1. SIU Presentation to Portfolio Committee: Justice and Correctional Services 21 October 2014
Annual Report 2013/2014

2. Presentation Outline
1. Introduction 2. SIU Investigations 2.1 Performance over the FY 2.2 Key Investigations 3. Human Resources 4. Financials 4.1 Financial Results Overview 4.2 Audit Outcomes 4.3 Section 55 (2) (b) (i) of the Public Finance Management Act (PFMA) read with Treasury Regulation Key Operational Challenges 6. End

3. Performance Over the Financial Year
Investigations
For the period 2013/14:
7 new proclamations were issued.
30 Presidential reports were submitted.
Outcomes 2013/14
The SIU exceeded six of its nine targets for the financial year.
The six achieved were:
Value of potential cash recoverable: R261m
Actual value of cash recovered: R75.8m
Value of expenditure in procurement matters where irregularities have been identified: R1.3bn
Matters referred to the prosecuting authority: 273
Matters prepared for civil litigation: 1 338
Matters referred for disciplinary action: 326

4. Key Investigations
1. National Department of Public Works: Prestige project situated at Nkandla, KZN: Proclamation R59 of 2013
Investigation completed and final report submitted to the President.
There is one civil case for R155 million in court.
12 disciplinary “dockets” were handed to the Department for action and disciplinary proceedings are currently being conducted.
4 criminal matters were referred to the prosecuting authority for financial misconduct.
9 cases referred to SARS (submission of illegal tax clearance certificates).
2. Universal Service and Access Agency of South Africa (USAASA): Proclamation R20 of 2014
Investigations still on-going.
An urgent application to set aside the appointment of the CEO is set to be heard in court.

5. Key Investigations cont…
3. Media Corner: Proclamation R10 of 2014.
An application has been brought in the North Gauteng High Court for declaration of invalidity of a contract to the value of R 756 million.
Due to the intervention of the SIU, the abovementioned application will seek to ensure that the matter is heard in the High Court rather than arbitration proceedings provided for in the contract.
4. The Gauteng Health Department matter: Proclamation R21 of 2010
Third parties sought arbitration in a claim for R1,3 billion. The SIU provided the Department with evidence to successfully resist the claim.
The matter has been referred to the Asset Forfeiture Unit (“the AFU”) for further action.

6. Key investigations cont…
Potential further matters for civil proceedings:
At least ten (10) further matters have been identified where SIU investigations have produced evidence that could result in civil litigation being instituted in the near future.
These matters are at an advanced stage and will go to external counsel for direction as to the institution of civil proceedings.
Considerable amounts of money are involved in these matters.

7. Human Resources
The SIU had a total staff complement of 564 as at 1 April 2014.
Operational staff: 445
Non operational staff: 119
29 staff left the SIU and 10 new appointments were made.
The SIU contracts in specialist skills when needed, for example Forensic Lawyers, Quantity Surveyors, Architects, Security Experts and Engineers.
To date the SIU has contracted 14 lawyers who assist the complement of 15 lawyers permanently employed by the SIU.
The SIU has one corporate lawyer

8. Financial Results Overview
N1 – This represents the interest earned on a positive cash balance.
N2 – The increase was mainly due to the cost of living adjustment to salaries.
N3 – The 34% decrease is influenced by the R41.3m reduction in use of consultants as well as R9.1m reduction in depreciation.
2013/14 Financial year
2013/14 R’000
2012/13 R’000
Variance %
Income
- Revenue income 1%
- Other income
4 141
3 815
9% (N1)
Expenditure
- Employee cost
10% (N2)
- Travel
15 387
15 416 0%
- Other operational costs
-34% (N3)

9. Financial Results Overview cont…
2013/14 Financial Year
Budget R’000
Actual R’000
Variance %
Income
- Government Grant 0%
- Project Income
37%
- Other Income
3 526
4 141
17%
12%
Expenditure
- Employee costs
-7%
- Forensic consultants (ACTT) *
7 680
5 098
-34%
- Travelling & Accommodation
17 340
17 186
-1%
- Direct Operational costs
20 117
17 674
-12%
- Administration costs
82 941
-15%
Accounting Surplus -
Cash roll over
75 297
* About 93% of the forensic consultant expenditure relates to Anti-Corruption Task Team (ACTT)

10. Financial Results Overview cont…
2014/15 (Q1 & Q2) Financial Year
Budget ¹ R’000
Actual R’000
Variance %
Income
- Government Grant 0%
- Project Income
37 528
-64%
- Other Income
1 907
2 064 8%
-26%
Expenditure
- Employee costs
-13%
- Forensic consultants (ACTT)
4 048
471
-88%
- Travelling & Accommodation
6 466
5 239
-19%
- Direct Operational costs
12 053
8 455
-30%
- Administration costs
35 511
28 788
-16%
Accounting Surplus
47 760
14 536
¹ The SIU having regard for its operations ideally is able to estimate the costs it will incur for the whole year and although these costs may not be spread evenly through the year, these figures above represent costs at the half year mark

11. Audit Outcomes for 2013/14 financial year
The emphasis of matter was as a result of restating prior year errors, which were corrected in the current financial year.
The SIU has developed an action plan to address the audit findings raised by the Auditor General (AGSA).
2013/14
2012/13
2011/12
2010/11
Type of Opinion
Unqualified
Number of emphasis of matter 1 2

12. Section 55 (2) (b) (i) of the Public Finance Management Act (PFMA) read with Treasury Regulation
SIU has reported irregular expenditure of R 14.3m for the 2013/14 financial year.
All the items above relate to irregular expenditure and not fruitless and wasteful nor unauthorised expenditure.
Even though the R4.7m is reflected in our annual report, it is in fact ACTT-related
The R7.2m is due to the use of a service provider without a tender process being followed.
The R1.2m relates to a lease that expired and continued on a month to month basis which the Auditor General found to be irregular expenditure.
2013/14 financial year
R’000
Non-compliance to SCM process – Forensic consultants for ACTT
4 721
Expenditure on a temporary employee
155
Non-compliance to SCM process – Repairs & maintenance/Report editing services 23
Non-compliance to SCM process – Travel & accommodation
7 240
Incorrect awarding of points to bidders - SCM policy not updated with new regulations
941
Proper SCM processes not followed when extending the existing contracts that lapsed
1 200
Purchases not approved by the delegated official 9
14 290

13. Key Operational Challenges
Budgetary challenges
The SIU currently experiences difficulty in collecting money owed to it by State institutions where investigations are conducted. This matter is being addressed with National Treasury and the AGSA.
Investigation Timelines
A perception exists that investigations by the SIU take too long to complete. This could be because some proclamations have a broad scope. Proclamations that are now obtained are more specific and targeted which should result in matters being completed more speedily.
It must be emphasised that SIU investigations are not merely aimed at producing reports, but to bring finality to matters through criminal, disciplinary and civil litigation.
Specialist skills
In light of the fact that SIU investigations now pursue specific legal outcomes, key specialist resources such as senior lawyers with the relevant experience are required.
These experienced lawyers are not readily available and it is a challenge to recruit such skills.
Processes are being pursued to identify the required level of seniority and to address this challenge.

14. END