SIU presentation - 3 May 20071 Presentation to Portfolio Committee on Justice and Constitutional Development 3 May 2007

SIU presentation - 3 May 2007 1

Presentation toPresentation toPortfolio Portfolio

Committee on Committee on Justice and Justice and

Constitutional Constitutional DevelopmentDevelopment

3 May 20073 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


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


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


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)


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

FDavids

seperated slides on capacity building from "Dealing effectively with corruption" . allows us to deal with legal mandate on second slide


Budget Increases Past years

EstimateOutcome

MTEF period

Audit Audit Audit Estim Estim Estim

03/04 04/05 05/06 06/07 07/08 08/09 09/10R'000 R'000 R'000 R'000 R'000 R'000 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


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


Increased investigative capacity

67123

166 194 207

394

550

710

820

1,000

0

200

400

600

800

1000

1200

Apr01

Apr02

Apr03

Apr04

Apr05

Apr06

Apr07

Apr08

Apr09

Apr10

Total staff

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


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

FDavids

check with suad if ok mention sars

FDavids

number of procurement matters + dept

FDavids

FDavids

housing subsidy fraud


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


Key Client Departments ▪ Current:

• Dept of Social Development• Dept of Correctional Services• Dept of Transport• Dept of Justice• National Treasury: Special Pensions Fund• Dept of Housing (proclamation recently published)• Municipalities: EC, WC, FS, Gauteng• Provincial Governments: EC, NWP, WC

▪ Pending:• Mpumalanga Economic Growth Agency (MEGA)


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


Projects UpdateDepartment 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


Projects Update – DSD (cont) Achievements

Performance Measure 2006/07Target

2006/07Achieved

Achieved from inception to

DateCash recoveries R 24 million R 26 million R 39 millionActual Savings R 40 million R 213 million R 493 millionPreventative savings R 1 billion R 1,8 billion R 4,9 billionRemovals from SocPen 64 221 81 648Lapsed grants 7 347 102 882Disciplinaries prepared 7 000 4 677 6 797Prosecutions 2 400 2 675 3 307Convictions 1 800 2 215 2 570


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


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


Projects Update DOT: Achievements to date

Performance Measure Targets2006/7

Achieved2006/7

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


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


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


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


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


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


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


Projects Update – DCS (cont)▪ Challenges

• New, wider proclamation required• Procurement investigations complex and time

consuming• Delays in obtaining FMS / BAS payment information

from DCS


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


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 AchievementsENE targets and achievements for 06/07

Performance

Measures 2005/06 2006/07

Target Actual 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


ENE Targets and achievementsPerformance

Measures 2005/06 2006/07

Target Actual(Audited)

Target 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


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


Building SIU & OD

▪ OD process started late 2006▪ Despite increasing success want to perform better▪ Also bigger demand for services in different forensic

markets▪ OD finalised design of new structure and operating

model▪ Implementation to start in June 2007


Overall Challenges▪ Rapid growth ▪ Some key investigations present unique challenges▪ Lack of movement on proposed legislative changes ▪ Proclamation process cumbersome


▪ 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 ambitious OD process to cater for future growth

• Laid foundation for a much bigger and more effective organisation in the future

Conclusion

Documents

SIU presentation - 3 May 20071 Presentation to Portfolio Committee on Justice and Constitutional Development 3 May 2007