Portfolio Committee on Justice and Constitutional Development Presentation to Portfolio Committee on Justice and Constitutional Development 3 May 2007 SIU presentation - 3 May 2007

Summary SIU mandate and legal scope Threat of corruption to Departments Building capacity Budget growth Project profile and update Performance review Good Governance Building SIU and OD process Key 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 SIU presentation - 3 May 2007

SIU mandate and legal scope The major functions of the SIU are to: Investigate corruption and maladministration Institute civil legal action to correct any wrongdoing The primary purpose of the SIU is to enable the state to recover money that it has lost as a result of unlawful or corrupt action But Act also lists other purposes, eg investigating maladministration may not result in recoveries but often lead to prevention of huge losses or the need to facilitate systemic improvements SIU presentation - 3 May 2007

Threat of corruption to Departments Departments facing combined threats of fraud, corruption and maladministration Also challenge to protect integrity of systems and processes, eg social grants, service delivery, issuing driving licenses, procurement, tax collection Either opportunistic or more organised exploitation of system gaps Initial detection usually through an escalating loss Difficulty to deal with all aspects of corruption due to multitude of role players SIU presentation - 3 May 2007

Dealing effectively with corruption Dealing effectively with corruption and maladministration requires integrated solutions: Forensic investigations Litigation (both criminal and civil) Systemic improvements Removing corrupt officials from office SIU mandate allows it to provide integrated forensic solutions and facilitate actions falling outside its mandate “Uniqueness of the SIU is that it operates in a criminal environment using civil legal remedies… also working closely with other LEA where it comes across criminal activity” (Adv Johnny de Lange, Deputy Minister DOJ&CD) SIU presentation - 3 May 2007

Building capacity Key challenge is to build sufficient capacity to deal with fraud, corruption and maladministration Still massive outsourcing of investigations to private sector due to lack of capacity Increased recognition that SIU ensures effective action against corruption through integrated solutions delivers excellent value for money to the state has a vital role to play in dealing with corruption Reflected in significant increase in budget from Treasury SIU presentation - 3 May 2007

Budget Increases Past years Estimate Outcome MTEF period Audit Estim   Past years Estimate Outcome MTEF period Audit  Estim Estim Estim  03/04 04/05 05/06 06/07 07/08 08/09 09/10 R'000 Total Income 40,2 59,5 101,5 139,7 203,7 231,9 270,4 Government grant 25,5 37,2 48,9 55,6 93,1 116,2 149,5 Projects income 14,7 22,3 52,6 84,2 110,7 115,6 120,9 SIU presentation - 3 May 2007

Funding growth Over past 4 years most of SIU growth funded innovatively through contributions from Departments An additional R84m over past 4 years (R0.5m to R84m) Treasury budget increase of R33m (R23m to R56m) Will be significant reversal of this over next 3 years: Dept funding will level off: increase by est R36m NT budget will increase by R94m: R 56m in 05/06 to R149m by 09/10 This is important as SIU should not be too reliant on funding from Departments SIU presentation - 3 May 2007

Increased investigative capacity Budget increases enabled Rapid increase capacity 67 in 2001 550 currently 1 000 by 09/10 Creation of effective national presence 1 office in ECP to 7 provincial offices SIU presentation - 3 May 2007

Project profile Current projects include: Social grants Special pension grants Driving licenses Procurement Municipality related forensic matters Provincial government departments Housing fraud Medical Aid Fraud Tax fraud SIU presentation - 3 May 2007

Ongoing projects 14 proclaimed investigations Incl 4 new in past FY 74 pre-investigations 5 nationally based investigations 40 regionally based investigations 19 Departments involved SIU presentation - 3 May 2007

North West Province SLA Recently concluded SLA with NWP Steering Committee established to screen all proposed forensic investigations Refer relevant matters to SIU for investigation SIU will assist with internal investigations or facilitating LEA involvement on other matters Ensure redress of fraud, corruption and maladministration SIU presentation - 3 May 2007

Projects Update Department of Social Development Start investigation in April 2005 into: Corrupt SD officials Beneficiaries unlawfully receiving benefits Start with 43 705 public servants 21 588 irregular public servant beneficiaries identified Recommended to be removed Extended to private beneficiaries 566 542 private beneficiaries being assessed 60 060 irregular beneficiaries confirmed SIU presentation - 3 May 2007

Projects Update – DSD (cont) Achievements Performance Measure  2006/07 Target Achieved Achieved from inception to Date Cash recoveries R 24 million R 26 million R 39 million Actual Savings R 40 million R 213 million R 493 million Preventative savings R 1 billion R 1,8 billion R 4,9 billion Removals from SocPen 64 221 81 648 Lapsed grants 7 347 102 882 Disciplinaries prepared 7 000 4 677 6 797 Prosecutions 2 400 2 675 3 307 Convictions 1 800 2 215 2 570 SIU presentation - 3 May 2007

Projects Update – DSD (cont) Impact and challenges Raised awareness of DSD efforts tackling grant fraud Lead to strong deterrence factor Removed huge numbers of disentitled beneficiaries Improved processes Result in improved public rating Major challenges: Recovering illegal benefits Accessing data from different databases Cumbersome process of removing disentitled beneficiaries SIU presentation - 3 May 2007

Projects Update Department of Transport Project started on 1 March 2005 3 year project recently extended for another 3 years Currently focusing on: Irregular issuing of driving licences Conversion of forged driving licences Key Challenges: Cumbersome process of cancellations Systems and process gaps at DLTCs Accessing information on foreign driving licenses SIU presentation - 3 May 2007

Projects Update DOT: Achievements to date Performance Measure Targets 2006/7 Achieved Achieved to date Files uplifted from DLTCs 318 708 1 145 645 Files audited 716 144 784 816 Non-compliant licenses found 17 550 30 553 42 229 Disciplinaries prepared 150 180 242 Criminal investigations 1 182 1 341 2 366 Arrests 700 606 1 014 Prosecutions instituted 431 621 Convictions 383 548 777 320 files have been scanned/uplifted. 91113 files have been captured. 46 768 files have been analysed. 10 240 invalid licences have been identified (7912 licences) and (2328 conversions). 1 985 invalid licences/conversions have been referred to the DOT for action. 1 294 criminal matters are under investigation. 359 private individuals and 31 officials have been arrested. 130 prosecutions have been instituted and 105 convictions obtained. 34 disciplinary files have been forwarded to the DOT/relevant municipal authority for action. SIU presentation - 3 May 2007

Project Update – DoT (cont) 55 DLTCs audited 9% of 784 816 audited driving licenses issued irregularly 23 216 non-compliant licences identified and referred DoT 30 officials arrested – mainly for selling licences 495 arrests for forged foreign conversions 251 SA citizens submitted forged foreign conversions SIU presentation - 3 May 2007

Projects Update Special Pensions Fund Investigation started 7 December 2006 with focus on: The unlawful payment of special pensions to disentitled beneficiaries Conduct of Board members that may contributed to irregular payments SIU will also look at systemic gaps in the processing, authorising and payment of special pensions SPF budget R320 million Currently auditing all 16 000 beneficiaries Running applications through other databases Verifying beneficiaries biographies SIU presentation - 3 May 2007

Projects Update - SPF (cont) Focus areas: Identifying fraud typologies Concentrating on clear frauds Major impact to remove disentitled beneficiaries from database SPF addressing process gaps Major challenges: Lack of compliance with provisions of SP Act Political sensitivity Another 12 000 new applications to deal with Concern over integrity of some officials SIU presentation - 3 May 2007

Projects Update Dept of Correctional Services Investigation started August 2002 for initial 3 years Project extended for further 3 years Current focus on: Procurement matters – 17 under investigation Pharmacy procurement Asset management Medical Aid investigation yielded R3.4 billion prevention of future losses in medical aid SIU presentation - 3 May 2007

Projects Update – DCS (cont) Procurement Range of investigations - cover-quoting, fronting, breach of contract, and corruption 17 current investigations (3 corruption) Achievements Recovery of R 6,9 million in 1 matter 5 criminal referrals for collusion with contractors 13 systemic recommendations SIU presentation - 3 May 2007

Projects Update – DCS (cont) Pharmacies 516 disciplinary recommendations 64 global systemic recommendations Asset Management 5 disciplinary recommendations R 362 000 recovered Other recoveries Medical Aid – R 1,1 million SIU presentation - 3 May 2007

Projects Update – DCS (cont) Challenges New, wider proclamation required Procurement investigations complex and time consuming Delays in obtaining FMS / BAS payment information from DCS SIU presentation - 3 May 2007

Projects Update Dept of Housing Previous, ongoing investigations: irregular awarding of housing subsidies, housing fraud in relation to low cost housing schemes and maladministraton of funds in 6 provinces Investigate widespread corruption in housing subsidy scheme in KZN Fraud committed by contracted conveyance attorneys in partnership with criminal syndicates Pre-investigations have identified over 1 500 government officials who have irregularly received a housing subsidy SIU presentation - 3 May 2007

Projects update (cont) - DoH New national proclamation 25 April 2007 Focus areas of new investigation: Abuse of the housing subsidy system Non-delivery on contracts Conveyancing fraud Conduct by officials in the administration of schemes and payment of housing funds DoH funds 50 staff, SIU 20 SIU presentation - 3 May 2007

SIU Achievements ENE targets and achievements for 06/07 Performance Measures 2005/06 2006/07 Target Actual Evidence prepared for use in civil litigation Evidence prepared for use in criminal prosecutions Evidence prepared for use in disciplinary proceedings Evidence prepared for use in other remedial action 40 800 660 50 000 2 133 1 263 666 27 758 5 025 2 000 2 300 45 000 4 829 3 302 7 551 95 846 SIU presentation - 3 May 2007

ENE Targets and achievements Performance Measures 2005/06 2006/07 Target Actual (Audited) Actual (est) Savings Preventions Cash recoveries R 150m R 850m R 40m R 299m R 3 270m R 13m R 80m R 1 250m R 20m R 231m R1 759m R 34m Totals R1 040m R3 582m R1 350m R2 024m 2007/08 Target R 40m R 2 000m R 160m R2 200m SIU presentation - 3 May 2007

Good Governance Good governance structures mean increased accountability – to President, Parliament and clients Integrity of investigations and staff is vigorously maintained – Internal Integrity Unit First completely clean AG report for 2005/6 with no emphases of matter A strong management chain ensures SIU’s strategic objectives work towards fulfilling mandate SIU presentation - 3 May 2007

Building SIU & OD Organisational Development process started late 2006 Despite increasing success want to perform better Also bigger demand for services in different forensic markets Finalised design of new structure and operating model Implementation to start in June 2007 SIU presentation - 3 May 2007

Overall Challenges Rapid growth Some key investigations present unique challenges Lack of movement on proposed legislative changes Proclamation process cumbersome SIU presentation - 3 May 2007

Conclusion SIU had an excellent year in very demanding circumstances Delivered outstanding results on existing projects Effective implementation of ambitious new projects While coping with challenges of growing rapidly Completed design phase of ambitious OD process to cater for future growth Laid foundation for a much bigger and more effective organisation in the future SIU presentation - 3 May 2007