Head of Asset Forfieture Unit- ADV Willie Hofmeyr. NPA conference- Gallagher Estate Midrand- 28/03/07 Picture: Alon Skuy
Head of Asset Forfieture Unit- ADV Willie Hofmeyr. NPA conference- Gallagher Estate Midrand- 28/03/07 Picture: Alon Skuy

Taxpayers fleeced of R30bn

By Deon De Lange Time of article published Oct 13, 2011

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South African taxpayers lose billions of rand every year to corruption, incompetence and negligence in the public service, Special Investigating Unit (SIU) boss Willie Hofmeyr has warned.

Briefing MPs on his unit’s annual report on Wednesday, Hofmeyr estimated that 20 percent – or between R25 billion and R30bn – of the government’s procurement budget alone went down the drain each year.

This was because officials stuck their fingers in the till, overpaid for products and services or failed to monitor how money was spent.

Hofmeyr said it was difficult to accurately determine the true scale of the problem, but the R30bn estimate – a figure accepted in Treasury circles – was “not unrealistic”.

He told visibly exasperated MPs these losses were incurred not only through corruption, but also by the failure of civil servants to properly monitor public spending. It was the poor who were suffering disproportionately because of this failed service delivery, he said.

The long-serving SIU boss suggested the country would have to increase the number of dedicated anti-corruption investigators tenfold – from about 700 to 7 000 – if the problem was to be tackled.

“(Our) laws, regulations and policies are pretty good. But if there are no consequences to them being broken, if there are not enough people to investigate an allegation that rules have been broken, and to hold somebody to account, then the culture of impunity spreads quickly,” he warned.

Over the past seven years, the SIU has vastly increased the number and scale of its investigations by having departments under investigation cover some of the costs.

A similar arrangement is used by the auditor-general.

However, an apparent oversight in the SIU Act seems to prohibit the investigating unit from applying this model.

Among government entities being probed is the Tshwane metro where about 65 municipal officials are being investigated for striking business deals worth about R185m with their own council.

Other irregularities in the city, including “collusion between officials and service providers” and the irregular approval of about R400m in spending, are also being looked into.

In all, the SIU is investigating 588 government procurement contracts valued at a staggering R9.1bn.

In 43 of these cases – which only cover the period April to June this year – the unit has confirmed “irregularities” of R1.4bn.

The unit is also probing 360 matters of conflict of interest, and has so far uncovered 45 incidents of conflict involving R99m.

MPs were also surprised to learn that Eskom – one of several government entities under investigation by the SIU – had obtained a legal opinion which effectively barred the SIU from receiving funding from a state entity, thereby losing one of its biggest sources of operating revenue.

Hofmeyr said he did not suspect an “ulterior motive” in the Eskom move, but the outcome nonetheless placed a question mark over the unit’s ability to continue with major investigations in the future.

He appealed to MPs to amend the SIU Act before the start of the next financial year – or to come forward with a different funding model.

In the meantime, the SIU has received Treasury approval to continue with the current funding arrangement in cases in which such agreements have already been entered into with state departments, but no new probes will be allowed using this arrangement.

The Treasury has also agreed to inject about R90m into the unit this year to help make up a potential shortfall.

“We did not want to communicate this publicly because we are obviously concerned about the impact on our staff, who may fear that this could lead to drastic job losses and so on.

“We only communicated this recently, after we had the assurance that we have a solution – at least for this year,” Hofmeyr said.

The SIU is not authorised to initiate its own investigations, but must await a presidential proclamation.

There are currently 22 active proclamations.

These have resulted in 60 ongoing investigations involving 18 government departments or state entities.

The biggest of these, the SIU’s “most consistently productive investigation”, began in 2005 and involves more than 40 000 public servants found to have been receiving social grants irregularly.

By clearing the system of these names, the SIU estimates it has saved the country R898m in future losses.

Another R244m will be paid back by implicated officials.

A total of 17 729 cases have been brought to court and 15 281 convictions have been obtained, according to the annual report.

Other government entities being probed include the SABC. Inves-tigators have fingered 20 employees whose private business interests received R2.4bn in payments from the public broadcaster between September, 2007 and March last year. The auditor-general previously uncovered a similar scam involving another 20 SABC employees and about R30m.

The SIU has recommended the SABC institute disciplinary proceedings against 13 employees. A further five cases have been referred to the National Prosecuting Authority for criminal prosecution. - Political Bureau

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