1. CIFAL DURBAN Ekurhuleni Metropolitan Municipality(EMM) Case Study Presentation by: Harold Chiloane

2. Table of Contents  Background  EMM Anti Corruption Strategy  EMM Investigation Unit  EMM Fraud Hotline  Challenges Experienced  Business Integrity Framework (Way Forward)  Concluding Remarks

3. Background  The Ekurhuleni Metropolitan Municipality (EMM) Anti Corruption Strategy was developed and adopted by Council in April 2009.  The principles of the Local government Anti Corruption Strategy were considered.  The Strategy was developed as a framework and a building process to effect a series of interrelated steps.

4. EMM – Anti Corruption Strategy The implementation steps are:  Development of a Anti Fraud and Corruption Policy  Development of Code of Conduct: o Set up of register of Declaration of gifts, interests etc o Set up register for permission to conduct other business o Set up a register of third party transactions (MFMA requirement) o Register of non payment municipal accounts by officials and Councillors  Information session about Corporate Governance

5. EMM – Anti Corruption Strategy  Strengthening of EMM disciplinary processes;  Review of the Loss Control Committee’s scope and function;  Promoting hotline within the EMM;  Introducing employee screening before appointment  Defining the Municipal Public Accounts Committee’s role.

6. EMM Investigation Unit We have a dedicated team responsible for Forensic audits, accounting and fraud investigations, Management of a Disclosure Service (Fraud Hotline) and management requests.

7. EMM Investigation Unit Planned Capacity

8. EMM Investigation Unit The following are the statistics of management requests, EMM Hotline and National Hotline received over the past five financial years: Financial YearManagement Request EMM HotlineNational Hotline 2007/2008:45 2008/2009:52 2009/2010:58181 2010/2011:791226 2011/2012:421107

9. EMM Investigation Unit SUCCESSES The unit has investigated over 230 cases since 2007 involving allegations relating to the following irregularities:  Unauthorised, Irregular and fruitless & wasteful expenditure.  Fraud & Corruption,  Misconduct of staff and suppliers and  Non Compliance to peremptory requirements of various Acts and regulations, policies and procedures.

10. EMM Investigation Unit The problems that are prevalent in the EMM are in the following areas:  Lack of Good Governance o Weak administration due to failure to adhere to Council Resolutions, existing policies and legislation, inadequate administration, finance, HR & IT policies  Procurement processes o not being followed in SCM o Irregular awarding of tenders o Collusion o Conflict of interests  Financial Mismanagement o Payments made for service that have not been rendered  Service Delivery o Failure to ensure that goods and/or service are delivered (no monitoring)

11. EMM Investigation Unit  We have established a working relations with agencies like SIU and the Hawks  There are a couple of high profile cases that the SIU is assisting us with.  The Hawks has recently arrested two former senior officials and a local business man for tender fraud amounting to a R32 million. More successes in this regard are imminent.  AFU confiscated 8 properties, 27 luxury vehicles and 14 trucks.  There are some employees that were disciplined and found guilty of fraud and misconduct.

12. Fraud Hotline  The approved EMM Anti-Corruption strategy makes provision for the development and implementation of whistle blowing mechanism.  The service was established and it has been provided independently.  The Services are provided by BE HEARD - an independent service provider.

13. Fraud Hotline  Enables stakeholders (employees, customers and suppliers) to report unlawful and inappropriate activities anonymously and confidentially  Operates 24-hours a day 7 days a week  Calls are answered in most of the official languages  Each matter reported is given a reference number and can follow up reports  All calls are recorded and stored on a database  Reports are sent to a designated person

14. Fraud Hotline  Contact channels  FreeCall - 0800-102-201  E-mail – ekurhuleni@beheard.co.za  Website – www.beheard.co.za  MaxiCall fax – 0861-BEHEARD

15. Fraud Hotline

16. INTERNAL EMPLOYEE AWARENESS  Launch November 2010  Information Pack with whistle, pamphlet and cell phone sticker  Laminated Posters on notice boards  Ekurhuleni TODAY Electronic Bulletin  Dedicated Page in the Corporate Internal Newsletter  Place number on Ekurhuleni 2011 desk calendars  Induction Welcome Pack – Include information  Competition amongst employees to name the fraud character (orange character) - Previous character was known as “Franky Fraud”

17. Fraud Hotline EXTERNAL COMMUNITY & CUSTOMER AWARENESS  Launch at January 2011 Council Meeting  Stickers reflecting number to be placed in municipal accounts  External newsletters  Inclusion of the number in all educational material  Ekurhuleni Website  Place number on all external publications where applicable  Perspex display holders for all Rates Hall & Licensing enquiry desks.  Flyers / Pamphlets

18. Fraud Hotline MARKETING  E-Mail Signatures  Corporate Stationary Templates to display number  Intranet and internet  Strong Radio Campaign  Pull-up Banners  Promotional Items –Media Launch  Billboards (2011 / 2012 Financial Year)

19. Fraud Hotline SERVICE STATISTIC  Since the launch of the fraud hotline in 2010 have received about 250 reports.  The nature of incidents reported are: o Theft and Tender Fraud o Complaints about call centre number not working o Complaints about manager treating employees badly o Unethical behaviour o Officers soliciting bribes o Illegal electricity connections  We are now experiencing backlogs in dealing with matters report.

20. Challenges Experienced  Integration and coordination of Anti Corruption Strategies (ACS) activities is challenge.  Lack of monitoring and evaluation mechanisms  Consultation process during the development of ACS was not adequate  Investigated matter are not processed on time: o Disciplinary cases o Prosecutions o Civil Litigation  Case management capacity due high volume of reported cases  Lack of Reporting of success stories.

21. Business Integrity framework  EMM is currently developing a Governance framework which include the development of the Business Integrity Framework.  The focus will be on the design of proactive measures to: o Identify fraud and corruption risks o Identify system weaknesses, and o How such areas should be managed proactively.

22. Business Integrity framework  Elements that will be incorporated into the Business Integrity Framework: o Fraud and Corruption Risk Management policy, o Fraud and Corruption prevention plan, o Fraud and Corruption response plan o Alignment to Local Government Anti Corruption Strategy o Other aspects of good corporate governance, ethics and King III requirements.  The diagram below depicts the process and gives clear and concise visual aid to understand the aspects to be covered in the Business Integrity Framework.

23. Business Integrity framework

24. Concluding Remarks  Take aggressive action when fraud is discovered.  Take action on people that do not act when fraud is discovered  Impose stiff penalties “thorough prosecution send a strong message to employees”  Need to raise awareness about the costs of corruption for the country's political and economic development  Create anti corruption agencies that will monitor state organs on how the manage deal with fraud and corruption when it occures

25. Questions ?