SIU Presentation to Portfolio Committee: Justice and Constitutional Development 17 October 2013 Annual Report 2012/2013 NM Justice and Constitutional Development(SIU)

Presentation Outline Justice and Constitutional Development(SIU) Preface and Introduction Strategy Overview 3. SIU Investigations Performance over the FY Outcomes on key investigations Civil Litigation Matters Key Operational Challenges Human Resources Overview HR Statistics Employment Equity Status Financial Overview Audit Outcomes Irregular Expenditure MTEF Concluding remarks Justice and Constitutional Development(SIU)

SIU presentation to PC on Justice and Constitutional Development Preface and Introduction Introducing the SIU Team Introductory remarks by HoU on the need for a new vision for the SIU following the amendments to the SIU Act in October 2012 Presentation on the SIU 2012/2013 FY performance Strategy Operations Finance Human Resources Audit 2013 Concluding remarks by HoU Questions 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

Strategy Overview The current SIU Strategy is outlined in two key strategy documents: Five year Strategic Plan: 2011 – 2016 Annual Performance Plan: 2012/2013 This Strategy was signed off by the Minister as the Executive Authority In line with its pre-amendment mandate, the Unit identified its strategic objective as: To increase the impact of SIU’s forensic services in the public sector by completing investigations successfully This strategic objective was to be supported by the following seven enablers/drivers: To achieve optimum institutional form To foster excellent cooperation with our law enforcement partners and stakeholders To develop and effective, accountable and engaging leadership To secure appropriate capacity and funding To align and improve systems and processes To invest in appropriate technological capacity To build an engaged, diverse and competent SIU The Unit’s strategic objective is aligned to Government’s Outcomes: Outcomes 3 - All people in South Africa are and feel safe Outcomes 12 - Efficient, effective and development oriented state

SIU presentation to PC on Justice and Constitutional Development SIU Investigations 25 active proclamations with seven extensions as per “Annexure A” 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development Performance over FY 2012/2013 Performance Measures   2011/2012 2012/13 % achieved 2012/2013 Savings for financial year Target R 30m R 35m 163% Actual R 15m R 57m Preventions of future losses R 200m R 210m 180% R 169m R 378.2m Cash recoveries 490% R 224m R 171.6m Value of procurement matters where irregularities were found R 20 000m R 1 000m 263% R 5 066m R 2 637m Evidence prepared for use in civil litigation 2 500 3 500 102% 6 412 3 570 Evidence prepared for other remedial actions 3 000 2 000 173% 5 431 3 454 No of completed investigations contributing to JCPS Output 5 20 30 127% 15 38 Evidence prepared for use in criminal action 50% 2 499 997 Evidence prepared for use in disciplinary action 24% 2 731 850 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development Performance FY 2012/2013 cont… “Value of procurement matters where irregularities were found” Indicator measures the face value of the procurement contracts that are being investigated where an irregularity has been identified. Indicator changed for 2013/2014 financial year to measure the “value of financial misconduct”. accurately reflect the value of irregularities within procurement matters Identified irregularities in contracts with an aggregated value of R 2.6 billion Actual value of the irregularities in these contracts amounted to approximately R 1.4 billion 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development Outcomes on key investigations 1. National Department of Public Works Procurement processes, mismanagement of contracts & leases and financial misconduct 12 Section 5(7) Reports handed to the Department 35 Systemic Recommendations 6 Disciplinaries against DPW officials recommended 7 Criminal matters referred to National Prosecuting Authority (NPA) 2. Department of Public Works (KZN) Procurement processes, mismanagement and financial misconduct related to contracts awarded 13 Criminal matters referred to NPA The value of irregularities identified amounts to R542.5 million Value of corrupt payments made to DPW official amounts to R134 000 Non delivery on 37 projects amounting to R7.6 million 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development Outcomes on key investigations cont… 3. Tshwane Municipality Supply Chain Management, Service Delivery, Governance, Financial Misconduct, Waste Management and Recruitment irregularities Identified collusion in the awarding of several contracts amounting to R 77.7m Established that an official received gratification to the value of R 16m Established that R 286m was paid for work partially completed on Soshanguve and Giant stadiums Irregular Expenditure is R340m 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development Outcomes on key investigations cont… 4. SASSA (Social Development and ICT contracts) Procurement processes, mismanagement and irregular awarding of beneficiary grants Identified irregularities in 4 contracts with a possible civil recovery of R 128m Actual savings of R 47m following the cancellation of Phase 1 of ICT contract Prevention of future losses of R 222m Total cases analysed: 865 Convictions: 855 Removals from the Social Pensions System: 3 454 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development Outcomes on key investigations 5. National Treasury Limpopo Intervention: 41 disciplinary and 5 arrests on the Roads and Transport (GAAL) amounting to R15 million 6. Eastern Cape Department of Health Procurement irregularities amounting to R2.9m 39 cases of tax irregularities amounting to R10.8m referred to SARS for further investigation 61 cases of fraud, forgery and uttering amounting to R5.1m referred to 7. Ekurhuleni Municipality Established payments amounting to R35m for partially or inferior work for the upgrading of 20 sporting fields during 2010 world cup 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

Civil Litigation Matters Nature of irregularity Potential forum Department/Entity concerned Proclamation Value of Contracts Potential legal action 1. Corruption, fraud, secret profit, SCM irregularities Special Tribunal (or High Court) Tshwane Municipality R62 of 2010 R77 m Civil action based on contract and/or delict 2. Corruption, Fraud, SCM irregularities Department of Public Works R38 of 2010 R637 m Civil action based on contract and/or delict / Application for declaratory orders 3. Corruption, SCM irregularities, Non-compliance with contractual terms SAPS R42 of 2010 R900 m 4. Money illegally transferred by consultant Already finalized in the North Gauteng High Court Department of Water Affairs R54 of 2012 R2.8 m Civil action based on theft 5. Ring fenced funds used by Municipality for daily expenses Arbitration Sunday River Valley Municipality R7.3 m Intergovernmental Dispute resolution 6. Fraud, misrepresentation Department of Rural Development and Land Reform R8 of 2011 R3.9 m Civil action to set aside an administrative award 7. Maladministration Limpopo Department of Cooperative Governance, Housing and Traditional Affairs R7 of 2007 R25.3 m Intergovernmental Dispute Resolution 8. Non-compliance with SCM requirements Already settled PSETA R65 of 2012 R27.5 m Civil action based on contract

SIU presentation to PC on Justice and Constitutional Development Reports submitted to the Presidency 30 April 2013: - 20 Presidential Closure Reports submitted as per Annexure B 3 June 2013: - 9 Presidential Closure Reports submitted as per Annexure C 12 Reports currently being drafted as per Annexure D 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development Key Operational Challenges Need more in-house specialist skills, such as forensic accountants There is a greater need for specialised expertise on procurement investigations such as: Quantity Surveyors Engineers Corporate Governance Experts Business Analysts Develop a stronger civil litigation capability to meet the growing demands on our procurement matters Need to establish Special Tribunals in key centres Need to develop a stronger technological infrastructure in Operations Improve our operational processes and reporting mechanisms Enhance the operational focus towards stronger civil legal outcomes Increase the impact of our operations 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development Human Resources Overview Prioritized the filling of long outstanding vacancies 78 appointments and/or promotions Converted 104 temporary workers to fixed term contract employees Resulted in strengthening the operational and project administrative support Senior management appointments on track for finalizing in this financial year Employee relations continues to improve 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

HR Statistics Employment and vacancies 3 Programme 2011/2012 No. of Employees 2012/2013 Approved Posts 2012/2013 Vacancies % of vacancies Business Management 13 21 18 3 14.3% Business Operations 459 548 465 83 15.15% Business Support 61 100 Total 533 669 583 86 12.86% Reasons for staff leaving Reason Number % of total no. of staff leaving Death 1 3.1 Resignation 22 68.8 Dismissal Retirement Ill health Expiry of contract 7 21.9 Other Total 32 100 Note: The resignations were primarily motivated by better opportunities elsewhere.

Equity Target and Employment Equity Status Levels MALE African Coloured Indian White Current Target Top Management - Senior Management 1 9 3 6 12 Professional qualified .53 84 14 13 20 55 72 Skilled 90 139 10 25 22 30 Semi-skilled 29 2 Unskilled Total 173 255 27 43 32 44 73 120 Levels FEMALE AFRICAN COLOURED INDIAN WHITE Current Target Top Management - Senior Management 2 8 1 4 Professional qualified 18 59 6 5 9 35 45 Skilled 41 64 12 17 23 30 65 Semi-skilled 86 38 7 3 10 Unskilled 13 Total 159 182 15 24 36 75 123

SIU presentation to PC on Justice and Constitutional Development Summary on EE Status The delays in the 2010 recruitments led to a lag in achieving the EE Plan targets In 2012/13 Unit made 78 appointments, which improved the EE picture in the middle management and professionally qualified categories. Challenges remain at the Senior Management level, where positions remain vacant and previous recruitments could not yield appointments, e.g. for Head: Stakeholder Management, Head of Finance, Projects Director. We need to improve senior managerial representativity Female senior managerial representativity is at 15% 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development Financial Overview Financial Budget 2012/13 Actual Variance R’000 Income Government Grant 340 713 340713 Project income 75 122 124 642 -65% CARA Grant 28 497 100% Other Income 3 815 Total Income 415 835 497 667 Expenditure Employee Costs 263 205 235 558 11% Travel and Accommodation 17 359 15 416 13% Depreciation 22 454 17 473 29% Debt Impairment 29 869 -100% Finance Costs 7 Other Costs 112 815 116 697 -3% Total Expenditure 415 020 Surplus 82 647 Cash roll over 81 168 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development Audit Outcomes 2012/13 2011/12 2010/11 Type of Opinion Unqualified Number of emphasis of matters 1 2 The emphasis of matter as a result of restating prior year errors, which were corrected in the current financial year. Errors include: Employee costs; Rental paid; Intangible assets; Re-assessment of property, plant and equipment Notwithstanding the reduction in the number of emphasis of matters structured risk interventions are in place to achieve no emphasis of matters in following financial years. Progress on corrective action on 31 AG findings  33% of findings addressed and confirmed by Internal Audit. 24% of findings Work-in-Progress Remainder of findings to be addressed before the end of the financial year 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

SIU presentation to PC on Justice and Constitutional Development AG findings on Performance Information In Audit 2011/12 the AG makes a finding that SIU should report on eight strategic objectives alternatively obtain express approval from Executive Authority for one strategic objective. SIU applied in November 2012 for such express approval . In the absence of such express approval the SIU advice to report on all eight strategic objectives The implications of this is that SIU reports were not fully aligned to its the strategic plan. However key performance indicators were in place to measure the strategic objectives and drivers This gap resulted in a negative opinion on the performance information for Audit 2012/13. The strategy objective (s) will be aligned to the October 2012 amendment of the SIU Act. 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

AG findings on Financial Information Corrections made after submission on 31 May 2013 to the AG Irregular Expenditure condonation being obtained Wasteful and Fruitless: Forensic report on Memex procurement matter being finalised Rental over- payments of R2 million recovered Introduced SCM compliance checklist to avoid recurrence

Irregular Expenditure & Fruitless and Wasteful Irregular Expenditure: R 42 799 417 Incident 2011 2012 2013 Forensic consultant procured outside SCM process 166 862 1 864 825 - Rendering Services not explicitly authorised - GEMS 243 803 1 267 402 205 281 Expenditure on Temporary employees 13 672 771 15 554 825 8 651 177 Procurement of Forensic Data Analysis 822 822 Non-compliance to SCM process- VIP Training 13 338 Non-compliance to SCM process- Accommodation / Repairs and Maintenance 337 077 Total 14 083 436 19 509 108 9 206 873 Operational Cost on rental agreement has already been recovered Fruitless and Wasteful: R 2 835 165 Incident Prior Years Current year 2012/13 Procurement of Forensic Data Analysis Software 822 822 Operational Cost on rental agreement 1 616 472 395 871 Total 1 218 693

SIU presentation to PC on Justice and Constitutional Development Medium Term Expenditure Framework Audited Outcome Revised Estimates Medium-Term Estimates 2010/11 2011/12 2012/13 2013/2014 2014/15 2015/16 2016/2017 Income R’000 Grant Received 171 089 323 191 369 210 305 859 296 813 313 098 329 692 Project Income 141 151 172 481 124 642 226 616 338 328 360 000 380 000 Other Income 1 436 1 665 3 816 3 814 3 852 3 891 Total Income 313 676 497 337 497 668 532 475 638 955 6769 50 713 538 Expenditure Employee Costs 182 142 208 726 235 558 245 460 372 699 408 478 447 691 Investigative Consultants 56 586 149 232 46 380 82 924 87 070 91 423 95 994 Travel and Accommodation 22 280 25 829 15 416 32 581 34 210 35 920 37 716 Depreciation 9 934 16 578 17 473 25 836 16 954 25 940 Finance Costs 50 3 7 Other Costs 67 088 97 945 100 187 108 891 128 062 124 175 106 197 Total Expenditure 338 080 496 361 415 021 495 692 638 995 676 950 Surplus/(deficit) (24 404) 976 82 647 36 783 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

Medium Term Expenditure Framework cont… Breakdown of Expenditure per budget Programme Audited outcome Revised Estimate Medium-term Estimate R thousand 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/2017 Business Support 70 997 104 236 109 227 121 890 134 181 142 160 149 852 Business Management 13 523 19 854 25 229 23 217 25 558 27 078 28 543 Business Operations 253 559 372 271 280 564 435 320 479 216 507 712 535 187 Total Expenditure 338 079 496 361 415 020 580 427 638 955 676 950 713 583

SIU presentation to PC on Justice and Constitutional Development Concluding remarks by HoU HoU outlines some of the key next steps for the SIU 17 October 2013 SIU presentation to PC on Justice and Constitutional Development

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