Update on SIU investigations relating to DCS

Meeting report

Opening remarks

The Chairperson welcomed the Head of the Special Investigating Unit (SIU), who would lead the presentations. He noted that the Director-General (DG) of the Department of Justice and Constitutional Development (DJCD) and the National Commissioner of the Department of Correctional Services (DCS) were present in the meeting.

He proposed that the next time the Committee had such a presentation, the National Prosecuting Authority (NPA) and the Directorate for Priority Crime Investigation (DPCI/HAWKS) should also be present.

Ms N Maseko-Jele (ANC) suggested that for future presentations, the Committee should separate the presentations. One day should be allocated for the DCS and another for the DOJ.

The Chairperson agreed with Ms Maseko-Jele's suggestion. He handed over to the Head of the SIU to present on its investigations.

SIU investigation at DCS involving Engineered System Solutions

Adv Andy Mothibi, Head: SIU, said that the Proclamation R18 of 2016 focused on the investigations and the irregularities involving a company called Engineered System Solutions (ESS). This dealt with what was colloquially referred to as “bracelets”, which were used to monitor the parolees.

Ms Naomi Jose, Programme Manager: SIU, explained that the SIU had been requested to investigate allegations of irregularities in the award of a tender for the Electronic Monitoring (EM) system acquired by DCS. The procurement process in the appointment of ESS was believed to have been irregular and in conflict with the prescripts governing public procurement. The project was initially awarded to ESS for a 12-month period, and the project was extended to 27 months, allegedly without any further tender or any other supply chain management (SCM) process. Although the amount budgeted for the pilot project was R6 510 376, ESS was ultimately paid an amount of R14 648 346, which was 125% more than what was budgeted for. It had been alleged that high-ranking officials in the DCS were bribed to ensure the award of the tender to ESS.

The investigation findings included the following:

• Non-compliance with the State Information Technology Agency (SITA);

• Non-compliance with, or fraud in respect of, the Private Security Industry Regulatory Association (PSIRA)

• Non-compliance with, or fraud in respect of, the State Security Agency (SSA)  -- security clearance up to the level of “Confidential.”

• Broad-based black economic empowerment (B-BBEE) fraud in respect of the use of Ekasi as a sub-contractor, and resulting in a supply chain management (SCM) process that did not comply with the prescripts of Section 217(1) of the Constitution.

Ms Jose listed the following disciplinary outcomes:

• In a referral letter dated 25 May 2017, which was served on the Minister of Justice and Correctional Services and the Presidency, the SIU had provided evidence to the Minister to warrant the institution of disciplinary proceedings against Mr Zacharia Modise, the former National Commissioner and Accounting Officer of the Department of Correctional Services.

Mr Modise had retired before disciplinary action could be taken against him.

• In a referral letter dated 6 July 2017, which was served on the former National Commissioner and Accounting Officer of the Department, the SIU had provided evidence to the Minister to warrant the institution of disciplinary action against two DCS officials.

The DCS had advised that one official had retired, and the Department had decided not to institute action against the administration official.

• In a referral letter dated 6 July 2017, which was served on the former National Commissioner and Accounting Officer of the Department, the SIU had provided evidence to the Minister to warrant the institution of disciplinary action against five DCS officials, who were members of the Bid Specification Committee (BSC) and the Bid Evaluation Committee (BEC).

The DCS had advised that one official had died, two had resigned, and the remaining two were challenging the disciplinary action

Outcomes on the loss prevented:

• The SIU recommended that DCS cancel the contract and the said contract between DCS and ESS was cancelled during the 2017/2018 financial year. As a result of the early cancellation, the investigation prevented the Department from suffering a loss of approximately R122 012 792.

Ms Jose and Adv Mothibi further highlighted the criminal outcomes; the outcomes from the blacklisting of the ESS to restrict it from doing business in the public sector; the civil outcomes; the steps taken since the ESS judgement; and the systemic recommendations.

(See attached document for details)

DCS's comments

The Chairperson asked Mr Makgoti Thobakgale, National Commissioner, DCS, for his comments on how the Department had responded to the SIU’s observations and recommendations.

Commissioner Thobakgale said the DCS had made written submissions to the SIU concerning how it was implementing the recommendations. It was also working with colleagues from the SIU to ensure that it was implementing the recommendations and were not off the mark. He requested that Mr Kilian make specific technical remarks on the work that the DCS had been doing in cooperation with the SIU, because he was the appointed colleague that worked with the SIU.

Mr Pieter Kilian, Head: Administration and Academic Services, DCS, said that the DCS had been interacting with the SIU on a weekly basis. On the ESS investigation, the DCS had particularly interacted with the project manager, Ms Jose. The outcome of the Supreme Court of Appeal (SCA) made it more difficult for the DCS to deal with the disciplinary issues, because the SCA stated that in terms of its findings, the contracts were not invalid, which meant that the contracts were there and they continued.

The DCS had had to discuss the outcome of the SCA with the SIU. It had had several meetings with the SIU in this current year and with the legal officials from the SIU to discuss the impact of the SCA on the report and the findings on the disciplinary cases. There was an agreement that the SCA outcomes had had an impact on the disciplinary findings. The DCS was now in the process of finalising its internal report, which it would shortly submit to the National Commissioner. He reiterated that there were disciplinary recommendations against a number of officials, one of whom had died, a few had retired, and two were still in employment in the Department.

On the systemic recommendations, he confirmed that there had been changes in how the DCS dealt with its procurement. The DCS had taken on board what the SIU had recommended. On the lack of consequence management against negligent officials, he said that it was true that officials often resigned before or during SIU investigations. The DCS was committed to ensuring that it would take the necessary action where there was sufficient evidence.

Discussion

Ms W Newhoudt-Druchen (ANC) asked whether the electronic monitoring bracelets were still being used in the DCS. She recalled that in previous presentations, it had been said that the SIU had not been receiving payments. She asked whether the SIU had been compensated for this specific proclamation, R18 of 2016.

She asked if the DCS had the capacity to implement the SIU's recommendations.

She referred to the disciplinary outcomes, and asked whether the two officials who were still in the employ of the Department were working in the same capacity as they were during the time of the contract.

She asked if SITA had never been involved in any of the Department's procurements, and if this was the reason why SITA was not involved in this particular tender.

Mr J Engelbrecht (DA) said that the SIU findings suggested that there were very serious shortcomings in the procurement and bid adjudication practices in the DCS. This was important for the Committee to note, because it indicated a problem in the entire Correctional Services processes, not only in the investigated cases. In other investigations that had not yet been discussed, certain findings recur every time. This was a strong indication of the problems that existed in the DCS.

It appeared as if there were repeat offenders where names came up on a regular basis in these investigations and previous investigations -- for instance, the former National Commissioner, Mr Modise. He asked the SIU whether there were certain individuals whose names had come up repeatedly in the matters that they had investigated.

He was concerned that officials tended to resign before disciplinary action could be taken against them. There should surely be other steps that could be instituted against such individuals, because it could not be said that there was nothing that could be done about it once officials had resigned.

Mr S Swart (ACDP) appreciated the presentation, particularly concerning the incredibly hard work that had been done. He also appreciated that the contract had been cancelled, which had saved R221 million. This was a highlight for him. With the special tribunal, such contracts would now be cancelled much more quickly. It was obvious that the SCA judgment was a setback -- this happened with litigation, as one was not always successful. He was pleased that the SIU did have a think tank, to understand what was lacking in the SCA judgment and what steps could be taken to improve litigation going forward. However, there were obviously implications following the loss of the SCA judgment, because it had an impact on disciplinary actions and would probably have an impact on criminal cases. The test on the civil matters was on a balance of probabilities, whilst on the criminal cases, it was a much higher test -- beyond reasonable doubt. Lessons had been learnt. He asked if the Committee could get information on the costs involved, particularly in respect of the SCA judgment.

On the blacklisting, he understood that the application to National Treasury had been on 17 June 2020. It had been a matter of concern that had been raised in Parliament, that very few companies were being blacklisted by National Treasury. He asked if the Committee could get an update on the blacklisting of ESS in the public sector.

Mr W Horn (DA) reiterated the question that Ms Newhoudt-Druchen had raised regarding the possibility of the continued use of electronic monitoring devices. The Committee had previously been informed that the contract had been set up in such a way that only the original company, ESS, would be able to service or supply replacement parts for the devices. While noting the budgetary context in which the Department operated, as well as the ratio between the officials at the Community Corrections division versus the number of parolees which must be monitored, he recalled that at some stage, the Committee had been informed by the DCS that electronic monitoring would be part of the solution. He asked the DCS what had been learnt from this exercise and what the way forward was regarding electronic monitoring.

He said it was good to hear that the National Commissioner had said that the DCS had reported in writing to the SIU about the steps taken to avoid a repeat of this matter going forward. However, he agreed with Mr Engelbrecht’s comment that the Committee must receive more detail. The Committee must insist that it be briefed in full on the steps that would prevent the type of adjudication and bid specification processes that had been set up to allow for only one provider to qualify to render the service. This was not a unique situation -- it was something that was prevalent throughout the public procurement processes of the country. Therefore, if the Committee was to play a meaningful role as an oversight body, it must insist on being briefed and being able to interrogate the specific steps that would be taken and the mechanisms that would be put in place by the DCS to prevent a recurrence of that type of situation.

Adv G Breytenbach (DA) said that her questions had largely been covered by her colleagues. She referred to the matter that the SIU had referred to the Anti-Corruption Task Team (ACTT), where documents had been lost, but had fortunately been replaced. In this kind of matter, it was convenient for documents to get lost. The loss of documents could simply derail any criminal investigation or prosecution. She wanted to know if this was the case, and if so, whether it was being investigated. She asked how it was possible for a high-profile body like the ACTT, filled with high level individuals, to lose documents that were so important.

Ms Maseko-Jele supported the Chairperson’s proposal for a follow-up meeting. The follow-up meeting should include all relevant institutions, including the NPA, so they could also respond on the investigations. She was interested to know what the NPA would say about the referrals that Adv Mothibi had spoken about, because these were old matters which the NPA must also prioritise.

She suggested that the follow-up meeting with National Treasury should also give an update on the blacklisting of ESS. If this company still did business in the public sector, she questioned how much damage was being done. It seemed that this company had deliberately had a relationship with high-profile officials in the DCS to engage in corruption. This was a matter that the Committee needed to follow-up on.

She referred to the officials that had retired or resigned before disciplinary action could be taken against them and the two remaining officials that were challenging the disciplinary. She said there was no way that the two officials who were challenging the disciplinary did not know what was happening in the Department, because the findings of the investigation had said that they were involved. In future, there would still be officials that retired before disciplinary action was taken against them, and questioned if this meant that no disciplinary action would be taken against those officials because they were already gone. She questioned whether anything was being done to bring such retired officials to account, so that it would also be a lesson for those still working for the Department -- that action would be taken against retired officials even if they no longer worked for the Department.

SIU's response

Adv Mothibi referred to Ms Newhoudt-Druchen's question on whether the SIU had been paid. He replied that he was pleased that the DCS had been honouring the invoices. On the question of why SITA was not involved in the tender, he said that government as a whole required SITA to be the custodian when departments procured electronic systems. SITA had not been consulted in this regard, and the SIU believed that on merit, the Department had erred in that regard.

On Mr Engelbrecht’s question about repeat offenders, he replied that there were indeed some officials whose names come up in various investigations. For instance, the Committee would notice that some of the same officials would be mentioned again in the next presentation involving another investigation, with particular reference to the former National Commissioner, Mr Modise. The SIU did indicate where there were repeat offenders, and the Department dealt with that accordingly.

Regarding the officials who retired or resigned before disciplinary actions were taken, he said that the SIU ensured that the resignation, early retirement or retirement, should not absolve the officials from the criminal or civil litigation process. In this regard, part of the 19 referrals to the NPA for criminal prosecution or investigation did involve some of those officials. It was expected that those officials should be held to account, in terms of the criminal law.

In response to Mr Swart, he said that the SIU took the SCA judgment very seriously. The SIU was also not happy with the judgment, which was why it went back. Even before the special tribunal, lessons had been learnt. On similar grounds, the SIU had not lost any of the cases it had taken to the high court or to the special tribunal, so it believed that it had put measures in place to ensure that it avoided such setbacks.

On the merits itself, the SIU believed that the cancellation of the contract had saved the Department of about R221 million. The SIU had advised the Department to cancel on the same basis that it wanted to cancel the overall contract and recover the money. It was ironic that the ESS did not even challenge the cancellation of the contract. Some of the referrals that the SIU had made were based on the misrepresentations and the fraud it had picked up. On the criminal side, the SIU were of the view that the merits and evidence were solid. The SIU was working with the NPA and should be able to prove fraud and corruption.

The SIU would ensure that it responded in writing to the cost order. He asked that Dr Wells provide a further response.

Dr Jerome Wells, Chief Legal Counsel: SIU, said that the cost had not been quantified as yet, but the cost order was against both applicants -- the SIU as the first applicant, and the DCS as the second applicant.

He referred to Mr Swart's question, and said that the first two points on slide 32 significantly addressed the lessons learnt concerning the outcome of the ESS matter.

On the implications of this judgment, he referred the Committee to the first point on slide 31. He said that the court did not discount that there might be non-compliance. The court ruled only in the context of whether it should review and set aside the contract. In his view, the ruling only applied to the court, stating that the misrepresentations that the SIU had alluded to, or the non-compliance that it had referred to, did not justify the setting aside of the contract. In all other aspects, it was a value judgment pertaining to the setting aside of the contract, and the evidence or findings should not have a material effect on any of those remedies or consequence management actions.

Adv Mothibi said that the SIU had learnt lessons and would like to ensure that costs of this nature did not come from technicalities or non-compliance with timelines. The instruction was very clear to the legal team, that it could not afford to not comply with legal timeframes when it came to civil proceedings, because it was not in the interests of the public. The Committee would not view that favourably.

In response to Adv Breytenbach, he said it also concerned the SIU that there documents involving the matters that were referred to the ACTT had been misplaced or lost. He assured the Committee that the SIU had taken this up, and that the SIU was part of the ACTT as well. The SIU had done a proper review of the ACTT process, including case prioritisation and case processing, and document safety was a critical part of this. Fortunately, the SIU was able to reproduce the documents and the prejudice was really not that much. The cases were being processed on the criminal side, and the SIU would still drive towards criminal consequence management. It would ensure that the ACTT continued to improve in terms of its document management.

He agreed with Ms Maseko-Jele's proposal for a follow-up meeting, particularly so that the colleagues from the NPA could also respond.

The SIU also took the issue of blacklisting seriously, because if it found that service providers had not acted prudently in departments when they did business with government, then those service providers needed to be blacklisted. The SIU was glad that the Department had acted on this part, and awaited the response from National Treasury.

Further discussion

Ms Newhoudt-Druchen noted that the final Presidential report had already been submitted to the Presidency in 2019, but the SIU was still waiting for a response from National Treasury on the blacklisting of ESS. She would have expected the blacklisting to be responded to immediately. She was concerned as to why the SIU was still waiting for the response. She suggested that the Committee could perhaps assist, by following up on the National Treasury to fast-track the blacklisting.

Responses

Commissioner Thobakgale referred to the questions on the electronic monitoring bracelets, and said that in line with the outcomes of the investigations and the legal processes, and as part of the broader information technology (IT) programmes, the Department had signed a Memorandum of Understanding (MoU) with the Council for Scientific and Industrial Research (CSIR). One of the projects was the electronic monitoring bracelets which the Department was developing and designing with the CSIR. The Department would own the patent and the designs. The project was still at the design stage.

Regarding how the Department worked with SITA, he replied that all the IT projects were now in line with the SITA legislation.

Regarding the question and comments by Mr Horn on the continued use of the electronic monitoring bracelets, he said that this was exactly why the Department had started this project with the CSIR. It was to ensure that the DCS strengthened its capacity, because the number of officials on the ground was not equal to the task regarding the number of parolees that had to be monitored.

Commissioner Thobakgale said that in the follow-up meeting, the DCS would provide more detail about how it had been responding to the outcomes of the investigations by the SIU.

Ms Jose referred to Mr Engelbrecht’s question on what measures could be taken when officials resigned before facing disciplinary action. She replied that if officials resigned and went into the private sector, then nothing could be done about that. However, if they resigned and went into the public sector, then the SIU could refer it to their new employer. It was important to note that all disciplinary action was not necessarily criminal or civil. So, in certain instances, once the official resigned, then action could not be taken, often because the official was negligent in following policy. However, in many instances, when the actions were criminal, they would be referred to the NPA.

The Chairperson noted that Mr Engelbrecht had asked a question concerning the specific individuals who had resigned before disciplinary action.

Ms Jose confirmed that those specific officials who resigned have not gone into the public sector again.

Commissioner Thobakgale said that the DCS would still pursue the disciplinary processes against those officials who were still within the Department, although this would be challenged. The referrals had been submitted to the NPA and the Hawks for those who had resigned. The NPA and the Hawks had requested specific information, and the DCS provided all the required information. The DCS were also awaiting the outcome of these processes.

SIU investigation at DCS involving Masetlaoka Scott Wilson

Ms Jose said that on 7 April 2015, the former National Commissioner, Mr Modise, had referred the matter involving Masetlaoka Scott Wilson to the SIU. He had wanted an investigation in respect of two contracts. One contract was related to the design and project management in respect of five prisons. The other contract related to the Government Immovable Asset Management Act, 2007, (GIAMA), in respect of 221 correctional facilities -- the GIAMA conditional assessments project.

It was alleged that Masetloaka Scott Wilson (MSW) had been irregularly appointed in respect of both the renovation and the GIAMA conditional assessments project.

The finding was that the DCS had irregularly appointed MSW without following a competitive bidding process. The SIU had found that MSW had colluded with one or more DCS officials, the services rendered by MSW were sub-standard, and in certain cases, the services were not rendered at all, and the DCS did not receive fair value for money.

The SIU had appointed expert engineers and architects to examine the five prisons. In all instances, it was found that MSW had overcharged the DCS by about R20 million.

The SIU had submitted a disciplinary referral against Mr Modise, who had since retired. Disciplinary referrals were also made against Ms Nandi Mareka, the Acting Chief Financial Officer (CFO) at the relevant time, and Ms Laura Susan Dekha Katenga, a Director: Professional Services at DCS.

Ms Jose also provided an overview of the civil outcome, the outcome of the investigation and the systemic recommendations. She said that in addition to the review, the SIU was also asking the court to order the MSW to refund the DCS a total amount of up to R158 917 123. The investigation had been finalised, and only the civil litigation was ongoing.

Given the fact that civil proceedings were still ongoing, the SIU could not preempt the result of the civil case outcome. The SIU had not taken any steps to restrict the MSW from conducting business with the state. Once the civil actions had been concluded, the SIU would make the necessary recommendations.

Adv Mothibi added that the recovery process was currently in the high court. There had been a slow turnaround time, but the SIU believed that the trial would be set and ensure consequence management on the part of the service providers and all concerned.

(See attached document for details)

DCS's comments

The Chairperson asked the National Commissioner comment on his observations. He asked that the National Commissioner explain why Ms Katenga had merely received a written warning.

Mr Kilian replied that Ms Katenga was actually a witness in another hearing. However, when the DCS had received the referral against her, it engaged with the SIU because it was of the view that Ms Katenga had provided information which had assisted the whole process. For that reason, the DCS ended up giving Ms Katenga a final written warning. The disciplinary hearing against Ms Nandi Mareka, the acting CFO at the time, was still ongoing.

Commissioner Thobakgale said that with regard to the utilisation of contracts from other departments, the DCS was strictly following National Treasury regulations. Before it engages in contracts, it writes to the National Treasury and seeks guidance regarding how it should happen. The DCS also had an audit function that did due diligence before the Department awarded any tender.

The Chairperson asked whether the interventions had been established before or after the SIU had concluded its work and made recommendations.

Mr Kilian replied that some of the information was obtained when the DCS had engaged with Ms Katenga to respond to why she should not face a disciplinary hearing. Some of the information was then shared with the SIU’s project manager at the time, who had shared the same sentiment that Ms Katenga was actually more valuable to the DCS as a witness in another matter.

The Chairperson said that that was not the question. He had asked whether the audit function had been established as a response to the recommendations to the SIU or was already established before the SIU had done its investigation.

Mr Thobakgale replied that the audit function was part of the DCS’s response in implementing the recommendations of the SIU.

Discussion

Mr Horn said he wanted to ask questions regarding the information on slide 49, particularly regarding the names of officials who were repeatedly mentioned in these presentations. In his view, if someone retired from a department instead of resigning, then that person was still in a relationship with the department. Regarding Mr Modise, it was not quite as simple as saying the Department no longer employed him. He asked whether the specific aspect had been considered that Mr Modise was a retiree of the Department. The quantum would ultimately be determinable only once the civil litigation was finalised. If unrecovered wasteful and fruitless expenditure was still remaining, and if there was still that relationship with the retiree, then it should be permissible and advisable to look in the direction of recovery.

He asked whether there was a familial relationship between Ms Laura Katenga and Mr Joseph Katenga, the Chief Deputy Commissioner of Strategic Management in the DCS.

Response

Commissioner Thobakgale said that he had also asked the same question as Mr Horn. The answer was that they were not related. He had not investigated this any further.

Adv Mothibi said that Mr Horn’s question was critical, because it was a phenomenon that people retired and resigned before facing disciplinary action, and they often got away with it. The SIU would ensure that this phenomenon would not continue. He asked that Dr Wells provide a legal perspective of the consequences that would be taken once the quantum had been determined.

Dr Wells said there was a pending matter, where the court would determine the just and equitable relief. The SIU had not lost sight that it could recover the money from the various officials. In this case, it was a possibility and there was potential to recover against the estate of the deceased. This was considered an option to recover all the damage and losses suffered by the Department. However, at this point in time, the quantum had not been determined.

Adv Mothibi made a slight correction that if a member was deceased, there was potential to recover against the estate, but in this case, there had not been anyone deceased. In principle, the SIU would follow up against the officials individually, or in cases of the deceased, against the estate.

SIU investigation at DCS involving procurement of personal protective equipment

Ms Jose said that this matter had been referred to the SIU on 13 August 2020. The SIU had been asked to investigate the irregular procurement of personal protective equipment (PPE). The total value of the alleged contracts awarded to 25 companies amounted to R53.3 million.

The SIU had determined that the procurement process was not fair and competitive in the procurement of the PPE, as the SIU could find no evidence to suggest that more than one supplier had been contacted to provide quotations. There was also no proper record keeping of delivery notes, and therefore the SIU could not confirm whether the goods were indeed delivered.

Regarding the procurement of mattresses, Ms Jose said the need for a fire retardant had existed since May 2019, and the DCS could not procure it due to budget constraints. The available evidence indicated that the mattresses were procured with Covid-19 funding, although these were not a Covid-19 related commodity.

It had been established that the quarantine team had requested the procurement of mattresses with water-resistant covers, but the procurement manager had requested a quotation for the fire-retardant mattress, which was irregular. This was an instance of superiors that asked their juniors to change the requests -- the juniors seemed to be adhering to the requests, but the seniors were actually abusing their authority. The manufacturers of mattresses had been unable to provide the SIU with comparable prices, as they did not supply the identified fire retardant mattresses.

Ms Jose confirmed that the investigation had been finalised, and civil action was being considered.  

On 11 February 2021, the SIU made four disciplinary referrals regarding 18 contracts against four senior DCS officials. In July, additional referrals were made against the same officials regarding different entities. One official subsequently resigned. The disciplinary hearings against the remaining three officials were ongoing.

Ms Jose concluded with the systemic recommendations and the SIU’s observations during the investigation.

(See attached document for details).

National Commissioner’s comments

Commissioner Thobakgale said that the DCS had addressed its SCM policies and internal control measures, as well as the issue of the segregation of duties. He confirmed that there were ongoing disciplinary processes concerning the remaining three officials.

He reaffirmed the findings, outcomes and observations made by the SIU. The DCS would work together with the SIU on the training that should be given to the DCS’s SCM officials.

Discussion

Ms Maseko-Jele said that this report was dated 2020, which was the time of dealing with "State Capture." People had been made aware that corruption was being dealt with everywhere. She expressed the view that the officials involved in corruption had no remorse and no respect for the law. The only thing that had to be done overall was to have a seminar on morals. It seemed as if moral values were too low. Something must be done about those officials that abused their power. The report indicated that junior officials were getting into trouble because of the instructions from the senior officials, but the law was clear. She suggested that the unions should also be involved in this matter, particularly concerning people being suspended with pay.

Mr Horn asked the SIU whether they had accepted the explanation that the CFO had obtained verbal approval from the National Commissioner at that time, on quotations above R500 000. He was not an expert on public procurement, but he understood that the accounting authority -- who was the National Commissioner -- did not have the authority to even approve this type of deviation in writing. It had been mentioned that some departments claimed that this was an emergency. In his view, considering the requirements for somebody appointed as a CFO, it was quite clear that the CFO could not have believed that a verbal or written approval for this type of procurement would comply with the Public Finance Management Act (PFMA). He asked that the Department provide the Committee with updated information on the disciplinary hearing of the suspended CFO. Was the CFO’s suspension based on this specific procurement, or were other issues also involved?

Ms Newhoudt-Druchen assumed that if a junior official ignored an instruction from a senior official, the junior official would surely be disciplined for insubordination and would have no choice but to follow the instruction of the senior official. She asked whether the Department would place both the junior and senior officials through disciplinary hearings. She asked whether the official that resigned was a junior or a senior official.

She asked whether all of the mattresses that were procured were fireproof, and whether they were able to be sanitised, as this was during the pandemic.

Response

Commissioner Thobakgale referred to the questions about the SCM officials. In terms of the outcome of the investigation into the PPE issues, both the junior and senior officials would be taken through disciplinary processes.

Regarding the follow-up on the officials that had resigned, the DCS was cooperating with law enforcement on the referrals by the SIU. The DCS had provided all the information that was needed.

Mr Lebogang Marumule, Acting CFO, DCS, said that the mattresses were fire resistant, because this had been the specification requested at that particular point in time.

The Chairperson noted that Mr Horn had asked for an update on the disciplinary hearing of the suspended CFO.

Commissioner Thobakgale said that the disciplinary processes were still ongoing. The report indicated that the disciplinary hearings against the remaining three officials were ongoing, and the next hearing date was from 5 December to 8 December.

Further discussion

The Chairperson asked Mr Horn if all of his questions had been answered.

Mr Horn said that he had also asked a question on the specific issues included in the CFO's suspension and disciplinary hearing.

Commissioner Thobakgale replied that the findings of this PPE investigation had been included in the disciplinary hearing.

The Chairperson noted that Ms Newhoudt-Druchen had also asked whether the official that resigned was a junior or senior official.

Mr Marumule replied that the person who resigned was a Deputy Director, and a senior staff member. The person resigned only because he was due for a pension. In other words, he had retired.

Ms Jose referred to Ms Newhoudt-Druchen's question on whether junior officials were also disciplined with the senior officials. She replied that all of the four officials who were being disciplined were senior officials, as they were the ones who gave the instructions and breached the PFMA.

The Chairperson considered the time and asked the Members how they would prefer to continue with the proclamations. He said the Committee would not deal with the SIU investigations at the Department of Justice (DOJ) in this meeting, and that the Committee would conclude with the outcomes of proclamation R10 of 2018, on KwaZulu-Natal (KZN).

SIU investigation at DCS involving Proclamation R10 of 2018 in KwaZulu-Natal

Mr Jonathan Chetty, Acting Regional Head: Gauteng/National Coordinator, Anti-Corruption Task Team at the SIU, said that this investigation emanated from a request for assistance received by the SIU from the DCS in investigating allegations of corruption and tender irregularities within the KZN region. The DCS had received an anonymous complaint regarding the abovementioned allegations, and its Departmental Investigation Unit (DIU) conducted a preliminary assessment.

In most instances, the SIU found a flagrant disregard for legislation, policies and procedures, codes of conduct and Treasury regulations by senior officials of the DCS's KZN regional office.

Several service providers were also found to have defrauded the DCS, resulting in the SIU making recommendations for prosecution to the NPA. There was evidence of transgressions of the Prevention of Organised Crime Act, Act 121 of 1998 (POCA), as well as evidence of possible tax evasion that was referred to the South African Revenue Service (SARS). Recommendations were also made to the DCS to blacklist certain service providers due to their actions during the bidding process.

16 referrals were made to the NPA between June 2019 and December 2019. These were against six entities and their directors. The offences included various types of fraud, such as false documentation. In total, the SIU made 22 disciplinary referrals between September 2019 and August 2020. There were various contraventions of the provisions of Annexure A of Chapter 7 of the SMS Handbook; contravention of the Public Service Code of Conduct, 2002; and contravention of National Treasury Regulations.

Mr Chetty mentioned additional outcomes, such as blacklisting referrals, SARS referrals, Asset Forfeiture Unit (AFU) referrals, and systemic recommendations.

(See attached document for details).

Comments by DCS

Mr Kilian said the matter that Mr Chetty had referred to was on review and in the labour court, so not much could be said about it at this stage. The SIU had been following up and engaging with the Acting CFO on the issue of blacklisting and the process of systemic recommendations.

Mr Marumule said that the DCS had implemented all of the systemic recommendations by the SIU, one of which was on the issue of the bid awards and adjudication process that did not take place in the KZN region itself. The DCS had changed its delegation to ensure it occurred within the head office.

He managed to resuscitate the particular processes in terms of the list of suppliers recommended for blacklisting. The DCS communicated with National Treasury to ensure that it implemented the recommendations of the SIU.

Discussion

The Chairperson asked Adv Mothibi whether the Committee had received all of the presentations on the SIU investigations at the DCS.

Adv Mothibi replied that there was one presentation that the SIU had planned to make, which was the Proclamation R28 of 2017 on the fencing, but this presentation might take a while. Other proclamations were also included so the Committee could have a complete view, such as the Proclamation R66 of 2002 up until 2004.

In particular, Proclamation R44 of 2007 involved various procurements and had attracted public interest simply because there had not been consequence management on the criminal side. Prosecutions were now being seen. He commented that this was the proclamation that had involved the company Bosasa. The SIU were satisfied that the prosecutions were underway, and those implicated were being held accountable.

Closing remarks

The Chairperson suggested that when the Committee returned in early January, it should schedule a meeting with the SIU, the NPA and the Hawks. This was to update the Committee on the progress that had been made on the events that had been described in this meeting. Thereafter, the SIU could brief the Committee on the remaining investigations that needed to be presented, which included the SIU investigations at the DOJ.

He was pleased with the manner in which the SIU and the DCS were working together. He noted that there was good cooperation between the SIU and the DCS. It should continue in that way to ensure that it consolidates the fight against crime and corruption. Crime and corruption were a serious concern to all South Africans, and it was important that it was defeated, because they ate into the moral fibre of society. It could be defeated only if everyone worked together.

The meeting was adjourned.