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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

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

14. 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
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

15. 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

16. 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

17. Projects Update DOT: Achievements to date
Performance Measure
Targets
2006/7
Achieved
Achieved to date
Files uplifted from DLTCs
Files audited
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
files have been scanned/uplifted.
91113 files have been captured.
files have been analysed.
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

18. Project Update – DoT (cont)
55 DLTCs audited
9% of audited driving licenses issued irregularly
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

19. 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 beneficiaries
Running applications through other databases
Verifying beneficiaries biographies
SIU presentation - 3 May 2007

20. 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 new applications to deal with
Concern over integrity of some officials
SIU presentation - 3 May 2007

21. 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

22. 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

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

24. 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

25. 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 government officials who have irregularly received a housing subsidy
SIU presentation - 3 May 2007

26. 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

27. 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

28. 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

29. 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

30. 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

31. 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

32. 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