From scooter ambulances to Talana shacks in Limpopo, we look back at the SIU’s 25 years of striking against corruption

As the Special Investigating Unit (SIU) celebrates its silver jubilee anniversary on 14 July 2022 in Boksburg, we look back at the Unit’s 25 years of striking against corruption in South Africa. For the past 25 years, the SIU has made significant recoveries of public money and set aside a number of contracts that were unlawfully awarded by state institutions.

The SIU’s mission is to ensure that corruption has no room to breathe in all spheres of government. We have always maintained that we are poised to strike against corruption, however, our history and present work shows that we are not only poised but STRIKING AGAINST CORRUPTION.

In 1996, Parliament of the Republic of South Africa passed the Special Investigating Units and Special Tribunals Act 74. The next year, President Nelson Mandela signed the Proclamation R24, which created the Special Investigating Unit. The SIU was meant to be a temporary body but the need to solidify anti-corruption in the State grew, and the work of the organisation became one of the pillars in strengthening the justice system.

In 2001, the SIU ceased to exist because of a Constitutional Court ruling. But soon after legislative amendments were made, the SIU was back in action and more energised to serve South Africa with pride.

The setting up and subsequent operation of the Special Tribunal in 2019 has made it possible for the SIU to expedite recovery of State monies and State assets lost through negligent and corrupt means. The Special Tribunal adjudicates on matters that the SIU institutes for civil litigation relief following the conclusion of its investigations. The SIU no longer has to queue at High Courts with other litigants and experience delays, which may make recovery of stolen money more difficult as culprits may have enough time to hide or dissipate the money and assets.

Contribution in government departments

There is no national or provincial department, municipality or State owned entity that is exempted from the probing eye of the SIU.

It was not long since our inception when the SIU investigation uncovered State farms in the Eastern Cape that were illegally transferred and leased. By the end of February 1999, the SIU had recovered 204 farms in the former Transkei worth R31.4 million.

Between 1994 and 1999, the SIU investigated fraud, bribery, and corruption at drivers’ license testing centres (DLTC) in Limpopo Province. The outcome of the SIU investigation revealed that as many as 11% of the 240,000 drivers’ licenses audited should be cancelled. In 2004, the Department of Transport (DoT) thus approached the SIU for its assistance in rooting out the problem at a national level, and in January 2005, the President issued Proclamation R5 of 2005 directing it to proceed.

Within three years of our agreement with the department, the SIU audited nearly 800,000 files, uncovered 45,253 invalid licenses and referred 264 officials for disciplinary action. In collaboration with various law enforcement partners, our work further resulted in the arrest of 969 private individuals and 81 government officials, with 565 successful prosecutions. In one case, an official at a DLTC in Limpopo was arrested through a sting operation in which he tried to sell a licence to a member of the SIU, and was later connected to the sale of over 1,000 licences.

Personal protective equipment

As the country and the globe faced challenges of the Covid-19 virus, others saw an opportunity to milk State coffers with irregular and fraudulent tenders to supply the government with personal protective equipment (PPE). Whistleblowers alerted the SIU of abuse of public funds. We acted and investigated following the signing of Proclamation R23 of 2020 by President Cyril Ramaphosa.

The SIU investigation in the Gauteng Department of Health found a number of irregularities in the appointment of service providers for the delivery and supply of PPE and the failure by the then MEC Dr. Bandile Masuku to exercise appropriate oversight and failure to act against the irregularities when he was made aware. Some of the contracts found to be invalid and unlawful include a R103 million PPE tender awarded to Zakheni Strategic Supplies, R139 million PPE tender awarded to Ledla Structural Development, and R24 million PPE tender awarded to events management company Mlangeni Brothers Events.

In the Gauteng Department of Education, the SIU investigation revealed that the department unlawfully awarded school disinfecting tenders worth R431 million. The investigation revealed that the procurement process was not cost-effective, as service providers were not paid per square meter of the area cleaned. Frozen monies and properties were forfeited to the State and companies were ordered to pay back profits earned from invalid tenders.

In the Eastern Cape province, the SIU put a stop to a R10.1 million tender that was irregularly awarded by the Eastern Cape Department of Health for 100 scooter ambulances. The SIU investigation found the tender to have been unlawfully awarded, and the tender was reviewed and set aside.

In another PPE tender case, the SIU investigated a tender worth R172 million awarded by the National Health Laboratory Services (NHLS) to Hamilton Ndlovu and associated companies. The Special Tribunal ruled that this tender was invalid and unlawful, and Ndlovu and associates were ordered to pay back R158 million back to the State. Frozen properties and funds worth R42 million belonging to Ndlovu were forfeited to the State.

Soon after President Ramaphosa announced the National State of Disaster in 2020, the Department of Public Works awarded Caledon River Properties and Profteam CC a contract worth over R40 million to erect the Beit Bridge border fence, as part of the Covid-19 emergency procurement. It was not long after the fence was erected that it started falling apart. The SIU stepped in and investigated the contract and uncovered a number of irregularities including the pre-payment of over R20 million. The department of Public Works was interdicted and restrained by the Special Tribunal from making further payment pending the conclusion of civil claim instituted by the SIU. The tender has since been declared unlawful and invalid.

In Limpopo, the SIU concluded an investigation into the R15.3 million tender awarded by the Provincial Government for the construction of 192 transitional residential areas, popularly known as Talana shacks. The SIU investigation had revealed that the tender was fraudulently obtained. The appointed service provider, Aventine Group CC, made misrepresentations and forged documents of industry experts with no links to the company to influence the direction of the bid.

Cleaning up SOEs

State Owned Entities (SOEs) play an important role in providing different services to South Africans. Unfortunately, they have been vulnerable to theft and corruption. The SIU was directed by President Ramaphosa to investigate allegations of corruption, maladministration, malpractice and payments made by State entities like the SABC, Transnet, and Eskom, and as well as the conduct of employees.

SABC

The High Court of South Africa: Gauteng Division reviewed and set aside a decision by the former SABC Board to pay its former Chief Operations Officer, Hlaudi Motsoeneng, a success fee amounting to over R11,5 million. The Court found the decision by the then SABC Board to be unlawful and invalid, and ordered Motsoeneng to pay back the success fee with interest.

Eskom

Supplying the majority of the country with power, Eskom is a key SOE in providing homes and businesses electricity. Our multiple investigations spanning over a number of years found that multiple contracts were irregular and also found that Public Finance Management Act (PFMA) was being violated. We found that billions of rands from different contracts were unlawfully profited.

Following an intensive investigation by the SIU, Eskom contractor, ABB South Africa reached an agreement with the investigating unit to repay Eskom R1.5 billion for an overpayment on a contract awarded for work on the Kusile power station project. The SIU investigation also revealed that the contract was awarded to ABB through unlawful means.

Also at Eskom, R11 million held in the bank account of Thephunokheja Projects (PTY) Ltd, a company linked to sacked Eskom senior manager, Patrick Mazibuko, was forfeited to the State. The funds were deemed to be nothing but proceeds of unlawful activities. The SIU approached the Special Tribunal for forfeiture of the funds after it received allegations from a whistle-blower that Mazibuko was receiving unauthorized gratification from Eskom suppliers.

Transnet

The SIU investigations revealed that three tenders awarded to CRRC E-Loco Supply (CRRC) for a combined sum of approximately R25.4 billion, between 2011 and 2014 to supply Transnet with locomotives. The Special Tribunal granted the SIU a preservation order to freeze R4.2 billion held in bank accounts of third party companies linked to a locomotive supplier pending the finalisation of the review application. Investigations raised the suspicion that CRRC paid kickbacks disguised as Business Development Services Agreements (BDSAs) to entities linked to allegations of State Capture and/or allegations of maladministration and irregularities, allegedly to influence the direction of tenders at Transnet. No evidence exists to suggest that the payments envisaged in the BDSAs were for service rendered and the said payments are linked to the award of contracts and payments made by Transnet.

Based on the findings in investigations conducted by Transnet and the SIU, the SIU and Transnet have also instituted a review application in the High Court of South Africa, Gauteng Local Division in Johannesburg under Case No. 21/11645, which is ongoing.

Furthermore, the SIU also sought public money that was unlawfully taken from Transnet’s purse for personal gain by employees. One such person is former executive for capital projects Herbert Msagala. He was found to have unlawfully benefitted from secret profits and was ordered the pay the State R26.4 million back. Assets to the value of over R18 million belonging to Msagala were forfeited to the State. The assets included 35 luxury vehicles, five properties which include two farms and houses in gated estates together with his pension benefits.

There are many other cases that we have successfully investigated and recovered State funds from. We will continue fulfilling our mandate and serve the people of South Africa.

We are grateful for the support that we receive, especially the courage of whistleblowers. To strengthen our young democracy, the SIU has played a vital role in protecting the country’s assets and ensure that those who are corrupt pay back the money they have solicited meant to serve the people of South Africa and face the full might of the law. We hope that over the next 25 years, we are able to close down all the doors of corruption.

Source: Government of South Africa