President Zuma orders several anti-corruption investigations

12 August 2010

President Jacob Zuma has directed the Special Investigating Unit to investigate supply chain related concerns in a number of government departments.

The affected departments are the Department of Health in the Gauteng Province, Human Settlements, Department of Arts and Culture, Department of Education in the Eastern Cape Province, national Department of Public Works, the South African Social Security Agency (SASSA) and the South African Police Service.

While not pre-judging the investigations, the proclamations are a clear indication of the President and Cabinet's stated resolve to combat corruption, mismanagement and maladministration at all levels of Government and the public service.

The SIU has started detailed investigations into these matters, and is treating them as ones of extremely high priority. Each investigation will be staffed by a substantial team of forensic investigators, lawyers, accountants and analysts.

We are pleased to note that in each case the relevant Ministries and Departments are cooperating fully with the investigations, and will continue to do so going forward as they want solutions. Some Ministers have requested the President to assist them towards eradicating corruption and maladministration in their departments.

DETAILS OF THE INVESTIGATIONS

Department of Arts and Culture

The President has issued a Proclamation mandating the SIU to investigate concerns in the Department of Arts & Culture (No. 36, 2010 - Government Gazette 30 July 2010 No 33425).

The details of the matters to be investigated are indicated in the excerpts from the Proclamations quoted below.

The Department of Arts and Culture has already taken disciplinary action against a number of Departmental staff. A special focus for the SIU will be the recovery of funds, as well as ensuring proper accountability for any irregular expenditure that may be found.

Extract from the Department of Arts and Culture Proclamation which can be found in full in Government Gazette of 30 July 2010 No 33425.

The Proclamation mandates the SIU to look at:

1. The under-spending or misspending of the Department's budget in respect of the amounts voted for the purpose of the 2010 FIFA World Cup Projects for 2007, 2008 and 2009 financial years.

2. The failure by officials of the Department to ensure that transfers and subsidies to beneficiaries in terms of the Department's Arts and Culture in Society Programme, the 2010 FIFA World Cup Projects, The Investing in Culture Programme and the Cultural Development Programme were applied for their intended purposes.

3. Any irregular or fruitless and wasteful expenditure incurred by the Department in respect of the Department's Arts and Culture in Society Programme, the 2010 FIFA World Cup Projects, the Investing and Culture Programme and the Cultural Development Programme.

Department of Public Works

The President has issued a Proclamation mandating the SIU to investigate concerns in the Department of Public Works (No R.38, 2010 - Government Gazette 30 July 2010 No 33425).

The details of the matters to be investigated are indicated in the excerpts from the Proclamation quoted below.

The Department of Public Works investigation will be one of the biggest ever launched by the SIU, and will focus primarily on procurement within the Department - including the assessment of numerous leases negotiated by DPW for and on behalf of client departments, some of which involve significant amounts.

The investigation originates in a request from the Minister of Public Works that the SIU assist in addressing serious concerns he had regarding procurement processes in the Department.

Extract from the Department of Public Works Proclamation which can be found in full in Government Gazette of 30 July 2010 No 33425.

The Proclamation mandates the SIU to look at:

The procurement of goods and/or services, including leased accommodation, on behalf of the Department and/or other national departments and/or institutions for whose procurement the Department is responsible, in a manner that was

(a) not fair, equitable, transparent, competitive and/or cost-effective; and/or
(b) contrary to applicable
(i) legislation;
(ii) manuals, guidelines, practice notes and instructions issued by the National Treasury; and/or
(iii) manuals, policy, procedures, instructions and/or practices of or applicable to the Department.

The incurrence of:

(a) irregular expenditure;
(b) fruitless and wasteful expenditure; and/or
(c) expenditure not due, owing or payable, in relation to payments made to property owners, property managers, consultants, suppliers and/or service providers for the furnishing of goods and/or services to the Department, including leased accommodation.

Eastern Cape Department of Education

The President has issued a Proclamation mandating the SIU to investigate concerns in the Eastern Cape Department of Education (No R.37, 2010 - Government Gazette 30 July 2010 No 33425).

The details of the matters to be investigated are indicated in the excerpt from the Proclamation quoted below.

Extract from the Proclamation which can be found in full in Government Gazette of 30 July 2010 No 33425.

The Proclamation mandates the SIU to look at

1. The procurement of goods or services by or on behalf of the Department and payments made in respect thereof in a manner that was:

(a) not fair, competitive, transparent, equitable or cost-effective;
(b) contrary to applicable legislation;
(c) contrary to applicable manuals, guidelines, practice notes or instructions issued by National Treasury or the applicable Provincial Treasury;
(d) contrary to manuals, policy, procedures, prescripts, instructions or practices of or applicable to the Department; or
(e) conducted or facilitated by, or through the intervention of officials or employees of the Department with undeclared conflicts of interest, and any related unauthorised, irregular, fruitless and wasteful expenditure or loss of ''funds of the Department.

2. Any losses suffered by the Department as a result of:

(a) the mismanagement of the expenditure of its funds; or
(b) theft, fraud or other unlawful conduct and irregular practices of third parties or of officials or employees of the Department.

3. The mismanagement of the remuneration or benefits of officials or employees of the Department and losses resulting therefrom.

4. The remuneration or granting of benefits to officials or employees of the Department or other persons whilst such officials, employees or other persons were not entitled to such remuneration or benefits or any part thereof.

5. The failure by the Department to take appropriate steps to recover remuneration and employee benefits paid out or granted incorrectly or erroneously.

6. The recruitment, selection and appointment of personnel

(a) for the Department or education institutions in a manner that was contrary to:
(i) applicable legislation;
(ii) manuals, policies, procedures, prescripts, instructions or set
practices of or applicable to the Department or such educational
institutions; or
(iii) the applicable post structures, minimum post requirements and
remuneration structures; and
(b) for positions that they are not qualified or otherwise best suited for .

South African Police Service

The President has issued a Proclamation mandating the SIU to conduct an investigation within the South African Police Service (No R.42, 2010 - Government Gazette 10 August 2010, No 33451).

The investigation will focus primarily on concerns within the procurement division of SAPS.

The full details of the matters to be investigated are indicated in the extract from Proclamation attached below.

The SIU intervention originates from a referral by the Independent Complaints Directorate (ICD) and has received the full support of the National Commissioner of Police, who is committed to ensuring that procurement within the SAPS is undertaken in a clear and transparent manner and in accordance with the necessary Supply Chain Management prescripts.

Extract from the SAPS Proclamation which can be found in full in Government Gazette of 10 August 2010 No 33451

The Proclamation mandates the SIU to look at:

1. The procurement of and contracting for goods, works or services, including leased accommodation, by or on behalf of the Service (including procurement and contracting conducted on behalf of the Service by the Department of Public Works ("DPW") or the State Information Technology Agency (Pty) Ltd ("SITA")) and payments made in relation thereto, in a manner that was -

a. Not fair, equitable, transparent, competitive or cost-effective;
b. Contrary to applicable -
i. Legislation;
ii. Manuals, guidelines, practice notes or instructions issued by the National Treasury or the applicable Provincial treasuries; or
iii. Manuals, codes, policies, procedures, instructions or practices of or applicable to the Service;
c. Conducted or facilitated by or through the intervention of officials, officers, employees, personnel or members of the Service (hereinafter collectively referred to as "the Service's Personnel") with undeclared conflicts of interest; or
d. Conducted or facilitated by the manipulation of the Service's supply chain management, procurement or information system management processes -
i. By property owners, property managers, contractors, suppliers or service providers (hereinafter referred to as "the Service's suppliers and service providers") of the Service; or
ii. By, in collusion with or through the intervention of the Service's personnel,
To unduly benefit themselves or others.

2. The incurrence of -

a. Unauthorised expenditure
b. Irregular expenditure
c. Fruitless and wasteful expenditure; or
d. Expenditure not due, owing or payable,
In relation to payments made to agents of the Service (including the DPW and SITA) or to the Service's suppliers and service providers for goods, works or services, including leased accommodation procured by or on behalf of the service.

3. Non-compliance with the provisions of the Government Immovable Asset Management Act, 2007 (Act No. 19 of 2007), or the conditions of the "devolution of custodial responsibilities of functional assets" process embarked upon by the DPW, the Service and National Treasury, inter alia, due to the manner in which the Service's Building Services have been conducting their projects.

4. Unlawful or irregular conduct by the Service's personnel, the Service's suppliers and service providers or third parties relating to any one or more of the aforementioned allegations.

Department of Social Development

The Special Investigating Unit (SIU) has been working with the Department of Social Development (DSD), and the South African Social Security Agency (SASSA) for several years to investigate a number of issues, especially irregularities pertaining to social grants.

In early 2010 the SIU and SASSA applied for an extension of the existing proclamation. This makes provision for the investigation of institutional matters in SASSA relating to corruption, procurement related fraud, etc, as well as new matters within the grant administration which fell outside the time frame of the previous proclamation. Types of irregularities to be investigated include:

• double invoicing,

• conflict of interest matters,

• procurement-related fraud,

• non-compliance with Supply Chain Management and procedures and PFMA prescripts.

The extension to the new proclamation was published on 8 June 2010 (proclamation R27 in Government Gazette 33279) which means all irregularities committed between 15 November 2004 and 8 June 2010 are covered by the proclamation.

There is already a service level agreement between the SIU and SASSA which runs until March 2011.

The DSD-SASSA investigation is the SIU's largest in terms of physical staff presence (as many as 200 staff), data analysis input and national scope. The Department has committed substantial resources to this investigation, which has enabled the SIU to employ a large number of additional staff to focus exclusively on it.

The relationship with DSD and SASSA is the SIU's longest-running, and has produced amongst the best results in terms of both fiscal outcomes and implementable systemic and other recommendations.

Extract from the SASSA Proclamation which can be found in full in Government Gazette of 8 June 2010 No 33279

The Proclamation mandates the SIU to look at:

1. The unlawful and illegal payment and/or receipts of social grants or benefits in respect of deceased and/or fictitious persons and/or persons who do not qualify for the receipt of such grants or benefits or any portion thereof and any conduct directed at, promoting, or facilitating payment and/or receipt thereof

2. The conduct of officials and employees of the SASSA, government officials and/or agents responsible for the administration and/or payment of social grants or benefits, which has or may in the future result in losses of, lack of control over, or delays in payment of monies allocated for the payment of social grants or benefits and any conduct directed at, promoting or facilitating the aforementioned.

3. The procurement and contracting with suppliers and/or service providers for goods and services on behalf of the SASSA and payments made to such suppliers and/or service providers in relation thereto in a manner that was -

a. Not fair, equitable, transparent, competitive and/or cost-effective; and/or
b. Contrary to applicable
i. Legislation; and/or
ii. Manuals, guidelines, practice notes and/or instructions issued by the National Treasury and/or the applicable Provincial treasury, as amended; and/or
iii. Manuals, policies, procedures, prescripts, directives, guidelines, instructions and/or practices of or applicable to, the SASSA

4. The failure by officials and/or employees of the SASSA to -

a. Disclose the fact that they had a direct or indirect interest in the suppliers and/or service providers used by the SASSA, which presented a conflict of interest; and/or
b. Disclose to the SASSA, that they engaged in business activities for remuneration outside of their employment.

Department of Human Settlements

The President has extended the end-period of the original Proclamation from 25 April 2007 to 30 July 2010. There is no change the mandate of the investigation. (No R.35, 2010 - Government Gazette 30 July 2010 No 33425).

For further information please contact:
Presidency: Zizi Kodwa
SIU: Marika Muller

Issued by the Presidency, Pretoria, August 12 2010

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