Text of Fholisani Sydney Mufamadi’s affidavit to the Judicial Commission of Enquiry into the Allegations of State Capture, Corruption and Fraud in the Public Sector, including Other Organs of State
1.1. I am an adult male residing in Gauteng. I am currently employed by the University of Johannesburg as Director of the Centre for Public Policy and African Studies.
1.2. I confirm that the averments contained in this affidavit fall within my personal knowledge except where the converse is expressly stated or where the converse appears from the context in which the statement of facts is made, and they are to the best of my knowledge and belief both true and correct.
1.3. Since my teens, I have been in public life in a variety of capacities ranging from student, trade unionist and political activist. I have also had the privilege of involvement in statecraft as one of the framers of our country's interim and final constitutions. I have been a Minister in government for almost fifteen years. I consider myself a public intellectual.
My lived experience and academic training give me the credentials necessary to be of assistance to the Commission's quest to understand whether some of the things which happened in the State Security Agency ("SSA" or "Agency") do throw some light onto "allegations of state capture, corruption and fraud in the public sector, including organs of state".
1.4. The key finding of the Panel was that there has been a serious politicisation and factionalisation of the intelligence community over the past decade or more, based on factions in the ruling party, resulting in an almost complete disregard for the Constitution, policy, legislation and other prescripts. Our civilian intelligence community was turned into a private resource to serve the political and personal interests of particular individuals.
In addition, the Panel identified a doctrinal shift towards a narrow state security orientation in the intelligence community from 2009 in contradiction to the doctrines outlined in the Constitution, White Paper on Intelligence and other prescripts. The Panel expressed concern that the cumulative effect of the above led to the deliberate re-purposing of the SSA.
1.5. The findings raise the question as to whether this capture and repurposing of the SSA was designed to and did facilitate and protect the project of state capture.
2. Background
2.1. The High-Level Review Panel on the SSA ("the Panel") was established by President Matamela Cyril Ramaphosa in June 2018, began its work in July 2018 and was given six months to submit its report. The key objective for the establishment of the Panel was to enable the reconstruction of a professional national intelligence capability for South Africa that will respect and uphold the Constitution and the relevant legislative prescripts.
2.2. I was asked to chair the Panel. The Panel included nine other members with a wide range of senior level experience and expertise in law, security studies, civil society, academia, the intelligence and security community and other arms of government. The contents of this affidavit have been largely drawn from the Panel's report.
2.3. The Panel had the benefit of presentations and submissions from SSA units, from other sectors of the intelligence community, from past and current individual members of the community and from other relevant arms of government. Its resources included an extensive number of documents including policies, legislation, regulations and directives, previous review reports and discussion documents, and investigation reports. The records of the Panel's inquiry are retained under the control of the SSA.
2.4. It was important for the Panel to understand the nature of the operations conducted by the Chief Directorate Special Operations ("SO") and other units of the SSA, how these operations were executed, and how funds in relation thereto were spent and accounted for. Accordingly, the Panel interviewed, among others, Mr Thulani Dlomo, who was the General Manager: Special Operations and later Deputy Director-General: Counter Intelligence.
2.5. The Panel also engaged with several bodies and persons whose responsibility it was to conduct oversight of the SSA. These included members of the Joint Standing Committee on Intelligence ("JSCI"), the Inspector-General of Intelligence ("IGI") and the Auditor-General of South Africa ("AG").
2.6. Although our Terms of Reference were limited to the SSA, we invited submissions from the Intelligence Division of the South African Police Service ("SAPS") and the Intelligence Division of the South African National Defence Force ("SANDF"). Because of the similar environment in which these intelligence divisions work, we recommended that a similar investigation should be conducted into their activities.
3. The Panel's Terms of Reference
3.1. The Panel's Terms of Reference provided 12 focus areas for the Panel's work:
1.5. The findings raise the question as to whether this capture and repurposing of the SSA was designed to and did facilitate and protect the project of state capture.
2. Background
2.1. The High-Level Review Panel on the SSA ("the Panel") was established by President Matamela Cyril Ramaphosa in June 2018, began its work in July 2018 and was given six months to submit its report. The key objective for the establishment of the Panel was to enable the reconstruction of a professional national intelligence capability for South Africa that will respect and uphold the Constitution and the relevant legislative prescripts.
2.2. 1 was asked to chair the Panel. The Panel included nine other members with a wide range of senior level experience and expertise in law, security studies, civil society, academia, the intelligence and security community and other arms of government. The contents of this affidavit have been largely drawn from the Panel's report.
2.3. The Panel had the benefit of presentations and submissions from SSA units, from other sectors of the intelligence community, from past and current individual members of the community and from other relevant arms of government. Its resources included an extensive number of documents including policies, legislation, regulations and directives, previous review reports and discussion documents, and investigation reports. The records of the Panel's inquiry are retained under the control of the SSA.
3.1.1 The high-level policies and strategies, legislation, regulations and directives governing, or impacting on, the mandate, structure, operations and efficacy of the SSA.
3.1.2 The impact on the work of the civilian intelligence agencies of the amalgamation of the previous services into one agency and the appropriateness of this change.
3.1.3 The appropriateness of the current structure of the agency to its core mandates and to effective command, control and accountability.
3.1.4 The mandate and capacity of the SSA and to examine the compatibility of its structure in relation to this mandate.
3.1.5 The effectiveness of controls to ensure accountability.
3.1.6 The institutional culture, morale, systems and capacity to deliver on the mandate.
3.1.7 The involvement of members of the national Executive in intelligence operations and measures to prevent this.
3.1.8 The policy framework (including legislation) that governs operational activities conducted by members of the national Executive.
3.1.9 The development of guidelines that will enable members to report a manifestly illegal order as envisaged in section 199(6) of the Constitution.
3.1.10 The effectiveness of Training and Development Programmes in capacitating members of the Agency.
3.1.11 The effectiveness of intelligence and counter-intelligence coordination within the Agency and between the agency and other South African intelligence entities and the capacity and role of the National Intelligence Coordinating Committee ("NICOC") in this regard.
3.1.12 The effectiveness and appropriateness of the existing oversight mechanisms in ensuring accountability and transparency.
3.2. The Review Panel concluded its work and submitted its report to President Ramaphosa in December 2018.
4. The Philosophy and Principles underpinning Intelligence Organisations.
4.1. In the immediate aftermath of the 1994 democratic breakthrough, government assiduously spread commitment to reconstruction, development and reconciliation as the underlying philosophy of governance and the practice of statecraft in South Africa. To that end, government adopted a White Paper on Intelligence which:
4.1.1. Defines modern intelligence and juxtaposes the purpose of intelligence in a democratic and constitutional dispensation against the purpose of intelligence during the Cold War period.
4.1.2. Underlines several principles that underpin intelligence organisation. Among these is the principle of political neutrality. This principle asserts that a national intelligence organisation is a national asset, and shall therefore be politically non-partisan.
4.1.3. From the above, it follows that no intelligence or security service or organisation shall be allowed to carry out any operations that are intended to undermine, promote or influence any South African political party or organisation at the expense of another by means of any acts, including active measures or covert action or by means of disinformation. In this regard, there is a clear resonance between the White Paper on Intelligence and the Constitution of the Republic. The Constitution reflects the resolve of its drafters that our intelligence and security services should never return to the wanton disrespect for political and human rights that preceded the democratic dispensation. Coming as they did from a past of conflict and warfare, our intelligence officials had to be consciously reeled into a new intelligence dispensation — the new dispensation being a novel instrument as one that is united in its diversity.
5. Proclamation
5.1. On 11 September 2009, President Jacob Zuma issued a proclamation in terms of which he established the State Security Agency — an amalgam of the National Intelligence Agency ("NIA"), which dealt with domestic affairs, and the South African Secret Service ("SASS"), which dealt with foreign affairs.
5.2. The designation of the civilian intelligence organisation (as amalgamated) as a "State Security Agency" echoed the pre-1994 mindset of the warfare state. Given where the new South Africa came from, this reversion to the state security, as opposed to the human security mindset, was not only a retrogressive position. It was reflective of an allergy to accountability in that it was done without reference to Parliament and the attendant public consultation required by the Constitution.
5.3. The effect of this was that the two distinct branches of the SSA, the NIA (domeitic) and the SASS (foreign) were centralised under authority of a single Director-General ("DG"). This centralisation made external executive control of the Agency easier than it would have been in relation to a decentralised organisation. The evidence before the Panel was that this also had the effect of weakening the foreign branch of the SSA.
6. Some Findings
6.1. The Panel examined an extensive archive of evidence. The report confirmed the abuse of the intelligence structures dating back to 2005. These included allegations relating to the Principal Agent Network ("PAN") programme and more recent allegations concerning the Special Operations ("SO") unit.
6.2. The Panel was given information in regard to:
6.2.1 Incidents that speak to the weaponisation of intelligence services for partisan and/or factional purposes.
6.2.2. Incidents which show the attempts to secure the connivance of the SSA in opening up the state to rent-seekers.
6.2.3. Abuse and the bypassing of proper financial and procurement controls.
7. The Weaponisation of Intelligence for Partisan and Factional Purposes 7.1. From accounts provided to the Panel, the SO unit of the SSA was rekindled in about 2011. Its re-emergence was stimulated by the incendiary politics of partisanship and factionalism which had become endemic in the country as well as in the African National Congress ("ANC").
7.2. The notion of a SO unit in intelligence, military and police services is not at all unusual. Normally it entails units that work under deeper cover than other units of a service and that work on particularly sensitive operations against especially serious targets or issues, usually at a national level. Members of such units are supposed to be specially trained and highly competent. In the case of the NIA and SSA, such a unit would be based at head office and work on national projects of particular seriousness that cannot be assigned to a provincial or other structure.
7.3. The Panel probed deeply and widely into the issue of SO. Towards the end of its deliberations, it received a briefing from the Inspector-General of Intelligence (IGO, Dr Setlhomamaru Dintwe, on an investigation his office was conducting into SO. For the purposes of this exercise, I highlight key elements of what was presented to the Panel on SO, particularly in relation to the naked politicisation of intelligence in recent years.
7.4. The key player in the politicisation of SO and the SSA in general, according to information before the Panel, was Mr Thulani Dlomo. Mr Dlomo later became South Africa's ambassador to Japan. According to reports, he was "deployed" to SSA by then President Zuma via then Minister of State Security, Siyabonga Cwele, in 2012 to head up the SO Chief Directorate. This was in spite of allegations that he left the employ of the KwaZulu-Natal (KZN) Department of Social Development under a cloud of corruption allegations.
7.5. According to Mr Dlomo, his brief CV is that he was a member of ANC underground structures in KZN since 1985; left the country in 1988 and returned in 1992. He then worked with the ANC's Department of Intelligence and Security in KZN. After 1994 or thereabouts he was integrated into the SAPS VIP Protection Unit and served as a protector for me when I served as Minister of Safety and Security. Mr Dlomo claimed to have worked for the Presidential Protection Unit ("PPU") of SAPS during President Thabo Mbeki's time.
He left government in 2002 and worked for a security company in KZN which was assisting the eThekwini Municipality on cash-in-transit heist investigations. He left that company in 2006 and joined the KZN Department of Social Development as Security Manager. As mentioned, he joined SSA in 2012 as General Manager SO and was promoted in 2014 to DDG Counter Intelligence. According to former Minister of State Security, Bongani Bongo, President Zuma eventually complained that Mr Dlomo had "created too many structures" and that he had to take him out of SSA. Mr Dlomo was appointed Ambassador to Japan in 2017. He has now been recalled from his ambassadorship in Japan.
7.6. The Panel put it on record that Mr Dlomo was the most recalcitrant and evasive "witness" it encountered in all its interviews. Mr Dlomo invoked the "need to know principle" to withhold information from the Panel — particularly with regard to his interaction with the Executive.
7.7. It was clear to the Panel that the SSA's SO unit, especially under Mr Dlomo's watch, was a law unto itself and directly served the political interests of the Executive. (This is what I mean by the "weaponisation" of intelligence for partisan political purposes.) The SO also undertook intelligence operations which were clearly unconstitutional and illegal. Information made available to the Panel indicated that among these operations were the following.
7.8. Project Construcao: This involved the training of undercover agents in VIP protection elsewhere on the continent and assigning some of these to provide protection to the then President of South Africa, as well as to others who were not entitled to such protection, such as the former Chairperson of the Board of South African Airways, Ms Dudu Myeni; the former National Director of Public Prosecutions (NDPP), Mr Shaun Abrahams; the ANC Youth League (ANCYL) President, Mr Colin Maine; and the former Acting Head of the Directorate for Priority Crime Investigation (DPCI or the "Hawks"), Gen Yolisa Matakata. VIP protection is a mandate of the SAPS. The Panel was aware of initiatives some years ago to attempt to make this a NIA responsibility. This did not happen. Apparently, this project had an annual budget of around R24 million.
7.9. Project Commitment This involved providing then President Zuma with R2.5 million per month in the 2015/16 financial year, increased to R4.5 million per month in the 2016/17 financial year. Apparently, this money was provided via then Minister Mahlobo. Although acknowledgments of receipt of these funds were received from Minister Mahlobo, there is apparently no proof of the funds being received by President Zuma.
7.10. Project Justice: This project involved recruiting and handling sources in the judiciary in order to influence the outcome of cases against President Zuma. Information provided to the Panel indicated that amounts of between R1.2 million and R4.5 million were routinely taken from SSA and provided to Minister Mahlobo whom, it is said, was responsible for handling these sources.
7.10.1. The-Panel was told that this project was motivated by a perceived need to counter the influence of judges hostile to President Zuma. Allegations made were to the effect that judges were bribed to achieve this purpose. This should, however, be treated with extreme caution as one would not want to be party to the destruction of public confidence in the judiciary if there is no actual evidence that the operation was carried out to conclusion.
7.10.2. The Panel believed it was possible that this project did not exist and was instead used as a ruse to obtain State resources. However, even if this were so, funds should not have been allocated to a project of this nature which on all accounts constituted a serious breach of the constitutionally guaranteed separation of powers and the independence of the judiciary.
7 .11. Operation Lock: This involved providing a safe house and protection to Mr Eugene de Kock when he was released from prison, apparently on the basis of a Memorandum of Understanding with the Department of Correctional Services. The Panel was aware that, prior to Mr De Kock's release on parole, he had been assisting the NPA's Missing Persons Task Team to locate the bodies of murdered cadres of MK. According to the Task Team, the SSA blocked access to Mr De Kock for some time.
7.12. Project Wave: This involved infiltrating and influencing the media at home and abroad in order, apparently, to counter bad publicity for the country, the then President and the SSA. The project was launched in the 2015/16 financial year with a budget of R24 million. One of the largest amounts issued for this project was one of R20 million given to a media agency, Apricot, apparently for "services rendered" for eight months.
7.13. Project Accurate/Khusela: This was a project to recruit toxicologists to test the food and bedding of then President Zuma. This project had an initial allocation of R500 000 per month which increased to R1 .5 million per month in the 2015/16 financial year. Again, the Panel did not understand this to be the responsibility of the SSA.
7.14. Project Tin Roof: This involved an investigation into the alleged attempted poisoning of President Zuma by his wife, MaNtuli, but it also involved acquiring a safe house for MaNtuli and seemingly maintaining her, given the quantum of the project budget of R5.2 million, with a monthly withdrawal of R800 000.
7.15. The SSA and Civil Society: The Panel also heard testimony and was provided with legal papers about a union called the Workers Association Union which was established with the support of the SO unit of the SSA. The purpose served by the formation of this union was ostensibly to neutralise the instability in the platinum belt and counter the growing influence of the Association of Mineworkers and Construction Union ("AMCU"). The Panel also heard testimony from the IGI, Dr Dintwe, about the SSA having put under surveillance unions that had broken ranks with the Congress of South African Trade Unions ("Cosatu") and were critical of President Zuma.
7.16. Project Academia: This was designed to intervene in the #FeesMustFall protests and influence the direction of the student movement. The main agent in this project, Murray was sent on training to a foreign country. According to Mr Dlomo, the purpose of Project Academia was to support "young bright minds" to be patriotic and to be strategically deployed to institute counter measures and ensure stability and peace in our universities.
7.17. These are just some of the SO projects that the Panel was made aware of. In addition, the Panel was given access to a document which was purportedly a report to the then SSA DG, Mr Arthur Fraser, in February 2017 in which the author "boasts" of his SO unit's performance in the 2016/17 year. These "achievements" include:
7.17.1. During the 2016 ANC January 8 statement in Rustenburg, the unit "initiated 3 countering operations to impede the distribution of CR17 regalia, impede transportation system of dissident groups from [Gauteng Province]".
7.17.2. During the February 2016 State of the Nation Address the unit was "able to infiltrate and penetrate the leadership structure of the ZMF [Zuma Must Fall] movement. The initial ZMF indicated that more than 5 000 people would embark on Parliament, but with efficient and effective countering actions, and the dissemination of 'disinformation' to supporters of ZMF, only approximately 50 ZMF supporters attended the march".
7.17.3. During the ANC's manifesto launch in Port Elizabeth in 2016, the unit "initiated a media campaign to provide positive media feedback through the placement of youths of various ethnic groups in photographic vision [sic] of media personnel, thereby promoting social cohesion".
7.17.4. The report "boasts" of various other similar operations, including that "Active monitoring of the South Africa First, Right to Know, SAVESA, CASAC and Green Peace was done due to the penetration ability of the group".
7.18. It was clear from the above information and other information available to the Panel that SO had largely become a parallel intelligence structure serving a faction of the ruling party and, in particular, the personal political interests of the sitting president of the party and country. This was in direct breach of the Constitution, the White Paper, the relevant legislation and plain good government intelligence functioning.
8. Attempts to Secure the Connivance of SSA in Wrongdoing.
8.1. In its interviews with the SSA leadership, Messrs Jeff Maqetuka (former SSA Director-General) Gibson Njenje (former Director Domestic Branch), and Moe Shaik (former Director Foreign Branch), the Panel heard that the three had submitted a report to the then Minister of State Security, Dr Siyabonga Cwele about the emerging influence of the Gupta family over government officials and then President Zuma as a threat to national security. Mr Njenje gave an example where the former President instructed former Minister of Minerals and Energy, Ms Susan Shabangu, to meet with Mr Ajay Gupta at the President's home. At the Minister Shabangu's request, Mr Njenje accompanied her and described Mr Gupta as being rude and "demanding certain things in mining".
8.2. According to Ambassador Maqetuka, when he was at the SSA, and in response to growing concerns about the influence of the Gupta family, domestic operations under Mr Njenje undertook an investigation into the Guptas. According to Minster Cwele, he was unhappy with how the investigation was conducted. As a result of this investigation, the former President was advised to reconsider his relationship with the family because it may damage his reputation. According to the three, this report was suppressed and in part led to the departure of the three of them from the SSA.
8.3. One of the things that surprised the Panel was that the revised Oath of Allegiance that SSA members are expected to take requires members to swear allegiance to the Constitution, the laws of the country and the President. It also requires them to "recognise the authority of the Minister of State Security".
9. The Abuse and Bypassing of Financial and Procurement Controls 9.1. A key concern for the Panel was the failure to implement financial controls in the SSA. In particular, this applies to the failures in the adherence to operational directives and especially those which apply to special operations.
9.2. A key element of this is the fact that most of the operational financial transactions of the Agency are done by means of cash. This is to hide the fact that the origins of the payments are the SSA. This would, among others, apply to the payment of sources, purchases of certain fixed and moveable assets, running costs of cover entities etc. This fact is a major vulnerability in the system of financial controls given that, often, proof of the legitimate disbursement of such cash payments has to avoid revealing the identity of the recipient or that, indeed, the intended recipient actually received the funds.
9.3. This system of cash disbursements is handled through what are called Temporary Advances (TA). How the system is supposed to work is that a member applies for the TA on the basis of an approved submission. That member is then required to account for the expenditure of that TA and return any unused amount. There is supposed to be a rule that a member may not receive a second TA until he or she has reconciled the previous one.
9.4 Notwithstanding these control measures, it became clear to the Panel that a practice has developed in which members are able to acquire subsequent TAs, even when the previous ones have not been settled. In the operational environment, some of these advances sometimes run into millions of Rands. This has led to a situation in which certain members have accumulated several advances that they have not accounted for.
However, the Panel was informed that where steps are taken to recoup the funds through deductions made against salaries, the amounts can be too large to be realistically settled over time. Furthermore, the Panel was made aware of a number of members so affected who have left the Agency before they were able to settle the balance and are thus owing large sums of money, which they are unlikely to ever be able to pay back.
9.5. In addition, the TA system does not guarantee that the cash leaving the Agency is indeed paid as intended to the ultimate recipient. The Panel was made aware of cases where money was taken to pay sources and the sources paid an amount less than was requested, the remainder being pocketed by the handler.
Of concern to the Panel was that the consequence management in many of these matters has been completely absent or inadequate. The Panel was informed by one SSA officer of a case where it was discovered that a member was underpaying. a source and pocketing the balance himself. When this was reported to the relevant General Manager, he simply imposed a sanction that the officer should repay the money through salary deductions. There was no consequence for the criminal act of theft of state funds. The Panel noted that there is a fine line between such losses incurred being administrative or criminal.
9.6. The Panel received a submission from several members working in the Finance department. They alleged that Dwayne (Management Accounting) restructured the budget process leading to the collapse of the budget structure for domestic intelligence. The DG at the time was Ambassador Santo Kudjoe.
Dwayne removed all divisional heads and concentrated authority in his hands. This concentration stripped further powers from the Chief Financial Officer (CFO) and effectively made Dwayne the budget controller for all of the SSA, including the provinces. This concentration of power reduced transparency and enabled the movements of funds to areas of the SSA favoured by the SSA leadership, such as Ambassador Kudjoe and Mr Dlomo.
9.7. The Panel received briefings on the theft of over R17 million from a safe inside the SSA complex in December 2015. In spite of video footage of the perpetrators and the outcome of internal investigations, there appears to have been no consequence management for this incident. Of particular concern is the report the Panel received that the Head of the DPCI ("Hawks") at the time, General Berning Ntlemeza, failed to take the investigation of the burglary to its logical conclusion.
9.8. The Panel was made aware that, although the SSA has strict procedures and controls for the procurement of assets, these assets are often reported as missing and cannot be easily found on the assets register. Examples of such assets include high value cars and SUVs, specialised surveillance equipment, properties and houses used for cover and even the profits derived from entities created as front companies.
This problem is particularly the case within the covert operations environment. In some cases, the asset ends up in the technically legal possession of a member or source under whose name it was acquired and there are problems determining rightful ownership or repossessing the asset.
9.9. One of the key challenges of the SSA lies in its planning processes and the budgeting process arising out of them. The Panel was provided with documentation and heard evidence from numerous members about strategic and operational planning deficiencies within the SSA. Over the past decade or so the Agency has been riven by a series of senior management changes and each time such changes occur, the strategic and operational plans that had been developed were either adjusted or replaced by a new set of plans. This has had a deeply damaging impact on the SSA's ability to plan and see through those plans to fruition.
A consequence has also been that budget planning within the SSA has suffered and has become nothing more than an annual allocation with a small percentage increase. The Auditor General ("AG") has regularly raised the concern that there seems not to have been a serious attempt in the SSA to define strategic programmes or identify clear, measurable targets and indicators. Neither have the plans been underpinned by a rational allocation of budgetary resources.
9.10. One of the key control weaknesses as far as financial management in the SSA is concerned lies in the fact of a perceived (perhaps falsely) impermeable border between the "covert" SSA and the "open" SSA.
9.11. From evidence heard by the Panel, it seems even the CFO of the SSA is restricted in terms of information he or she can obtain from the covert structures and, in many cases, is not taken into confidence. In fact, the Panel heard of incidents where serious tensions and conflict arose between the CFO and operational management when the CFO tried to impose basic financial and budgetary management controls on them. It surprised the Panel that a CFO of an intelligence agency should have any restriction on the information she or he is entitled to and the controls she or he can effectively impose. It seems that even the IGI has more entitlement to access than the CFO.
9.12. Related to this is the issue of the AG's inability to effectively audit all of the SSA's financial, procurement and performance activities. The AG was interviewed by the Panel to provide it with a perspective on the audit process involving the SSA. The AG conducts an annual audit of the SSA in terms of the Public Audit Act 25 of 2004 as is the case with all national departments.
9.13. The AG noted, however, that every year he is forced to automatically provide a qualified audit of the SSA.
9.13.1. Firstly, this is because he is not provided with access to information to allow him to verify the finances and assets of the SSA.
9.13.2. Secondly, he is not able to determine the extent to which performance targets have been met.
9.14. This situation pertains notwithstanding attempts by the AG and the SSA to develop mechanisms to enable a thorough audit process to be conducted.
9.15. The AG's report on the SSA for the 2017/18 financial year provides a useful example of why the AG is forced to qualify his audit:
9.15.1. He noted the high-risk environment within which the Agency functions, and yet the manner in which expenditure and assets were recorded did not sufficiently mitigate the risks.
9.15.2. He noted the extensive use of TAs for operations which were required to be certified for surety. However, during the audit, management was unable to provide documentation to verify operational expenditure of R125.6 million or that the money was used for the intended purpose.
9.15.3. The AG was unable to confirm redundant assets in excess of R9 billion as there was insufficient audit evidence and the assets could "not be located by the Agency”
9.15.4 He was unable to confirm the reported irregular expenditure of R31.3 million as stated in the financial statements.
9.16. In addition, the AG has regularly made findings on the internal control environment. In his report on the 2017/18 financial year, he noted for example:
9.16.1. Lack of consequence management and not holding staff accountable for poor quality of financial and performance reporting.
9.16.2. Inadequate internal review processes by management leading to material misstatements as required in section 40(1)(a) and (b) of the Public Finance Management Act (PFMA).
9.16.3. Non-compliance with supply chain processes going unnoticed.
9.16.4. Absence of approved standard operating procedures to guide collection collation verification, storing and reporting of actual performance information.
9.16.5. Numerous senior acting positions have created instability, which resulted in delays in the audit of performance management.
9.16.6. Lack of monitoring and implementation plans by the Accounting Officer and senior management to address key control deficiencies.
9.17 The AG's report also complained about the incomplete assessment of the useful life of assets which have recurred year after year as a result of information being withheld. While this is assumed to be because the SSA is reluctant to disclose this information because of the covert nature of the assets, it could also be because the Agency is intent on hiding indications of serious management weaknesses.
9.18. The Panel recognised that the AG, as a result of limited access to information, could only provide a qualified audit and could not publish his annual report. This is a matter of great concern.
9.19. The SSA is defined as a national department established in terms of the Public Service Act 103 of 1994 and the PFMA.
9.20. The SSA does not have a separate budget vote for its annual allocation of funds. Instead its allocation is included as a line item in Budget Vote 7 (National Treasury), Programme 10. This arrangement is made possible by the Secret Services Account established in terms of section 1A of the Secret Services Act 56 of 1978. It means that the only information made available for public scrutiny is the overall allocation for the financial year, but none of the details such as programmes or their respective allocations. The SSA was allocated R4.3 billion for the 2017/18 financial year.
9.21. Several consequences flow from this secrecy arrangement:
9.21.1. Firstly, unlike other national departments, the SSA does not participate in the annual Medium-Term Expenditure Committee (MTEC) budget- making process, where anticipated expenditure over a rolling, three-year cycle is estimated and considered for allocation.
9.21.2. Secondly, while SSA provides National Treasury with confidential monthly financial statements, these do not include operational expenditure, which therefore cannot be monitored over the course of the year for spending trends or adjustments.
9.21.3. Thirdly, the virement rules which require approvals for the movement of funds between programmes within a department's allocation do not apply in terms of the Secret Services Account. Therefore, the SSA is able to shift funds around between its various component parts without the disclosures required in other legislation.
9.22. Once the annual allocation has been approved by Parliament, the Secret Services Account requires only that the SSA submits a letter to the Minister of Finance for the release of funds at the beginning of each financial year.
9.23. In terms of section 2A of the Secret Services Act, the SSA may keep any unused funds at the end of the financial year instead of disclosing and returning these to the fiscus as all other departments must do. This means that unused funds from a previous year can be utilised the following year off-budget. If funds are under-utilised over time, a sizeable "pot" may develop, (and has developed), which can be used without any disclosure.
10. The Principal Agency Network (PAN) Programme
10.1. The Panel was presented with the results of several investigations into the so-called PAN programme which the Agency (NIA at the time) had implemented over several years until 2011, when it was suspended.
10.2. The implementation of a Principal Agent Network ("PAN") is accepted practice in intelligence agencies. In essence, it is a method of "force multiplication" in which principal agents are recruited outside the Agency who in turn are trained and capacitated to recruit and handle sources and agents in or close to targets of legitimate interest to the Agency. This is primarily a human intelligence (HUMINT) collection initiative.
However, it appeared to the Panel that PAN evolved into a methodology designed to avoid or bypass the procedural requirements for recruitment of staff, disbursement of funds and procurement. As an example, the Panel became aware that one person was recruited into the PAN to provide analysis support.
The analysis function does and should reside in the Agency itself and be conducted by full-time employees of the Agency and should be the capacity that receives intelligence from PAN agents. An analyst is not a principal agent. There were plenty of other examples of breaches of the principal agent network concept. Indeed, apart from this, the PAN Project has gained notoriety for alleged wide-ranging illegality which has led to several investigations as well as seeped into the media in recent times.
10.3. Several investigations have been conducted into this project by internal Agency investigators, as well as two investigations which were conducted by the former IGI, Ms Faith Radebe. The Panel heard the views of several persons involved in the investigations, as well as those of the current 1GI.
10.4. The Panel noted that the nature of the accusations and the evidence collected during the various investigations painted a disturbing picture. Allegations of malfeasance, procedural transgressions and criminal behaviour were placed before the Panel.
These included, for example, the procurement of assets without adherence to formal procedures, the signing of fraudulent contracts and payments to persons without valid contracts having been signed, the employment of family members and close associates outside of formal processes, the abuse of assets, and missing funds and assets.
10.5. In his interactions with the Panel, Mr Fraser confirmed the appointment of his son as an employee of a warehouse that was a front company for the SSA. He also confirmed initiating the employment of the wife of the Manager of the Cover Support Unit ("CSU"), Philani.
10.6. It appeared to the Panel there had been instances of serious criminal behaviour which had taken place under the guise of conducting covert work and that this. behaviour may have involved theft, forgery and uttering, fraud, corruption, and even bordered on organised crime and transgressions of the Prevention of Organised Crime Act 121 of 1998 ("POCA").
10.7. The Panel was concerned whether the reporting requirements were followed by the responsible individuals in management when the allegations were discovered. This includes reporting of fruitless and wasteful expenditure to the National Treasury in terms of the PFMA and to SAPS under section 34 of the Prevention and Combating of Corrupt Activities Act 12 of 2004 ("PRECCA").
10.8. Of particular concern for the Panel was that, apart from suspending the PAN programme in 2011, it appears that no formal action or consequence management has taken place by the Executive or the Agency management. The absence of consequence management has become a theme running throughout the Agency over several years.
10.9. The Panel received reports that members of the Agency's internal investigations team into the PAN project had been subjected to various forms of intimidation and some had their offices broken into.
10.10. The PAN programme has had other consequences which seem not to have been addressed with the seriousness warranted. One such consequence is the large number of claims made against the Agency and the Minister of State Security by former PAN members involving allegations of breaches of contract by the Agency. These have amounted to hundreds of millions of Rands.
11. Conclusion
11.1. In conclusion, I wish to reiterate that the information provided herein is based on what the High-Level Review Panel into the SSA gathered in the course of its work.
11.2. The key finding of the Panel was that there has been a serious politicisation and factionalisation of the intelligence community over the past decade or more, based on factions in the ruling party, resulting in an almost complete disregard for the Constitution, policy, legislation and other prescripts. Our civilian intelligence community was turned into a private resource to serve the political and personal interests of particular individuals. In addition, the Panel identified a doctrinal shift towards a narrow state security orientation in the intelligence community from 2009 in contradiction to the doctrines outlined in the Constitution, White Paper on Intelligence and other prescripts. The Panel expressed concern that the cumulative effect of the above led to the deliberate re-purposing of the SSA.
11.3. The Panel made several general recommendations arising out of its findings. First, it recommended that the President appoint a Task Team to unpack the more detailed recommendations of the Panel into a concrete plan of action. The Task Team should be required to initiate, undertake and coordinate the recommended reviews and oversee the implementation of their outcomes.
11.4. The Panel further recommended that the President instruct the appropriate law enforcement bodies, oversight institutions and internal disciplinary bodies to investigate all manifest breaches of the law, regulations and other prescripts in the SSA as highlighted by the report with a view to instituting, where appropriate, criminal and/or disciplinary proceedings.
11.5. The Panel also made many detailed recommendations throughout its report. The most relevant recommendations in relation to the findings discussed above concern the role of the executive, the application of financial controls and the strengthening of oversight.
11.6 I believe that the information provided in the report, as well as the report’s findings and recommendations, will assist the Commission in its investigation.
Signed by Sydney Mufamadi in Pretoria on the 30th November 2020
***
Extract from the report of the High-Level Review Panel Report on the State Security Agency, December 2018:
9.3.5 Special Operations
According to information provided to the Panel, a SO unit was first set up in the then NIA in or around 1997, was subsequently shut down (date not known) and re-opened again in or around 2002/03 and, apparently, carried over into the SSA.
The notion of a SO unit in intelligence, military and police services is not at all unusual. Normally it entails units who work under deeper cover than other units of a service and who work on particularly sensitive operations against particularly serious targets or issues, and usually at a national level. Members of such units are supposed to be highly trained and particularly competent. In the case of NIA and SSA, such a unit would be based at head office and work on national projects of particular seriousness that cannot be assigned to a provincial or other structure.
The Panel probed relatively deeply and widely into the issue of SO. Towards the end of its deliberations, it received a briefing from the OIGI on an investigation it is currently conducting into SO that it hopes to conclude by the end of the current financial year. The Panel will make recommendations regarding this below. For the purposes of this chapter of our report, we highlight key elements cf what was presented to the Panel on SO. particularly in relation to the naked politicisation of intelligence in recent years.
The key player in the politicisation of SO and the SSA in general, according to information before the Panel, was Thulani Dlomo. Dlomo is currently South Africa's ambassador to Japan. According to reports, he was 'deployed' to SSA by then President Zuma via then Minister Cwele in 2012 to head up the SO chief directorate. This in spite of allegations that he left the employ of the KZN Department of Social Development under a cloud of corruption allegations.30
According to Dlomo, his brief CV is that he was a member of ANC underground structures in KZN since 1985, left the country in 1988 and returned in 1992. He then worked with the ANC's Department of Intelligence and Security in KZN. After 1994 or thereabouts he was integrated into the SAPS VIP Protection Unit and served as a protector for the Chair of the Panel, Sydney Mufamadi when he served as Minister of Safety and Security. He claimed to have worked for the Presidential Protection Unit during Mbeki's time.
He left government in 2002 and worked for a security company in KZN which was assisting the eThekwini Municipality on cash-in-transit heists. He left that company in 2006 and joined the KZN Department of Social Development as Security Manager. As mentioned, he joined SSA in 2012 as General Manager SO and was promoted in 2014 to DDG Counter Intelligence. According to former Minister Bongo, Zuma eventually complained that Dlomo had 'created too many structures' and that he had to take him out of SSA. Dlomo was appointed Ambassador to Japan in 2017.
The Panel needs to put on record that Dlomo was the most recalcitrant and evasive 'witness' it had encountered in all its interviews. Dlomo invoked the 'need to know principle' to withhold information — particularly with regard to his interaction with the Executive — from the Panel. The Panel makes recommendations on this matter later.
It is clear to the Panel that the SSA's SO unit, especially under Dlomo's watch, was a law unto itself and directly served the political interests of the Executive. It also undertook intelligence operations which were clearly unconstitutional and illegal. Information made available to the Panel indicated that these operations included, inter alia:
- Project Construcao: This involved the training of undercover agents in VIP protection in and elsewhere and assigning some of these to provide protection to the then President, as well as to others who were not entitled to such protection, such as Dudu Myeni, former Chairperson of the South African Airways (SAA) Board; former National Director of Public Prosecutions (NDPP), Shaun Abrahams; ANC Youth League (ANCYL) President Cohn Maine and former Acting Head of the Department of Priority Crimes Investigations (DPCI- the Hawks), Gen Yolisa Matakata. VIP protection is a mandate of the SAPS and, although the Panel is aware of initiatives some years ago to try to make this a then NIA responsibility, this did not happen. Apparently, this project had an annual budget of around R24 million.
- Project Commitment: This involved providing then President Zuma with R2 million per month in the 2015/16 financial year, increased to R4,5 million per month in the 2016/17 financial year. Apparently, this money was provided via then Minister Malilobo. Although acknowledgments of receipt of these funds were received from Minister Mahiobo, there is apparently no proof of the funds being received by the president,
- Project Justice: This protect involved recruiting and handling sources in the judiciary in order to influence the outcome of cases against then President Zuma. Information provided to the Panel indicated that amounts of between R1,2 million and R4,5 million were routinely taken from SSA and provided to Minister Mahlobo whom, it is said, was responsible for handling these sources.
- Operation Lock: This involved providing a safe house and protection to Eugene de Kock when he was released from prison, apparently on the basis of a MoU with the Department of Correctional Services. The Panel is aware that, prior to De Kock's release on parole, he had been assisting the NPA's Missing Persons Task Team to locate the bodies of murdered cadres of MK. According to the Task Team, the SSA blocked access to De Kock for some time.
- Project Wave: This involved infiltrating and influencing the media at home and abroad in order, apparently, to counter bad publicity for the country, the then president and the SSA. The project was launched in the 2015/16 financial year with a budget of R24 million. One of the largest amounts issued for this project was one of R20 million given to the media agency, Africa News Agency (ANA), apparently for 'services rendered' for eight months.
Project Accurate/Khusela: This was a project to recruit toxicologists to test the food and bedding of then President Zuma. This project had an initial allocation of 8500,000 per month which increased to R1,5 million per month in the 2015/16 financial year. Again, the Panel does not understand this to be the responsibility of the SSA.
- Project Tin Roof: This involved an investigation into the alleged attempted poisoning of President Zuma by his wife, MaNtuli, but it also involved acquiring a safe house for MaNtuli and seemingly maintaining her, given the quantum of the project budget of R5,2 million, with a monthly withdrawal of R800,000.
- The SSA and Civil Society: The Panel also heard testimony and was provided with legal papers about a union that was established with the support of the SO Unit of the SSA (the Workers' Association Union) ostensibly to neutralise the instability in the platinum belt. The union was meant to counter the growing influence of the Association of Mineworkers and Construction Union (AMCU). The Panel also heard testimony from the IGI about the SSA having put under surveillance unions that had broken with the Congress of South African Trade Unions (Cosatu) and were critical of then President Zuma.
- Project Academia: This was designed to intervene in the #FeesMustFall protests and influence the direction of the student movement. The main agent in this project, [redacted], was sent on training to [redacted].
According to Thalami Dlomo, the purpose of Project Academia was to support 'young bright minds' to be patriotic and to be strategically deployed to institute counter measures and ensure stability and peace in our universities.
These are just some of the SO projects that the Panel was made aware of. In addition, the Panel was given access to a document which was purportedly a report to then SSA DG, Fraser, in February 2017 in which the author 'boasts' of his SO unit's performance in the 2016/17 year. These 'achievements' include:
During the 2016 ANC January 8 statement in Rustenburg, the unit 'initiated 3 countering operations to impede the distribution of CR17 regalia, impede transportation system of dissident groups from GP...'
During the February 2016 State of the Nation Address the unit was 'able to infiltrate and penetrate the leadership structure of the ZMF3I movement. The initial ZMF indicated that more than 5 000 people would embark on parliament, but with efficient and effective countering actions, and the dissemination of "disinformation" to supporters of ZMF, only approximately 50 ZMF supporters attended the march.'
During the ANC's manifesto launch in Port Elizabeth in 2016, the unit 'initiated a media campaign to provide positive media feedback through the placement of youths of various ethnic groups in photographic vision [sic] of media personnel, thereby promoting social cohesion.' [Our emphasis]
The report 'boasts' of various other similar operations, including that 'Active monitoring of the South Africa First, Right to Know, SAVESA, CASAC and Green Peace was done due to the penetration ability of the group.'
It is clear from the above information and other information available to the Panel that SO had largely become a parallel intelligence structure serving a faction of the ruling party and, in particular, the personal political interests of the sitting president of the party and country. This is in direct breach of the Constitution, the White Paper, the relevant legislation and plain good government intelligence functioning.
ENDS
The original document can be accessed here – PDF.
