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

2. SIU presentation - 3 May 20072 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

3. SIU presentation - 3 May 20073 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

4. SIU presentation - 3 May 20074 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

5. SIU presentation - 3 May 20075 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)

6. SIU presentation - 3 May 20076 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

7. SIU presentation - 3 May 20077 Budget Increases Past years Estimate Outcome MTEF period Audit Estim 03/0404/0505/0606/0707/0808/0909/10 R'000 Total Income40,259,5101,5139,7203,7231,9270,4 Government grant25,537,248,955,693,1116,2149,5 Projects income14,722,352,684,2110,7115,6120,9

8. SIU presentation - 3 May 20078 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

9. SIU presentation - 3 May 20079 Increased investigative capacity 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

10. SIU presentation - 3 May 200710 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

11. SIU presentation - 3 May 200711 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

12. SIU presentation - 3 May 200712 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)

13. SIU presentation - 3 May 200713 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

14. SIU presentation - 3 May 200714 Projects Update Department 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

15. SIU presentation - 3 May 200715 Projects Update – DSD (cont) Achievements Performance Measure 2006/07 Target 2006/07 Achieved Achieved from inception to Date Cash recoveriesR 24 millionR 26 millionR 39 million Actual SavingsR 40 millionR 213 millionR 493 million Preventative savingsR 1 billionR 1,8 billionR 4,9 billion Removals from SocPen64 22181 648 Lapsed grants7 347102 882 Disciplinaries prepared7 0004 6776 797 Prosecutions2 4002 6753 307 Convictions1 8002 2152 570

16. SIU presentation - 3 May 200716 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

17. SIU presentation - 3 May 200717 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

18. SIU presentation - 3 May 200718 Projects Update DOT: Achievements to date Performance MeasureTargets 2006/7 Achieved 2006/7 Achieved to date Files uplifted from DLTCs318 7081 145 645 Files audited716 144784 816 Non-compliant licenses found17 55030 55342 229 Disciplinaries prepared150180242 Criminal investigations1 1821 3412 366 Arrests7006061 014 Prosecutions instituted431621 Convictions383548

19. SIU presentation - 3 May 200719 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

20. SIU presentation - 3 May 200720 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

21. SIU presentation - 3 May 200721 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

22. SIU presentation - 3 May 200722 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

23. SIU presentation - 3 May 200723 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

24. SIU presentation - 3 May 200724 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

25. SIU presentation - 3 May 200725 Projects Update – DCS (cont) ▪ Challenges New, wider proclamation required Procurement investigations complex and time consuming Delays in obtaining FMS / BAS payment information from DCS

26. SIU presentation - 3 May 200726 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

27. SIU presentation - 3 May 200727 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

28. SIU presentation - 3 May 200728 SIU Achievements ENE targets and achievements for 06/07 Performance Measures 2005/062006/07 TargetActualTarget 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

29. SIU presentation - 3 May 200729 ENE Targets and achievements Performance Measures 2005/062006/07 TargetActual (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 TotalsR1 040mR3 582mR1 350mR2 024m 2007/08 Target R 40m R 2 000m R 160m R2 200m

30. SIU presentation - 3 May 200730 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

31. SIU presentation - 3 May 200731 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

32. SIU presentation - 3 May 200732 Overall Challenges ▪Rapid growth ▪Some key investigations present unique challenges ▪Lack of movement on proposed legislative changes ▪Proclamation process cumbersome

33. SIU presentation - 3 May 200733 ▪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