SIU presentation to Social Development Portfolio Committee 30 August 2006 Social Grant Investigation

Vision: Working together to rid society of corruption 2 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Summary Background on SIU Proclamation Broader DSD initiatives Key objectives of investigation Inter-Departmental cooperation Key focus areas Progress against targets Future targets

Vision: Working together to rid society of corruption 3 Mission: We are a state body that fights corruption through quality forensic investigations and litigation SIU methodology Similar to commission of inquiry President refers investigations by proclamation With power to institute civil litigation to recover or prevent losses of state property Do multidisciplinary forensic investigation Consist of forensic investigators, lawyers, accountants, analysts Special powers similar to Scorpions No power of arrest – work jointly with SAPS, DSO, NPA when evidence of crime

Vision: Working together to rid society of corruption 4 Mission: We are a state body that fights corruption through quality forensic investigations and litigation SIU Focus Provide one-stop service to government departments Concentrate on systemic widespread corruption Investigate corruption and maladministration Institute civil legal action to correct any wrongdoing Generate savings and cash recoveries Secure arrests and criminal convictions Prepare disciplinary hearings and testify Key emphasis on systemic improvements

Vision: Working together to rid society of corruption 5 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Working with Departments A major innovation has been to work closely with departments to deal effectively with corruption They use the SIU instead of the private sector Pay the SIU for the costs of the investigation Firm commitments from departments to invest R220m in fighting corruption during this year and next 2 years Enhance capacity to fight corruption

Vision: Working together to rid society of corruption 6 Mission: We are a state body that fights corruption through quality forensic investigations and litigation DSD initiatives to deal with grant fraud Losses estimated at R1.5 billion pa Minister increases public awareness Initiate amnesty process Introduce anti-fraud hotline Establish SA Social Security Agency ( SASSA ) Address gaps in Act and Regulations Strong commitment to combat problem SIU investigation – see below Fix systemic gaps

Vision: Working together to rid society of corruption 7 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Social Grant Proclamation Investigation initiated by the Minister and Department of Social Development ( DSD ) Proclamation published on 6 April 2005 to investigate Corrupt DSD officials Beneficiaries unlawfully receiving benefits 3 year cooperation agreement R22 million for 2005/06 for 80 staff R 43 million for 2006/07 for 160 staff by Dec 2006 R58 million for 2007/08 for 200 staff by Jul 2007 Currently 85 full-time and 21 part-time staff

Vision: Working together to rid society of corruption 8 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Inter-Departmental cooperation Part of one-stop service SIU conduct full forensic investigation assist departmental disciplinary hearings SAPS assist with arrest of suspects Scorpions focus on organised crime syndicates NPA delegate special prosecutors Funded through DSD Part of multi-disciplinary team DSD provide access to SocPen and information Interface with government & other databases

Vision: Working together to rid society of corruption 9 Mission: We are a state body that fights corruption through quality forensic investigations and litigation DSD cooperation model National steering committee: Consist SIU, DSD, SASSA and other agencies Identify priority areas Ensure inter-agency cooperation Alert other government depts. of irregular public servant beneficiaries Assess progress against targets SIU independent and objective agency

Vision: Working together to rid society of corruption 10 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Key objectives of investigation 1) Remove disentitled beneficiaries Initial focus on public servants 2) Increase deterrence through better public awareness, including prosecutions and other action To reduce current fraud by voluntary removals and To deter future fraud 3) Identify system gaps in systems 4) Prosecution of offenders 5) Disciplining public servants 6) Civil recovery of illegal benefits + interest

Vision: Working together to rid society of corruption 11 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Key focus areas Start with public servants Priority provinces: KZN, Gauteng, NW, Limpopo Mpumalanga, WCP, later ECP, FSP and NCP Will extend to private beneficiaries Also focus on vulnerable grants Child support (CSG), disability (DG), old age (OA), care dependency (CDG) More complex investigations Involvement of organised crime Ad hoc referrals Assist with skills development in SASSA

Vision: Working together to rid society of corruption 12 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Public Servants on Socpen ProvinceOAWVDGFCGComGIACDGCSGTotal EC FS GAU KZN LIM MPU NC NW WC Grand Total

Vision: Working together to rid society of corruption 13 Mission: We are a state body that fights corruption through quality forensic investigations and litigation

Vision: Working together to rid society of corruption 14 Mission: We are a state body that fights corruption through quality forensic investigations and litigation 1) Removal from SocPen public servants identified on Socpen entitled to social grants irregular beneficiaries public servants removed from SocPen Balance in process of removal Yearly value of pensions: R50.6m Present value of future pensions: R379m Already private beneficiaries identified Investigation recently started

Vision: Working together to rid society of corruption 15 Mission: We are a state body that fights corruption through quality forensic investigations and litigation 2) Deterrence A key objective is to deter fraud and to: Increase voluntary cancellations Reduce future fraudulent applications Results are measured by the increase in grants lapsing compared with same months in 2004/05: due to requests to cancel grants – code 48 due to non-collections for 3 months – code 52

Vision: Working together to rid society of corruption 16 Mission: We are a state body that fights corruption through quality forensic investigations and litigation No. of grants lapsing

Vision: Working together to rid society of corruption 17 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Value of lapsed grants

Vision: Working together to rid society of corruption 18 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Summary of lapsed grants Total increase in lapses 2005/06 compared to 2004/05 = /07 compared to 2004/05 = Increase lapses = Value of increase in lapses 2005/06 compared to 2004/05 = R m 2006/07 compared to 2004/05 = R m Value of increase lapses = R m Present value of future savings: R3.0 billion

Vision: Working together to rid society of corruption 19 Mission: We are a state body that fights corruption through quality forensic investigations and litigation 3) Systemic impact Identified systemic gaps in grants administration: Inadequate system checks in registration Lack of integration of SocPen systems Lack of review processes of expired grants Non-compliance with Standard Operating Procedures Application form and future income SASSA addressing gaps SIU developing database of irregular beneficiaries Will transfer SASSA end of project

Vision: Working together to rid society of corruption 20 Mission: We are a state body that fights corruption through quality forensic investigations and litigation 4) Prosecutions possible prosecutions of public servants prosecutions to Jul finalised, 770 convictions Charged with fraud or receiving benefit to which not entitled, resulting from Misrepresentation about income or employment status Failure to disclose change in financial circumstances Sentences - apply guidelines, vary from: Imprisonment of up to 3 years Fines: R500 - R suspended imprisonment Fully suspended sentences

Vision: Working together to rid society of corruption 21 Mission: We are a state body that fights corruption through quality forensic investigations and litigation 5) Disciplinary processes irregular beneficiaries will be referred to their host departments Individual departments have already taken some action DPSA is coordinating process and preparing guidelines Disciplinary process piloted in KZN Aim to prepare disciplinary files for departments this year

Vision: Working together to rid society of corruption 22 Mission: We are a state body that fights corruption through quality forensic investigations and litigation 6) Recovery of debt Slow and cumbersome process to compel debtors to pay Have to obtain a civil judgment in magistrate’s court Execution order if do not pay Cannot order person to pay more than they can afford Require evidence to refute version of debtor SIU tries to expedite process by recovering from those who are willing to start repaying Formalise agreement through Acknowledgement of Debt Made a condition of sentence in some cases

Vision: Working together to rid society of corruption 23 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Acknowledgement of Debt Formalise agreement through Acknowledgement of Debt ( AOD) Expedites litigation process AOD is for amount willing and able to pay Negotiate but cannot compel to go beyond what they are willing to pay or can afford It is not a settlement, ie no debt or interest is written off Only Accounting Officer can write off debt eg if not economical to collect Does not preclude DSD or SIU to take matter to court

Vision: Working together to rid society of corruption 24 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Collection of debt public servants have signed AODs Total value = R20.6 million Collected R2.4m thus far (R1.3m since Apr 06)

Vision: Working together to rid society of corruption 25 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Repayment periods Average repayment = 33 months 65.8% 3 years or less 92.5% 5 years or less 97.5% 8 years or less 2.5% More than 8 years From an SIU review, it is clear that in few cases, people earning substantial salaries are paying small amounts over excessive periods Will attempt to re-negotiate – else take legal action

Vision: Working together to rid society of corruption 26 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Future guidelines for AODs Prepared draft guidelines for future If unable repay within 5 years, will assess debtor’s financial circumstances Allow extended repayment period only in exceptional cases SIU and DSD considering proposed amendments to allow deduction from pensions

Vision: Working together to rid society of corruption 27 Mission: We are a state body that fights corruption through quality forensic investigations and litigation Future targets Targets for 2006/07 Removal of grants grants To value of R500 million prosecutions per year files for disciplinary action this year AODs signed to value if R30 million Collect R5m Assisting with training of SASSA staff