Presentation to Portfolio Committee on Justice & Constitutional Development 20 February 2008

1. Presentation to Portfolio Committee on Justice & Constitutional Development 20 February 2008

2. Summary • Threats to Departments • Integrated forensic solutions • About the SIU • SIU mandate and legal scope • Budget growth • Project profile • Major project successes • Performance review • Project successes • Key success drivers • Building capacity • Challenges

3. Threats 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 drivers’ licences, procurement, tax collection • Both opportunistic and more organised exploitation of system gaps • Maladministration as much of a challenge as purposeful fraud / corruption • Major problem of legislative compliance often resulting in loss and weak delivery, eg PFMA, MFMA compliance • According to AG, 30% of Departments had expenditure-related qualifications

4. Integrated forensic solutions • Initial detection of fraud, corruption and maladministration as a result of escalating loss • Dealing effectively with the problem requires interface between key agencies and Departments eg AG, SARS, DGs, SCOPA, Law Enforcement Agencies (LEA) • Critical part of cleaning up problem is a complete forensic solution: • Forensic audit and investigations • Remedial legal action: civil, criminal and disciplinary • Systemic improvements • Traditionally forensic solution primarily provided by private accounting firms • Result in outsourcing of forensic services by Departments at great cost – not effective • In recent years, SIU able to provide complete forensic solution to State Institutions – major counter to private sector

5. About the SIU • Started out: Heath Commission 1995 • Early years: primarily criminal investigators and lawyers – strong LEA culture • Last 5 years: developed multi-disciplinary forensic capability: • Forensic investigators, lawyers, forensic accountants, cyber forensics experts, data analysts and project management professionals • Guided by a vision, mission, strategic objectives and key organisational values • Definite focus on corruption, fraud, maladministration, misconduct causing losses to State • Success defined through statistical and systemic impact

6. SIU mandate & legal scope • Major functions of the SIU: • investigate corruption and maladministration • institute civil legal action to correct any wrongdoing • Primary purpose of SIU: enable state to recover money lost as a result of unlawful or corrupt action • SIU also able to: use civil law to prevent huge losses and facilitate systemic improvements eg set aside contracts • Special powers: subpoena, search, seizure and interrogate witnesses under oath – NOT power of arrest • Cooperation: SAPS, DSO and NPA when encounter criminal conduct • Provide: complete forensic service and facilitate criminal legal action to Departments

7. Budgetincreases

8. Govt grant vs project Income

9. Funding growth • Over past 4 years, client Departments’ contributions have funded most of SIU’s growth (from 1% to over 61% in 06/07) • SIU able to build good track record of performance and delivery through partnership funding • Now also a four fold increase in treasury allocation from R37.2 to R158.4 over 6 years • NT investment indicates SIU’s emerging role as forensic investigation service provider of choice for the state. • Proposed amendments to PFMA • Also reverses accounting firms’ hold on public sector

10. Project profile

11. Major project successes April – December 2007 • DOT – audited 317 221 licences and found 32 066 non-compliant • DSD – saved R298 million; R3.1 billion in preventative savings; R38 million in recoveries; facilitated 3 386 prosecutions and 2 861 convictions • DCS –recovery of R5.6 million in 1 matter; 10 systemic recommendations • DOH – identified over 31 259 Govt officials irregularly receiving subsidy • SPF – completing audit of 13 343 beneficiaries

12. Procurement • 36 procurement investigations referred to SIU nationally by • National Departments • Provincial government – EC, MP, LI, KZN, WC • Parastatals – ie MEGA • Local Government • Range of investigations • Fraud – cover-quoting, BEE fronting, other fraudulent misrepresentations made by service providers • Breach of contract • Corruption • Challenges • Procurement investigations complex and time consuming • Building sufficient capacity to deal with volume of investigations referred

13. Provincial matters • SIU offices in 7 Provinces • 12 regionally based investigations • Local government investigations in 4 provinces • Key achievements • Mpumalanga: MEEC / MEGA • KZN: Irregular investment of Municipal funds; DOT cost centres; WPU safe houses; Housing Subsidy Scheme Fraud; Procurement irregularities and ghost workers in Health; Stationery / textbook procurement irregularities in Education. • Free State: 5 new Proclamations – provincial and local govt • Eastern Cape: OngoingDepartment of Local Government investigation and 17 provincial department referrals

14. SIU achievementsENE targets and achievements for 06/07

15. ENE targets & achievements

16. Key success drivers • Innovation in delivering services, eg • Focus on widespread small to medium corruption • Delivering a integrated service to departments • Obtaining funding from Depts. for investigations • Excellent relations with other law enforcement agencies • An effective national presence • Project management approach to drive excellent delivery • HR Development through innovative programmes • Tough internal integrity program – ‘clean’ staff • Emphasis on good governance – clean audit report

17. Building capacity • Key challenge is building sufficient capacity without overburdening support structures • Attracting experts from private sector and reverse public sector ‘brain drain’ • Setting benchmark for new type of forensic investigator who can tackle complex investigations in multi-disciplinary organisation • Implementation of Organisational Development (OD) • Establishing Centres of Expertise in legal, accounting and computer forensics • Training and development – model is being looked at for possible wider roll-out in future

18. Investigative capacity

19. Employment equity

20. Cooperation SIU provides range of forensic servicesbut: • fight against corruption is not preserve of a single entity • works with other law enforcement agencies, leverages legal capacity and reaches targets as part of a wider team • also maintains partnerships with Provincial and National Departments, SAPS, NPA, AG, DSO and SARS

21. Overall challenges • Rapid growth • Some key investigations present unique challenges • Lack of movement on proposed legislative changes • Proclamation process cumbersome

22. Conclusion • SIU – excellent year in demanding circumstances • delivered outstanding results on existing projects – savings of R 374 million; systemic improvements in key departments • effective implementation of ambitious new projects • OD process caters for future growth – foundation for bigger and more effective organisation • Partnership collaborations key to successful SIU profile • Return on investmentsupports greater govt investment through increased budget • Negotiate legal hurdles through legislative amendments • Vital to proliferate success of SIU model

23. Thank you