Thursday, March 31, 2011
State corruption bombshell
March 31 2011 at 09:28am
By Deon de Lange
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National police commissioner Bheki Cele. Photo: Melinda Stuurman
The Special Investigating Unit (SIU) on Wednesday provided a rare glimpse into rampant corruption in the government when it told Parliament that 16 departments and public entities were under investigation for fraud, corruption and maladministration.
National police commissioner Bheki Cele, who is already under fire for his role in a multi-billion-rand headquarters lease in Pretoria, faces new questions after the SIU revealed that the construction of 33 police stations - valued at more than R330 million - was under investigation for “significant irregularities”.
The SIU has prioritised investigations into the Pienaar, Hazyview, Brighton Beach and eSikhawini police stations after an initial probe revealed fraud and corruption that included SAPS officials having undeclared interests in suppliers awarded work by the police; the lowest quotations not being accepted; no quotations received from winning bidders; and actual payments far exceeding budgeted costs.
SIU chief Willie Hofmeyr told visibly shocked MPs from the National Assembly’s justice committee on Wednesdaythat more than half of the government’s approximately 10 000 subsidised housing projects were suspect. This included instances where “contractors were paid for building houses which may not exist at all; were extensively incomplete; seriously defective; or were paid for more houses than were built”.
He said the investigation by public protector Thuli Madonsela into the Pretoria and Durban police office leases was “only one part of a far wider investigation” into the police’s procurement division.
So widespread is corruption at this department that the SIU has been forced to prioritise only the 20 “top cases”, which alone total over R2 billion.
At the SABC the SIU uncovered that between September, 2007 and March last year, about 20 employees had undeclared interests in firms that did business with the broadcaster to the tune of R2.4bn. This follows an earlier auditor-general investigation that uncovered corruption involving 20 SABC employees to the tune of R3.4m.
According to Hofmeyr, a joint investigation with the Brixton commercial crimes unit had so far resulted in eight criminal cases, of which five had been referred to the National Prosecuting Authority. “There is serious criminality that is being investigated at the SABC,” said Hofmeyr.
The Department of Public Works is being investigated after the SIU discovered that R35m had been paid to entities in which department officials had undisclosed business interests. A contract issued by this department for the construction of “accommodation” at an undisclosed border post - valued at R375m - was also under the microscope.
The public protector has already slammed Public Works Minister Gwen Mahlangu-Nkabinde for “unlawfully” entering into the police headquarters lease in Pretoria. Now the SIU is looking into another Pretoria lease, this time for a single residence which the department had leased as “residential accommodation” at an astronomical R217 000 a month - without “relevant approval”. The contractor had been “positively linked to a DPW official”.
The Department of Arts and Culture is being probed for misusing funds ring-fenced for the 2010 World Cup.
The Tshwane Metro had paid R185m between 2007 and 2010 to businesses in which 65 municipal staff members had either had undisclosed interests or, brazenly, were the vendors doing business with their own municipal council. Further procurements of R80m were also under investigation.
Ten waste management tenders at the Ekurhuleni Metro - valued at R500m and involving 19 different contractors - were under investigation. In one of these, payments totalling R37.8m had been made to service providers without delivery notes and no one at the metro could confirm whether the goods were ever delivered.
Also in Ekurhuleni, information and communication technology contracts worth R32m had been awarded to a company with which the municipality’s executive director of IT services had an undisclosed relationship.
“He has since resigned and is now employed full-time by the company,” Hofmeyr said to astonished gasps from MPs. And the municipality’s director of infrastructure had admitted to approving invoices valued at R12.4m for services that were never delivered.
The Department of Rural Development and Land Reform is being probed - at the request of minister Gugile Nkwinti - in what is likely to be the country’s biggest-ever “data uplifting project”.
So far, fraud and corruption charges have been laid against three officials and a KwaZulu-Natal businessman relating to land reform grant fraud totalling R50m. And working with the Hawks and the Assets Forfeiture Unit, the SIU has seized KwaZulu-Natal farms worth a further R50m.
The SIU can only investigate at the request of a department or government entity - and only after the president has signed a proclamation authorising such a probe.
President Jacob Zuma has signed 16 proclamations for the 2010/2011 financial year, including one proclamation to investigate all 23 municipalities in North West.
Asked by one MP whether South Africa was losing the fight against corruption, Hofmeyr said: “I think we should all accept that corruption is a serious problem in our country, but I am hopeful that we will make good progress over the next few years.”
He also said he was encouraged by the fact that the president had issued 16 SIU proclamations - the most in a single year - and that “significant resources” were being devoted to the problem. - Political Bureau
Comments by Sonny
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SIU probes staggering corruption cases
Cops in spotlight in corruption probe
Cape Town - The special investigating unit (SIU) has been inundated with new cases revealing staggering corruption in the police, the public broadcaster, the land reform and housing subsidy systems, state departments and municipalities, MPs heard on Wednesday.
SIU head Willie Hofmeyr told Parliament's portfolio committee on justice: "We have received a flood of new cases. Some of them are very big."
He outlined 16 new proclamations received by the anti-graft unit in the past financial year, the most ever in its 15-year history, before commenting wryly that "few professionals in South Africa are honest".
The SIU was investigating the entire procurement chain in the public works department and had so far found that R35m was paid to entities in which officials had undeclared business interests.
The probe also found that an official had signed a lease for a residential property in Pretoria for R217 000 a month without the relevant approval, Hofmeyr said, stressing that it was "a single house, a big and expensive house but just one house".
The contract value to date exceeded R7m.
SIU investigators have also found that the police's procurement process for the building or renovating of 33 police stations to the tune of R330m was deeply flawed.
Hofmeyr said at several stations the work was not put out to tender but contracts were instead awarded on what he facetiously called a "three quote" system.
"You have one quote for the desks and another quote for half the bricks, and another quote for the other half of the bricks. It is not, I think, a very desirable system."
The probe was focusing on Pienaar, Hazyview, Brighton Beach and eSikhawini police stations and had also found BEE fronting and instances where SAPS officials had interests in the contracted companies.
The longest-running project on the SIU's plate, its investigation into public housing corruption, has shown that at least half of all projects undertaken by the department of human settlements were "problematic in some way".
Investigators were probing contracts worth R2bn. Contractors were being paid for houses which did not exist at all, were extensively incomplete, seriously defective or fewer than the number agreed upon.
Hofmeyr said the SIU's probe into the cash-strapped SABC had uncovered "serious criminality" with R2.4bn paid out to businesses in which 20 company employees held interests between 2007 and 2010.
The unit opened eight criminal cases against staff members of which five had been finalised and handed to the National Prosecuting Authority.
Hofmeyr said the unit not only uncovered extensive corruption in the Tshwane and Ekurhuleni metros but had been asked by the national government to investigate all 23 municipalities in North West province.
In Tshwane, it found that 65 officials had interests in companies doing business with the metro that had received payments totalling R185m between 2007 and 2010.
Officials colluded with service providers, paid them for work that was not done and tampered with tender specifications.
At Ekurhuleni, "a number of people are in the process of being dismissed" for wrongdoing that included a director signing off on invoices to the value of R12.4m for services that were not delivered.
Hofmeyr said it was heartening that government departments were increasingly calling on the SIU to probe endemic abuse and noted that the department of land reform and rural development had asked it to scrutinise the entire land reform process.
He was expecting it to ask that the unit do the same on the land restitution system.
The land reform investigation saw the SIU conduct its biggest ever data swoop, with investigators effectively seizing more than 50 million documents to track fraudulent or irregular awarding of grants and funds.
With the help of the Hawks and the Asset Forfeiture Unit, the SIU has seized farms and assets in KwaZulu-Natal worth R50m and brought fraud and corruption charges against a businessman and three officials from the department.
In another new probe, the department of arts and culture was found to have incurred unauthorised expenditure of R42m related to the 2010 FIFA World Cup
Hofmeyr trod carefully on questions relating to the Public Protector's report on the R500m contract for the police's new headquarters in Pretoria, in which she found that the deal was fatally flawed and fingered national police commissioner Bheki Cele as the organisation's chief accounting officer.
But he conceded that on occasion the SIU had been "crippled" by the lack of co-operation from accounting officers, and like the protector, suggested that Treasury should step in.
"The public protector's solution was that Treasury should look at it and take the necessary steps, which may mean persuading the accounting officer to do it ... they carry a lot of persuasive value."
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