Portfolio Committee on Justice & Constitutional Development 28/11/2017 Presentation to Portfolio Committee on Justice & Constitutional Development 20 February 2008

Summary Threats to Departments Integrated forensic solutions 28/11/2017 Threats to Departments Integrated forensic solutions About the SIU SIU mandate and legal scope Budget growth Project profile Major project successes Performance review Project successes Key success drivers Building capacity Challenges Slide index: Will report on: SIU focus 2004/5 FY ENE targets Achievement against targets Current priorities - Developed 13 strategic objectives reviewed annually wrt: 4 key areas BSC - Key S/O report on: - project profile/volume (SP of choice) - joint investigations - Major impact by SIU - DSD, DoT, DCS, ECLG ENE targets 2006/7 Key objectives for next FY

Threats to Departments 28/11/2017 Departments facing combined threats of fraud, corruption and maladministration Also challenge to protect integrity of systems and processes, eg social grants, service delivery, issuing drivers’ licences, procurement, tax collection Both opportunistic and more organised exploitation of system gaps Maladministration as much of a challenge as purposeful fraud / corruption Major problem of legislative compliance often resulting in loss and weak delivery, eg PFMA, MFMA compliance According to AG, 30% of Departments had expenditure-related qualifications

Integrated forensic solutions 28/11/2017 Initial detection of fraud, corruption and maladministration as a result of escalating loss Dealing effectively with the problem requires interface between key agencies and Departments eg AG, SARS, DGs, SCOPA, Law Enforcement Agencies (LEA) Critical part of cleaning up problem is a complete forensic solution: Forensic audit and investigations Remedial legal action: civil, criminal and disciplinary Systemic improvements Traditionally forensic solution primarily provided by private accounting firms Result in outsourcing of forensic services by Departments at great cost – not effective In recent years, SIU able to provide complete forensic solution to State Institutions – major counter to private sector

About the SIU Started out: Heath Commission 1995 Early years: primarily criminal investigators and lawyers – strong LEA culture Last 5 years: developed multi-disciplinary forensic capability: Forensic investigators, lawyers, forensic accountants, cyber forensics experts, data analysts and project management professionals Guided by a vision, mission, strategic objectives and key organisational values Definite focus on corruption, fraud, maladministration, misconduct causing losses to State Success defined through statistical and systemic impact

SIU mandate & legal scope 28/11/2017 Major functions of the SIU: investigate corruption and maladministration institute civil legal action to correct any wrongdoing Primary purpose of SIU: enable state to recover money lost as a result of unlawful or corrupt action SIU also able to: use civil law to prevent huge losses and facilitate systemic improvements eg set aside contracts Special powers: subpoena, search, seizure and interrogate witnesses under oath – NOT power of arrest Cooperation: SAPS, DSO and NPA when encounter criminal conduct Provide: complete forensic service and facilitate criminal legal action to Departments

Budget increases Past years Est MTEF period Audit Est Est 04/05 05/06 28/11/2017   Past years Est MTEF period Audit  Est Est  04/05 05/06 06/07 07/08 08/09 09/10 10/11 R’m Total Income 59.2 101.5 142.7 229.8 257.6 299.5 316.9 Govt grant 37.2 48.9 55.6 103.1 116.3 149.4 158.4 Projects income 22.0 52.6 87.1 126.7 141.3 150.1 158.5

Govt grant vs project Income

Funding growth 28/11/2017 Over past 4 years, client Departments’ contributions have funded most of SIU’s growth (from 1% to over 61% in 06/07) SIU able to build good track record of performance and delivery through partnership funding Now also a four fold increase in treasury allocation from R37.2 to R158.4 over 6 years NT investment indicates SIU’s emerging role as forensic investigation service provider of choice for the state. Proposed amendments to PFMA Also reverses accounting firms’ hold on public sector

Project profile Project Focus Area Basic Service Delivery 28/11/2017 Project Focus Area Basic Service Delivery Systemic Problems Process Abuses Other Service Delivery Project Social grants Special pensions Housing Procurement Tax fraud Municipal forensic matters Provincial gov’t department Drivers’ licences Medical Aid fraud

Major project successes April – December 2007 28/11/2017 DOT – audited 317 221 licences and found 32 066 non-compliant DSD – saved R298 million; R3.1 billion in preventative savings; R38 million in recoveries; facilitated 3 386 prosecutions and 2 861 convictions DCS –recovery of R5.6 million in 1 matter; 10 systemic recommendations DOH – identified over 31 259 Govt officials irregularly receiving subsidy SPF – completing audit of 13 343 beneficiaries

Procurement 36 procurement investigations referred to SIU nationally by National Departments Provincial government – EC, MP, LI, KZN, WC Parastatals – ie MEGA Local Government Range of investigations Fraud – cover-quoting, BEE fronting, other fraudulent misrepresentations made by service providers Breach of contract Corruption Challenges Procurement investigations complex and time consuming Building sufficient capacity to deal with volume of investigations referred

Provincial matters SIU offices in 7 Provinces Key achievements 12 regionally based investigations Local government investigations in 4 provinces Key achievements Mpumalanga: MEEC / MEGA KZN: Irregular investment of Municipal funds; DOT cost centres; WPU safe houses; Housing Subsidy Scheme Fraud; Procurement irregularities and ghost workers in Health; Stationery / textbook procurement irregularities in Education. Free State: 5 new Proclamations – provincial and local govt Eastern Cape: Ongoing Department of Local Government investigation and 17 provincial department referrals

SIU achievements ENE targets and achievements for 06/07 28/11/2017 SIU achievements ENE targets and achievements for 06/07 Performance Measures 2006/07 2007/08 Target Actual Actual (31 Dec) Evidence prepared for use in civil litigation (AODs) Evidence prepared for use in criminal prosecutions Evidence prepared for use in disciplinary proceedings Evidence prepared for use in other remedial actions 5 025 2 000 2 300 45 000 4 829 3 302 7 551 95 846 10 000 4 000 7 000 150 000 7 197 3 670 6 664 99 127

ENE targets & achievements 28/11/2017 ENE targets & achievements Performance Measures 2006/2007 2007/08 Target Actual (Audited) (31 Dec) Savings Preventions Cash Recoveries R 80m R1 250m R 20m R 231m R 1 759m R 34m R 160m R 2 000m R 40m R 316m R3 100m R 48m Totals R1 350m R2 024m R2 200m R3 464m

Key success drivers Innovation in delivering services, eg 28/11/2017 Key success drivers Innovation in delivering services, eg Focus on widespread small to medium corruption Delivering a integrated service to departments Obtaining funding from Depts. for investigations Excellent relations with other law enforcement agencies An effective national presence Project management approach to drive excellent delivery HR Development through innovative programmes Tough internal integrity program – ‘clean’ staff Emphasis on good governance – clean audit report

Building capacity 28/11/2017 Key challenge is building sufficient capacity without overburdening support structures Attracting experts from private sector and reverse public sector ‘brain drain’ Setting benchmark for new type of forensic investigator who can tackle complex investigations in multi-disciplinary organisation Implementation of Organisational Development (OD) Establishing Centres of Expertise in legal, accounting and computer forensics Training and development – model is being looked at for possible wider roll-out in future

Investigative capacity 28/11/2017 Investigative capacity

Employment equity

Cooperation SIU provides range of forensic services but: fight against corruption is not preserve of a single entity works with other law enforcement agencies, leverages legal capacity and reaches targets as part of a wider team also maintains partnerships with Provincial and National Departments, SAPS, NPA, AG, DSO and SARS

Overall challenges Rapid growth 28/11/2017 Overall challenges Rapid growth Some key investigations present unique challenges Lack of movement on proposed legislative changes Proclamation process cumbersome

Conclusion SIU – excellent year in demanding circumstances 28/11/2017 SIU – excellent year in demanding circumstances delivered outstanding results on existing projects – savings of R 374 million; systemic improvements in key departments effective implementation of ambitious new projects OD process caters for future growth – foundation for bigger and more effective organisation Partnership collaborations key to successful SIU profile Return on investment supports greater govt investment through increased budget Negotiate legal hurdles through legislative amendments Vital to proliferate success of SIU model

Thank you