The

actual amount recovered is slightly over the final budgeted amount for the 2016/17 financial year. For the 2016/17 financial year, there were 13 new

proclamations issued and as at 31 March 2917, the SIU had 45 active Proclamations

N2: Rental of premises paid on behalf of the SIU

Rental of premises paid by the Department of Public Works on behalf of the SIU for East London office was historically not budgeted for. The SIU

will future budget for this item.

N3: Employee Related Costs

The underspending on employee related costs is due to the fact that the costs relating to vacancies were budgeted for the whole year as there was

no indication/projection of when the positions would be filled. The cost of these vacancies have not been incurred as they are still vacant. The

recruitment process has been placed on hold to enable the SIU’s organisational structure review process to be finalised in 2017/18, and the resulting

vacancies appropriately filled.

N4: Debts Impairment

The SIU did historically not budget for debt impairment due to the fact that the analysis of the amounts to be impaired is only conducted at the end of

the financial year. going forward the SIU will project an amount to be impaired at the beginning of the financial year, based on the projected amount

to be invoiced and budget it accordingly.

N5: General Expenses

The underspending under general expenses is due to the fact that the SIU anticipated incurring expenses relating to moving to new offices and fitting

it out in the various regional offices where leases have expired. However, the relocation of offices has not materialised in the 2016/17 financial year

and will be incurred in the 2017/18 financial year.


p.130

IRREGULAR EXPENDITURE



Irregular Expendire Incurred 35 361 497 10 297 270 14 290 149 6 090 831 2 507 247 1 799 023

Irregular Expendire Condoned - - - - 590 422 -56 710 317 * -4 608 936

Cumulative Balance 35 361 497 45 658 767 59 948 916 65 449 325 11 246 255 8 436 342

* The SIU did an extensive investigation of irregular expenditure in line with National Treasury guidelines for application to condone such irregular expenditure to the

relevant authorities. A substantial part of the irregular expenditure was condoned after the investigations were completed. Investigations for the remaining part of the

irregular expenditure are underway and application for condoning will be made where applicable.

• SIU has reported irregular expenditure of R 1.8 m for the 2016/17 financial year as

compared to R 2.5m in 2015/16 financial year.

• The SIU is in a process of regularising all contracts that are considered to be

irregular to ensure that irregular expenditure is not incurred anymore.

p.127-128

IRREGULAR EXPENDITURE

Continued


Description 2016/17 2015/16

Proper SCM Processes not followed when extending the lapsed contract (Nelspruit Lease) 0 614 205

No proper deviation in place for deviating from normal SCM processes (Travel Management )392 287 345 392

Service Provider used without following proper SCM process (Insurance for movable assets) 842 890 948 037

Service provider used without following proper SCM processes (Reference Checks) 41 285 382 465

Service provider used without following proper SCM processes (Courier Services)307 329 196 755

Promoted employees paid before written approval by Head of the Unit0 20 393

Services of legal counsel procured without following SCM processes 215 232 0

Totals per Financial Year 1 799 023 2 507 247


p.127-128

FRUITLESS AND WASTEFUL EXPENDITURE

2016/17 Financial year 2016/17 2015/16

Interest payment to SARS for late payment of PAYE 0 4 690

Payment of traffic fines incurred by employees 506 4 090

Opening Balance 2016/178780

2016/17 Total 9 286 8 780



• SARS: During February 2015, SIU ran two payrolls with the second run being afterthe February month end. This resulted in employees tax for this period being paidafter the required due date.

• Traffic Fines: these costs were incurred by SIU members and had to be settled by theSIU when the unit was trying to renew the annual vehicle licences. The cost will berecovered from the members.

p.127

OUTSTANDING DEBTORS ANALYSIS

Description 2016/17

R’000

2015/16

R’000

Gross Trade Debtors 418 257 374 389

Less: Provision for impairment (288 480) (233 480)

Net Trade Debtors 129 777 140 909

SIU Annual Report 2016/17 Presentation to PC J & CS 72p. 109-110


Receipts : 1 April 2017 to 30 September 2017

Payment Split Amount Paid

R’000

Invoices up to 31/03/2017 63 250

2017/18 Invoices 2 997

Total Receipts 66 247

DEBT RECOVERY STRATEGY


• The SIU embarked on an intensive exercise to recover outstanding debts;

• The SIU submitted reminder letters to the State Institutions reminding them of their

legal obligation to settle debts incurred for services provided by the SIU;

• Where further substantiating information is required by the institutions, the SIU now

provides such information and investigation outcomes to facilitate payment;

• National Treasury also assisted in by submitting Letters to affected State

Institutions; and

• Reminder letters were also sent from the Minister of the Department of Justice and

Constitutional Development to remind State Institutions to settle their debts.


7. ORGANISATIONAL REVIEW

The State’s preferred and trusted forensic investigation and litigation agencyVision

Mission We are the State’s preferred provider of forensic investigating and litigating services working together

with other agencies in the fight to eradicate corruption, malpractice and maladministration from

society.

How will we make an impact?

Strategic

Goals

To achieve appropriate legal outcomes

against perpetrators of maladministration

and corruption

To proactively influence the systemic

and behavioural root causes of

maladministration and corruption

Stabilise operating environment

Reach growth

through operational

excellence

Establish

governance and

accountability

Staying relevant

within a changing

environment

Strategic

Focus

ORGANISATIONAL REVIEW CASE FOR CHANGE

75

ORGANISATIONAL REVIEWNEW STRATEGIC FOCUS

To achieve appropriate legal outcomes

against perpetrators of maladministration

and corruption

To proactively influence the systemic and

behavioural root causes of maladministration

and corruption

1. To ensure that each case is

centrally reported and monitored

2. To ensure that each allegation is

assessed in accordance with

standardised criteria

3. To conduct forensic investigations

according to predetermined

standards

4. To initiate the implementation of

legal recommendations

5. To increase legal outcomes based

on civil and other proceedings

1. To direct strategic decision

making processes through data

analysis

2. To assist State institutions with

the prevention of the

reoccurrence of reported cases

3. To increase public awareness

about targeted anti-corruption

behaviour

Detailed Strategic Goals

76

Workstream 1: Strategy and Organisation Design:

• Case for change, Long-term strategy that is linked to accountability, Value Chain for SIU,

• Value Chain for the Industry, Operating Model, Macro structure, Micro structure, and High-

level capacity modelling

Workstream 2: Job Design and Evaluation/Remuneration and Incentives:

• Job architecture and libraries, Career pathing, Job descriptions and titles, Job evaluations

• Remuneration strategy, policy and plan, Incentive strategy, policy and plan

ORGANISATIONAL REVIEW:

FOCUS AREAS


Workstream 3: Culture, Change and Engagement

• Internal stakeholder map, Change management strategy and plan, High impact session with

leadership

• Change agent network support, Communication strategy and plan, Define desired culture,

Culture survey and report

77

ORGANISATIONAL REVIEW:

NEW VALUE CHAIN

Receive an allegation

Register Feasibility Scoping Proclamation Planning of

investigation

Remedial Action Reporting Evaluate

investigation Prevent

reoccurrence

Monitor remedial

action

High Level Value Chain

Functional Areas

Case

Registration

and Monitoring

Case

Assessment

Case

Management

Forensic

Legal

Assessment

Civil Litigation

Assessment

Forensic

Analysis

Market Data

Analytics

Prevention

and

Advisory78

79

ORGANISATIONAL REVIEW NEW OPERATING MODEL

REGIONAL CASESCENTRAL SUPPORTNATIONAL CASES

Allegation Registration

Case Assessment

Mark

et

Data

Analy

tics

Business DevelopmentBusiness Development

Monitor and Evaluate

Public Awareness Community Outreach

Core Case Investigation

Remedial Action

Set direction

Day-to-day support

services

En

ab

lem

en

t

Case Management

Remedial Action

Specialist oversight

Policy and procedures

Operational Reporting

Bu

sin

ess

Ove

rsig

ht

Sta

kehold

er

Managem

ent

Policy and procedures

Specialist support

Governance and Risk

Man

da

ted

Serv

ice

De

live

ryP

reve

nti

on

Case Management

Core Case Investigation

Advisory Services Advisory Services

Specialised Investigating Services

Specialist resource

allocation

Set and oversee policy and

standards

Civil Litigation

Day-to-day support

services

Operational Reporting

Technical oversight

1 2

Create ring-

fenced unit for

national cases

Empower

regional

accountability

and business

development

Standardise the quality of

service delivery3

CHALLENGES & MITIGATION STRATEGY

CHALLENGES MITIGATION STRATEGY

long turnaround times The new strategy is to obtain proclamations as specific as possible, where matters will only be

investigated that relate directly to the allegations that have been received.

For long multi-year running proclamations (investigations), interim reports will be submitted to the

Presidency based on completed focus areas as per the schedule of the proclamation.

Non – Payment by some State

Institutions

• Provide regular investigations progress update to State Institutions to facilitate payment.

• Regular contact with CFO’s and Accounting Authorities of relevant State Institutions

Delay in finalizing civil matters • Re-establish the Special Tribunal

• Interaction with Deputy Judge Presidents to expedite set down of civil cases .

Implementation of referrals by

the NPA

• Signed Memorandum of Understanding with NPA which includes monitoring and evaluation

structure

Feedback from State

Institutions regarding the

implementation of referred

disciplinary actions and

systemic recommendations.

• The conclusion of MoU’s with DoJ & CD, Presidency and the NPA and the implementation of

monitoring and evaluation committees to ensure implementation of findings, recommendations and

proposed remedial actions.

Limitation in dealing with pre-

proclamation activities

• SIU has formulated legislative amendments which the DoJ & CD are processing more specifically

ensuring the promulgation of amendments which will cover pre-proclamation investigations

Un-even spread of

proclamations

• Improve regional business development efforts and stakeholder engagements. 80

81

CONCLUSION


The SIU will continue to pursue good

governance practices, excellent performance

and clean audit outcomes.


THANK YOU

ADV. ANDY J.L MOTHIBI

HEAD OF SPECIAL INVESTIGATING UNIT

www.siu.org.za

82

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