HUMAN RESOURCE MANAGEMENT FINANCIAL INFORMATIONpmg-assets.s3-website-eu-west-1.amazonaws.com/151015SIU_AR.pdf · HUMAN RESOURCE MANAGEMENT FINANCIAL INFORMATION 1.3 Background to

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SPECIAL INVESTIGATING UNIT ANNUAL REPORT 2014/15

Special Investigating Unit

Annual Report

2014/15


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TABLE OF CONTENTS

Part A: General Information 51.1. Listofabbreviations 61.2. Strategic Overview 91.3. BackgroundtotheSpecialInvestigatingUnit 111.4. Foreword to the Annual Report 13

Part B: Performance Information 162.1. Proclamations 17 2.1.1. Proclamationsissuedduringtheperiodunderreview 17 2.1.2. Presidentialreportssubmittedinthe2014/2015financialyear 202.2. StatementofResponsibilityforPerformanceInformation 212.3. OverviewoftheSIU’sperformance 222.4. DetailedInvestigationsPerformance 27 2.4.1. National 27 2.4.1.1. DepartmentofCommunications 27 2.4.1.2. DepartmentofCommunications 27 2.4.1.3. NationalDepartmentofPublicWorks(DPW) 28 2.4.1.4. NationalDepartmentofPublicWorks(DPW): PrestigeProject,Nkandla,KwaZulu-Natal 28 2.4.1.5. NationalDepartmentofPublicWorks(DPW) 30 2.4.1.6. DepartmentofTransport 30 2.4.1.7. SouthAfricanPostOfficeLtd(SAPO) 31 2.4.1.8. DepartmentofLabourandtheCompensationFund 32 2.4.1.9. UniversalServiceandAccessAgencyofSouthAfrica(USAASA) 32 2.4.1.10.DepartmentofRuralDevelopmentandLandReform (DRDLR)andtheSITA 33 2.4.1.11.NationalDepartmentofRuralDevelopmentandLandReformand itsagents(DRDLR) 34 2.4.1.12.NationalDepartmentofRuralDevelopmentandLandReform 35 2.4.1.13.DepartmentofCo-operativeGovernanceandTraditional Affairs(COGTA) 36 2.4.1.14.DepartmentofWaterAffairs(DWA) 36 2.4.1.15.EskomHoldingsLtd 37 2.4.1.16.SouthAfricanPoliceService(SAPS) 38 2.4.1.17.DepartmentofHumanSettlements(LowCostHousingContracts)(NDHS) 39 2.4.2. Provincial 40 2.4.2.1. Kwazulu-NatalProvincialTreasury(KZNProvincialTreasury) 40 2.4.2.2. DepartmentofPublicWorks(DPW):PrestigeDirectorate,WesternCape 40 2.4.2.3. TheGuardiansFund(GF)componentsoftheKwaZulu-NatalandGauteng officesoftheMasteroftheHighCourtoftheDepartmentofJusticeand

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ConstitutionalDevelopment(DoJ&CD) 41 2.4.2.4. DepartmentofPublicWorks,Kwazulu-NatalProvince(KZNDPW) 41 2.4.2.5. DepartmentofHealth:GautengProvince(GDoH) 42 2.4.3. Local 43 2.4.3.1. GreaterTubatseLocalMunicipality 43 2.4.3.2. VhembeDistrictMunicipality 43 2.4.3.3. BushbuckridgeLocalMunicipality:MpumalangaProvince 44 2.4.3.4. MidvaalLocalMunicipality:GautengProvince(MLM) 44 2.4.3.5. EkurhuleniMetropolitanMunicipality(EMM):GautengProvince 45 2.4.3.6. TshwaneMetropolitanMunicipality(TMM):GautengProvince 46 2.4.3.7. NorthWestProvinceMunicipalities(NWM) 47 2.4.4. StateOwnedEntities 48 2.4.4.1. TheStateInformationTechnologyAgency(Pty)Ltd(SITA) 48 2.4.4.2. TheStateInformationTechnologyAgency(Pty)Ltd(SITA) 49

Part C: Report On Corporate Governance 513.1. FraudandCorruption 523.2.MinimisingConflictofInterest 533.3. CodeofConduct 533.4. Health,SafetyandEnvironmentalIssues 543.5. AuditCommitteeReport 55

Part D: Human Resource Management 574.1. Introduction 584.2. Keyachievements 584.3. HumanResourcesOversightStatistics 59 4.3.1 Personnelcostbyprogramme 59 4.3.2 Personnelcostbysalaryband 59 4.3.3 Performancerewards 60 4.3.4 Trainingcosts 60 4.3.5 Employmentandvacancies 61 4.3.6 Employmentchanges 62 4.3.7 Reasonsforstaffleaving 62 4.3.8 Labourrelations:Misconductanddisciplinaryaction 63 4.3.9 Equitytargetandemploymentequitystatus 63

Part E: Financial Information 655.1 StatementofResponsibilityfortheFinancialStatements 665.2 ReportoftheAuditor-General 675.3 AnnualFinancialStatements 71


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List of Tables

Table1.1: SIUCoreValues

Table2.1: CompletedProclamations

Table2.2: SIUpastperformanceinformation01April2003to31March2014

Table2.3: SIUannualperformanceinformation2014/15

Table2.4: Updateonreferralsmadeduringthe2014/15financialyear

Table3.1: Numberofreportedinjuriesondutyaccordingtodemographicgroup

Table3.2: AuditCommitteemembersandmeetingattendance

Table4.1: Personnelcostsbyprogramme

Table4.2: Personnelcostsbysalaryband

Table4.3: Personnelperformancerewards

Table4.4: Employeetrainingcosts

Table4.5: Employmentandvacanciesaccordingtooccupationallevel

Table4.6: Employmentandvacanciesaccordingtoskillslevel

Table4.7: Employmentappointmentsandterminations

Table4.8: Reasonsforstaffattrition

Table4.9: Disciplinaryactiondata

Table4.10: Employmentequitytargetsandstatusformaleemployees

Table4.11: Employmentequitytargetsandstatusforfemaleemployees

Table4.12: SIUemployeeswithdisabilities

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1.1 List of abbreviations

ACTT Anti-CorruptionTaskTeam

ACWG Anti-CorruptionWorkingGroup

Adv Advocate

AFU AssetForfeitureUnit

AGSA Auditor-GeneralofSouthAfrica

AOD Acknowledgement of Debt

APP Annual Performance Plan

CARA CriminalAssetsRecoveryAccount

CCMA CommissionforConciliation,MediationandArbitration

CEO ChiefExecutiveOfficer

CFO ChiefFinancialOfficer

CGO CentralGovernmentOffice

CIDB ConstructionIndustryDevelopmentBoard

CIPC CompaniesandIntellectualPropertyCommission

COID CompensationforOccupationalInjuriesandDiseases

CoGTA DepartmentofCooperativeGovernanceandTraditionalAffairs

DCS DepartmentofCorrectionalServices

DHA DepartmentofHomeAffairs

DoAFF DepartmentofAgriculture,ForestryandFisheries

DoJ&CD DepartmentofJusticeandConstitutionalDevelopment

DoJ&CS DepartmentofJusticeandCorrectionalServices

DOTS DeedsOfficeTrackingSystem

DPCI DirectorateforPriorityCrimesInvestigation(theHawks)

DPW DepartmentofPublicWorks

DPSA DepartmentofPublicServiceandAdministration

DRDLR Department of Rural Development and Land Reform

DRS DeedsRegistrationSystem

EMM EkurhuleniMetropolitanMunicipality

eNaTiS ElectronicNationalTrafficInformationSystem

FMPPI FrameworkforManagingProgrammePerformanceInformation

GEPF GovernmentEmployeePensionFund

GDoH GautengDepartmentofHealth

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GF Guardian’sFund

GID GautengInfrastructureDevelopment

GKM GreatKeiLocalMunicipality

GRAP GenerallyRecognisedAccountingPractice

GTLM GreaterTaungLocalMunicipality

HR HumanResources

IBM InternationalBusinessMachines

ICT InformationandCommunicationsTechnology

IFMS IntegratedFinancialManagementSystem

IIU InternalIntegrityUnit

JCPS Justice,CrimePreventionandSecurity

KZN KwaZulu-Natal

LCU LiveCapturingUnit

MFMA MunicipalFinanceManagementAct

MIG MunicipalInfrastructureGrant

MKLM MosesKotaneLocalMunicipality

MLM MidvaalLocalMunicipality

MoA MemorandumofAgreement

MPC MvelaPhandaConstruction

MSA MunicipalSystemsAct

NDHS NationalDepartmentofHumanSettlements

NDoBE NationalDepartmentofBasicEducation

NDoH NationalDepartmentofHealth

NHC NationalHousingCode

NPA NationalProsecutingAuthority

NWM NorthWestProvinceMunicipalities

PFMA PublicFinanceManagementAct

POCA PreventionofOrganisedCrimeAct

PPPFA PreferentialProcurementPolicyFrameworkAct

PRECCA PreventionandCombattingofCorruptActivitiesAct

PSIRA PrivateSecurityIndustryRegulatoryAuthority

R/D ReturntoDrawer

RFP RequestforProposals

RLM RustenburgLocalMunicipality


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SABC SouthAfricanBroadcastingCorporation

SANACO SouthAfricanNationalApexTertiaryCo-operativeLtd

SAPO SouthAfricanPostOffice

SAPS South African Police Service

SARS South African Revenue Service

SCM SupplyChainManagement

SITA StateInformationTechnologyAgency

SIU SpecialInvestigatingUnit

SIUAct SpecialInvestigatingUnitsandSpecialTribunalAct

SLA Service Level Agreement

SMS SeniorManagementService

Socpen SocialPensionsSystem

SSA StateSecurityAgency

TMM TshwaneMetropolitanMunicipality

UIF UnemploymentInsuranceFund

USAASA UniversalServiceandAccessAgencyofSouthAfrica

VAT ValueAddedTax

VLM VentersdorpLocalMunicipality

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1.2 Strategic Overview

Mission StatementTheprimarytasksoftheSpecialInvestigatingUnit(SIU)aretouncovercorruption,maladministration

andmalpracticesintheStateinstitutionsitisauthorisedtoinvestigateandtoensurethatperpetrators

ofsuchnefariousactsaremadetopaybybeingdismissed,prosecutedormadetopartwiththeir

ill-gottengains. Should it fulfil its tasksdutifully,diligentlyandefficiently, theSIUwill contribute

significantlytothereductionofsuchactionsandreversetheclimateofimpunitythathasbecome

evidentamongthosewiththepowertoallocatestateresources,whether in the formof jobsor

contracts.

ThemissionoftheSIUistouseitsuniqueforensicinvestigationandlegalskillsinthevaliantwar

oncorruption,byconductingforensicinvestigationsintoStateInstitutions,seekingpositiveresults

throughlitigationandgatheringevidencefordisciplinaryhearingsandcriminalprosecutionsandby

lendingnecessaryassistancetootheranti-corruptionagencies.

VisionTo provide timely professional forensic investigations intomaladministration andmalpractice in

ordertoprotectthepublicinterestandreversethescourgeofcorruptioninoursociety.

ValuesThewaroncorruptioncannotbewonbyagenciesthathaveintheirmidstcorruptelements.Indeed,

onlyfitandproperpersonsmaybeengagedbytheSIU.Asaresult,SIUstaffmembersarerequired

tomaintain thehighest standardsof proper conduct and integrity at all times. In attempting to

ensurethatthereisnodoubtastowhatisrequired,theSIUhasdevelopedasetofcorevalues.They

aresetoutinthetableimmediatelyhereunder.


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Table 1.1: SIU Core Values

1.1 Value 1.2 Value Statement

Integrity CultivatingandconstantlyensuringproperconductamongmembersoftheSIU.

Co-operation Nurturingexcellentco-operationandco-ordinationwithothercorruption-bustingandlaw enforcement agencies.

Professionalism Conductinginvestigationsandlitigationprofessionally.

Drive and passion Ensuringthatallourtasksareperformedwithrequisitedriveandpassion.

Effectiveness Aligningandimprovingsystemsandprocessestoconvertminimumresourcesintomaximumresults.

Independence Actingwithoutfear,favourorprejudice.

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1.3 Background to the Special Investigating Unit

TheSIUisan independentstatutorybodythat isaccountabletothePresidentandtoParliament

in termsof its activities. TheSIUwasestablishedby thePresident to investigate corruptionand

maladministrationingovernmentandtoreportonthefindingsoftheseinvestigations.TheSIUis

fundedthroughtheDepartmentofJusticeandCorrectionalServices(DoJ&CS).

TheSIUwassetupbythePresidentintermsoftheSpecialInvestigatingUnitsandSpecialTribunal

Act,ActNo.74of1996 (SIUAct). Itsprimarymandate is to recoverandpreventfinancial losses

to theStatedue tovariousactsof corruption, fraudandmaladministration.TheSIUalsoassists

departmentswithsystemicimprovementsthatwillimproveservicedelivery.

TheSIUisapublicentitywithpowersofinvestigationandlitigation.Followingtheissueofapresidential

proclamation,theSIUhaspowerstosubpoena,search,seizeandinterrogatewitnessesunderoath.

TheSIUcantakecivilactiontocorrectanywrongdoingituncoversinitsinvestigations.Forexample,

theSIUcanobtainacourtordertocompelapersontopaybackanywrongfulbenefitreceivedand

consequentlyrecoverthemoneyforthestate.TheSIUalsoworkswiththedepartmentconcerned

tocancelcontractswhentheproperprocedureswerenotfollowedandtostoptransactionsorother

actionsthatwerenotproperlyauthorised.

WhiletheSIUdoesnothavethepowertoarrestorprosecuteoffenderswherecriminalconductis

uncovered,itwillbringthemattertotheattentionoftheDirectorateforPriorityCrimeInvestigation

(DPCI)(theHawks)intheSouthAfricanPoliceService(SAPS),aswellastheNationalProsecuting

Authority(NPA).Itworkscloselywiththesetwoentitiestoensurethatthereiseffectiveinvestigation

andprosecution.TheSIUalsoworkscloselywiththeAssetForfeitureUnit(AFU)intheNPA,where

itspowersaremoreappropriateoreffectiveinrecoveringtheproceedsofcrime.

TheSIUmayinvestigateanymatterassetoutinsection2oftheSIUAct,includingthefollowing:

• SeriousmaladministrationinconnectionwiththeaffairsofanyStateinstitution.

• ImproperorunlawfulconductbyemployeesofanyStateinstitution.

• Unlawfulappropriationorexpenditureofpublicmoneyorproperty.

• Anyunlawful,irregularorunapprovedacquisitiveact,transaction,measureorpracticethat

hasabearingonStateproperty.

• Intentionalornegligentlossofpublicmoneyordamagetopublicproperty.


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• CorruptioninconnectionwiththeaffairsofanyStateinstitution.

• Unlawfulorimproperconductbyanypersonwhohascausedormaycauseseriousharmto

the interest of the public.

TheSIUappliesaproject-basedapproachandconcentratesonprocesses,peopleandfinanciallosses

indepartments.Itoffersauniqueandintegratedservice,includingthefollowing:

• Conductingforensicauditsandinvestigations.

• Institutinglegalaction,suchascivil,criminalanddisciplinaryorotherremedialaction.

• Recommendingandfacilitatingtheimplementationofimprovedsystems.

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1.4 Foreword to the Annual Report

The SIU continues to play a key role as one

of the entities participating in South Africa’s

multi-agency approach to the fight against

corruption. The principal goal of the SIU

is to reduce the level of corruption and

maladministration. It seeks to achieve this

goal by conducting forensic investigations

and instituting civil proceedings as weapons

to redress wrongdoings. The purpose is to

deterpartiesfromparticipatingincorruption

andmaladministrationbyapplyingprocesses

that are aimed at taking the profit out of

such illicit activities. The results thereof are

measured through the following outcomes:

criminal referrals, civil litigation, disciplinary

recommendations and final presidential

reports.

Overview of performanceThe Presidency has, since 2009, issued 54

Proclamations, which set out the terms

of reference for SIU investigations. These

Proclamations authorise the SIU to conduct

its investigations across all three spheres

of government, aswell as into the affairs of

state-owned entities. Twelve Proclamations

were issued during the 2014/15 financial

year alone. It must be emphasised that

Proclamationsvarysignificantlyintheirscope

andambitandusuallyenvisagealargenumber

of sub-investigations which are covered by

one Proclamation. This can be illustrated by

Proclamation R59 of 2014 that empowers

the SIU to investigate procurement at the

DepartmentofPublicWorks(DPW)inrespect

of2162leasecontracts.

Practical constraints in setting accu-rate performance targetsTheSIUfullyendorsestheacceptedapproach

to strategy as applied in thepublic sector. It

wishes, however, to highlight the practical

difficulty it has in setting accurate targets as

partofitsAnnualPerformancePlan(APP).The

finalAPPhas to be submittedby the endof

January each year. At that stage the SIU has

very limitedknowledgeof theProclamations

that will be signed and the matters it will

investigateinthefinancialyearthatstartstwo

months later.

During the 2014/15 financial year, the SIU

exceededfourofitseightannualtargets.The


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SIUwillcontinuetoseekaccuratemeasuresthatcanreflectthekeyroleitplaysinthefightagainst

corruptionandmaladministration.Goingforward,thiswillbeaddressedthroughproperlyreviewed

performancemeasuresalignedtothenewinvestigationapproachadoptedbytheSIU.Investigations

conductedduringthe2014/15financialyearhaveresultedinthefollowingoutcomes:

• 12proclamationsbeingissued;

• R844millioninpotentialvalueofcashand/orassetsrecovered;

• R145millioninactualvalueofcashand/orassetsrecovered;

• 4civilmattersinstitutedincourtortheSpecialTribunaltothevalueofR1.2billion;

• 171referralstotheNPA;

• 7referralstotheAssetForfeitureUnit;and

• 3769instanceswherepotentialdisciplinarymatterswerebroughttotheattentionofthe

relevantStateInstitution.

TheseachievementsindicatethattheSIUisanimportanttool inthefightagainstcorruptionand

maladministration.

Capacity buildingTheOctober2012amendments to itsempowering legislation resulted in theSIUbringingabout

adramaticshiftinitsapproachtoachievingitsdesiredoutcomes.TheSIUnowhasthelegislative

powertoconductcivillitigationinitsownname,orinthenameoftheaffectedStateInstitution.This

meansthattheSIUcangomuchfurtherthanmerelymakingrecommendationsandcanapproach

thecourtsforappropriaterelief.Themainoutcomeshavebecome:

• Civillitigation(adirectSIUresponsibility);

• Criminalreferrals(thisrequirestheSIUtomakereferralstotheNPA);and

• Disciplinaryrecommendations(thisrequirestheSIUtomakereferralstoaffectedState

Institutions).

Thesethreemainoutcomesallhaveasignificantlegalfocusandhaveplacedaconsiderableadditional

burdenon the legal capacityof theSIU.TheSIUhasembarkedonamentorshipprogrammefor

juniorlawyersalreadyintheemployoftheSIUandintendsembarkingonarecruitmentdriveinthe

nearfuturetoincreaseitsowninternallegalcapacity.

Working with our partners in fighting corruptionTheSIUcontinuestoactivelyparticipateinmulti-agencyeffortstofightcorruption.TheSIUactively

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promotesco-operationwithotherroleplayersinthefightagainstcorruptionandmaladministration.

It realises that SouthAfrica has adopted amulti-agency approach in this fight and that the SIU

cannotwinthisfightbyitself.TheSIUhasaparticularroletoplayandthiswillonlybeeffectiveif

doneinco-operationwithitspartners.

TheSIUdisplaysthisapproachinitsinteractionwithotherroleplayers,butparticularlythroughthe

significantroleitplaysintheactivitiesoftheAnti-CorruptionTaskTeam(ACTT).

Expression of appreciationTheSIUexpressesitsgratitudetotheOfficeofthePresident,Parliament(inparticularthePortfolio

CommitteeonJusticeandCorrectionalServices),theMinistryandtheDoJ&CSfortheircontinued

support.Italsoextendsitsappreciationtoheadsofgovernmentinstitutionsanditspartnersinlaw

enforcementandSouthAfricancitizens.

IalsowishtoconveymydeepestappreciationtoallSIUmembersfortheirdedicationinexecuting

themandateoftheSIU.

Acting Head of the Special Investigating Unit

AdvGerhardVisagie

18May2015


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2.1 Proclamations

2.1.1 Proclamations issued during the period under review• ProclamationR16of2015,dated17March

2015 (Government Gazette No. 38580)

(KwaZulu-NatalProvincialTreasury).Thisis

anamendmenttoProclamationR49of2014.

Itincludesallegationsmadeinrespectofthe

KwaZulu-Natal Provincial Treasury and the

KwaZulu-NatalProvincialGovernment.

• ProclamationR15of2015,dated17March

2015(GovernmentGazetteNo.38579)(State

InformationTechnologyAgency)(SITA).This

is an amendment to Proclamation R53 of

2014. It expands on the investigation into

IBMSA(Pty)Ltd(IBM)andalsoincludesan

investigation into iFirmConsulting(Pty)Ltd

(iFirm).

• Proclamation R62 of 2014, dated 04

September 2014 (GovernmentGazetteNo.

38579) (Department of Communications).

The SIU is required to investigate the

recovery of any losses suffered by the

Department for the period 01 May 2009

to 05 September 2014 for the donationof

R10millionbytheDepartmenttowardsthe

hosting or organisation of the Information

Communication and Technology Indaba

whichtookplacefrom04to07June2012;

travelandaccommodationexpensesorother

benefitswhichwerepaidbytheDepartment

inrespectofapersonwhodoesnotqualify

therefore; the recruitment, selection, and

appointmentof an employee to a position

thatdidnotexistintheCommunicationsUnit

of the Department; improper or unlawful

conduct by an official of the Department

which resulted in the Department

purportedlybreachingacontractconcluded

between the Department and Gitshasbaya

Consulting; improper or unlawful conduct

byemployeesorofficialsoftheDepartment

orthirdpartiesrelatingtotherecruitment,

selection and appointment of the Chief

FinancialOfficer(CFO)oftheSouthAfrican

Broadcasting Corporation (SABC) on 14

February 2012; and the procurement of

goods, works or services by or on behalf

of the Department and payments made

in respect thereof in relation to the

Nkowankowa event held in Limpopo on 21

June 2013 andWorld Telecommunications

and Information Society Day event held in

Richards Bay, KwaZulu-Natal, on 17 May

2013.

• ProclamationR59of2014,dated27August


(National Department of Public Works).


procurement and administration of leases

by the Department for the Department

or other National Departments and

organs of State forwhose accommodation

needs the Department is responsible;

any related unauthorised, irregular or


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fruitlessandwastefulexpenditure incurred

by the Department; and theft, fraud,

corruption, irregularities, malpractices

or maladministration in the affairs of the

Department in respect of these leases,

including the causes of such and any loss,

damageorprejudiceactuallyorpotentially

sufferedbytheDepartmentortheStatefor

theperiod01June2003to27August2014.



(National Department of Transport). The

SIUisrequiredtoinvestigatetheextensions

by the Department of the Driving Licence

Card Contract and the Electronic National

Traffic Information System (eNaTiS)

Contract. The investigation also included

any unauthorised, irregular or fruitless

and wasteful expenditure incurred by

the Department in respect of payments

made in terms of Change Note 47 dated

11 October 2010. The period covered by

the investigation is 10October 2005 to 01

August2014.



(SouthAfricanPostOffice)(SAPO).Thiswas

anamendmenttoProclamationR5of2014

and included the irregular conduct by the

board members of SAPO.

• Proclamation R55 of 2014, dated 01

August 2014 (Government Gazette No.

37884) (Department of Labour and the

Compensation Fund). The SIU is required

to investigate compensation claim

payments; the conclusion of (a) a Public

Private Partnership Agreement concluded

with Siemens Business Services (Pty) Ltd

(Siemens)onorabout01November2002,

(b) a Termination Support Agreement

concluded with EOH Managed Services

PublicSector(Pty)Ltd(EOH)onorabout27

November2012and(c)anagreementwith

the Medical Services Organisation South

Africa for claims adjudication and medical

service provider processing services on or

about 27 November 2012, alternatively

14 December 2012; the validity of the

agreement concluded between Siemens;

and the procurement of goods, works or

services and payments made in respect

thereofandinrelationto(a)theRequestfor

Proposals (RFP) for a Turnaround Strategy

and (b) the RFP for a Forensic Audit. The

periodcoveredbythe investigation is from

01November2002to01August2014.



(National Department of Public Works:

Prestige Directorate: Western Cape). The

SIU is required to investigate 17 Prestige

projectslocatedintheWesternCapeduring

theperiod28November2007to01August

2014.

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(SITA). The SIU is required to investigate

payments made to IBM in terms of an

agreementconcludedon30April2013from

08September2012to01August2014.



(GreaterTubatseLocalMunicipality).TheSIU

is required to investigate the procurement

of and contracting for goods, works and

servicesbyoronbehalfoftheMunicipality

and paymentsmade; fruitless andwasteful

expenditure incurred by the Municipality

through a settlement paid to Phambili

Network Skills (Phambili); the award of

contracts by the Municipality to suppliers

and service providers in which individuals

in the service of the State held interests;

andthefailurebytheMunicipalitytocollect

money due and owing by its debtors in

respectof(a)acostordermadeinfavourof

theMunicipalitybytheNorthGautengHigh

Court and (b) municipal services rendered.

The period under investigation is from 11

March2004to01August2014.



(Vhembe District Municipality). The SIU is

required to investigate the procurement

of and contracting for goods, works and

servicesbyoronbehalfoftheMunicipality

and payments made; the misappropriation

of funds and the incurrence of wasteful

expenditureor expenditurenotdue, owing

orpayablebytheMunicipalityinrelationto

paymentsmadetoitscontractors,suppliers

or service providers; and the award of

contractsbytheMunicipalitytosuppliersin

which individuals in the service of the State

heldinterests.Theperiodofinvestigationis

from01May2010to01August2014.

• Proclamation R49 of 2014, dated 24 July


(KwaZulu-Natal Provincial Treasury). For

the period from 24 May 2012 to 24 July

2014, the SIU is required to investigate the

appointment of a service provider to the

“MunicipalInfrastructureCrackTeam”ofthe

TreasurytoprovideservicesfortheMunicipal

InfrastructureInterventionProgrammeofthe

Treasuryandpaymentsmadetotheservice

provider; and unauthorised, irregular or

fruitless and wasteful expenditure incurred

bytheTreasuryinrespectofthefundingof

the(a)“CommemoratingPrisonersofWar–

St Helena” event, (b) Durban International

NorthSeaJazzFestivaland(c)KwaZulu-Natal

Sharks Board.


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2.1.2 Presidential reports submitted in the 2014/2015 financial year

Table 2.1: Completed Proclamations

No. Proclamation Number

Dept/State Institution

Scope Date Report Submitted

1 R25of2007 GreatKeiLocal

Municipality(GKM):

EasternCape

Thedisposalofresidentialervenandfarms

belongingtotheMunicipalitycontraryto

applicablelegislationandthepoliciesofthe

MunicipalitywithoutCouncilapprovaland

inaprocessthatwasnotfair,competitive,

transparent,equitableorcosteffective;

procurementofgoodsandservicesbythe

Municipalitycontrarytoprescribedtender

proceduresandthepaymentoffruitless

andwasteful,irregularand/orunauthorised

expenditureinrespectthereof;andconduct

oractivitiesthatmighthavecauseddamage

orlosstotheMunicipality.

31May2014

2 R38of2007 MetsimaholoLocal

Municipality:Free

State

Thealienationoflandbelongingtothe

Municipalityinamannerandbyaprocess

thatiscontrarytoapplicablelegislation

andresultinginlossessufferedbythe

Municipality.

31May2014

3 R59of2013 NationalDepartment

ofPublicWorks:

PrestigeProject

situatedatNkandla,

KwaZulu-Natal

Theprocurementof,andcontractingfor,

goods,worksorservicesbyoronbehalf

oftheDepartmentinconnectionwiththe

project.

20August2014

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2.2 Statement of Responsibility for Performance Information

Tothebestofmyknowledgeandbelief,Iconfirmthefollowing:

AllinformationandamountsdisclosedinthisAnnualReportareconsistentwiththeannualfinancial

statementsauditedbytheAuditor-General.TheAnnualReportiscomplete,accurateandfreefrom

anyomissions.TheAnnualReportwaspreparedinaccordancewiththeAnnualReportGuideissued

byNationalTreasury.Theannualfinancialstatements(PartD)werepreparedinaccordancewiththe

StandardsofGenerallyRecognisedAccountingPractice(GRAP)applicabletotheSIU.

Theaccountingauthorityisresponsibleforthepreparationoftheannualfinancialstatementsand

for the judgmentsmade in this report. The accounting authority is responsible for establishing

andimplementingasystemofinternalcontroldesignedtoprovidereasonableassuranceastothe

integrityandreliabilityoftheperformanceinformation,thehumanresourcesinformationandthe

annualfinancialstatements.

The external auditorswere engaged to express an independent opinion on the annual financial

statements.

Inouropinion,thisAnnualReportfairlyreflectstheoperations,performanceinformation,human

resourcesinformationandfinancialaffairsoftheSIUforthefinancialyearended31March2015.

Yoursfaithfully,

Acting Head of the Special Investigating Unit

GerhardVisagie

18May2015


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2.3 Overview of the SIU’s performance

Strategic objectives:1. Qualityforensicinvestigationsandcivillitigation;and

2. Strategicpartnerrelationsdevelopedandmaintained.

Table 2.2 on the next page reflects the SIU’s performance for the period 01 April 2003 to 31 March 2014.

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Table 2.2: SIU Past Performance Information 01 April 2011 to 31 March 2014

Performance Measure 11/12 12/13 13/14

Valueofpotentialcashrecoverable(R) Target 30m 35m 100m

Actual 224m 171m 261m

Actualvalueofcashrecovered(R) Target 0 0 32m

Actual 38m 0 75.8m

Actualsavings(R) Target 30m 35m 65m

Actual 15m 57m 16.7m

Preventionoffuturelosses(R) Target 200m 210m 0

Actual 169m 378m 0

Valueofprocurementmatterswhereirregularitieswerefound(R)

Target 20,000m 1,000m 0

Actual 5,066m 2,637m 0

Valueofcontractssetaside(R) Target 0 0 400m

Actual 0 0 27.5m

Valueofcontractualobligationsenforced(R) Target 0 0 30m

Actual 0 0 0

Valueofexpenditureinprocurementmatterswherefinancialmisconducthasbeenidentified(R)

Target 0 0 1,000m

Actual 0 0 1,300m

Evidencepreparedforuseincivillitigations Target 2,500 3,500 30

Actual 6,412 3,570 1,338

Evidencepreparedforcriminalaction Target 2,000 2,000 50

Actual 2,499 997 273

Evidencepreparedfordisciplinaryaction Target 2,500 3,500 120

Actual 2,731 850 326

Evidencepreparedforotherremedialaction Target 3,000 2,000 0

Actual 5,431 3,454 0

No.ofcompletedinvestigationscontributingtoJustice,CrimePreventionandSecurity(JCPS)Output5

Target 20 30 0

Actual 15 38 0


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Table 2.3: SIU Annual Performance Information 2014/15

Performance Measure 2014/15 Narrative

Strategicobjective1:Qualityforensicinvestigationsandcivillitigation

Number of proclamationsissued

Target 20 TwelveProclamationswerepublishedbetween01April2014and31March2015. Nineof thesewerenew investigationsand threewereamendmentstoexistingproclamations.Theoveralltargetfortheyearwas20proclamationsbutonly12werepublished.Thistargetwasthusunder achieved. While we have some control in motivating for theproclamations,thisislargelydependentonthenatureoftheallegationreceivedandwhetherornotthereissubstantiatingdocumentsforthemotivation.TheSIUisworkinghardtoensureapipelineofnewmatterswhichcanbemotivatedforaproclamation,aswellasstreamliningthecurrentprocessofreceivingproclamations.

Actual 12

Percentage of issued proclamationsfinalised

Target 66% None of the 12 proclamations that were published between 01April 2014 and 31March 2015were finalised. Themajority of theproclamationswereissuedinthesecondquarterofthefinancialyearand it was not possible to complete these investigations before 31March2015.Therefore,thetargetwasnotachieved.TheSIUdefinesa proclamation finalised when the final report is submitted to thePresidencyandnotwhentheinvestigationiscompleted.

There are reports that are being drafted and therefore we expectmore proclamations to be finalised in the next financial year. Themethod of calculation has been amended for this indicator for the2015/2016financial year so that thetimeframes for the completionof investigations aremore clearly defined. Thus,while a number ofproclaimed investigationsarecomplete, thereporthasnotyetbeensubmittedandtheycannotbecountedasfinalisedyet.

Actual 0%

Potentialvalueofcashand/orassetsrecoverable(R)

Target 200m Atotalof95AcknowledgementofDebt(AOD)documentsweresignedbetween01April2014and31March2015tothevalueofR7.4million.

AtotaloffourAFUpreservationorderstothevalueofR836.6millionweresecuredforthefinancialyear.

The overall target for the year was set at R200 million and thepotential valueof cashand/orassets identifiedby theSIU thatmaybe recoverable for the State amounted to R844million. The targetfor the yearwas exceededby 322%.Again, as the SIU refocuses itsinvestigationstomaximiseimpact,afarlowernumberofAODsweresigned.

Actual 844m

Actual value of cashand/orassetsrecovered(R)

Target 100m TheAODEnforcementDepartmentattheSIUcollectedpaymentsfromdebtorstothevalueofR22.9millionforthe2014/15financialyear.ApaymentwasmadebyadebtoragainstanAODthatwassignedwiththeDepartment inNovember2013. ThetotalamountreceivedwasR57,414. AtotalofR2.5millionwasrecoveredinrespectofmoniesowedtotheDepartmentforthefundingofthePatersonBulkWaterProject.

Seven final forfeiture orderswere secured during the financial yearfor theDepartmentof LandReform. Sixof thesewere for farms inKwaZulu-NatalandonewasforafarmintheEasternCape.ThetotalvalueofthesesevenorderswasR119.5million.

ThetargetfortheyearforthisindicatorwasR100million.Thetotalvalue of the actual cash and/or assets recovered was R145million.Thetargetfortheyearwasthereforeexceededby45%.

Actual 145m

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Number of civil mattersinstitutedinCourt or the Special Tribunal

Target 20 TheSIUinstitutedapplicationproceedingsinthefollowingmatters:

• Universal Service andAccessAgencyof SouthAfrica (USAASA) –relief sought is for the contract of employment betweenMr ZTNkosi and USAASA to be declared unlawful, invalid and for thiscontract to be set aside.

• Nkandla–reliefissoughtagainsttheprincipalagent,MrMinenhleMakhanya, tothevalueofR155million. Thismatter iscurrentlybeingcontestedintheHighCourt.

• Media Corner – the relief sought is for the tender for theBroadcasting Digital Migration Process Project to be declaredinvalidandnullandvoid.ThevalueofthecontractisR760million.

• DepartmentofLandAffairs(Gijima)–tosetasidetheawardofatenderrelatingtothedesign,developmentandimplementationofaTurnkeySolutionforconsolidationofdatastoresinpreparationfor the provision of an e-Cadastre for the Department of LandAffairs.ThevalueofthecontractisR364million.

The overall target for the year was 20 civil matters but only fourwere achieved. This target was under achieved. The nature of theproclamations,especiallytheageofthemattersinvestigated,resultedinthistargetbeingunrealistic.Manyofthematterswereofahistoricnature,whichresultedinanypossibleclaimshavingprescribed.TheSIU now seeks to focus on currentmatters and foresees thatmorematterswill result in civil litigation. Should a significant numberofmatters be identified for civil litigation, itmay be advisable for theSpecialTribunaltoberevived.

Actual 4

Strategicobjective2:Strategicpartnerrelationsdevelopedandmaintained

Number of referrals made to the NPA

Target 50 Thenatureoftheoffencesinclude:

Contraventionsofsection38(1)readwithsection86(1)ofthePublicFinanceManagementAct(PFMA);contraventionsofregulation25(9)(a) read with regulation 30(1)(c) and 30(1)(a) of the ConstructionIndustry Development Board (CIDB) Regulations; fraud and/or theftcommitted in relation to invoices that were submitted; abuse ofpowers by receiving unlawful gratification/bribes, collectingmoniesnotduebycreatingnon-qualifyingbeneficiariesandfraudforobtainingsocialgrantstowhichtheywerenotentitled;allegedmanipulationofprocurementprocesses,VATfraudandfraudinrespectofpaymentsreceived;forgeryandutteringforunlawfullyandintentionallycreating,submitting and receiving fraudulent quotations; fraud, forgery anduttering and offence in terms of section 173(1) of the MunicipalFinanceManagementAct,ActNo.56of2003(MFMA);contraventionofsection20(1)ofthePrivateSecurityIndustryRegulatoryAuthority(PSIRA)readwithsection20(2)(b)whichconstituteacriminaloffenceunder the provisions of sections 38(3)(a), (f) and/or (g) of thisauthority;fraudforusingshellcompaniestosubmitquotationstotheSAPSwithout thesecompaniesknowledgeorconsent;and fraudbyconstructioncompanieswhichresultedintendersbeingawardedbyaDepartment.TheDepartmentwouldnothaveapprovedthetendersif the false documentation had not been submitted; contraventionsof sections 3 and/or 4 and/or 5 and/or 17(1) of the Prevention ofOrganisedCrimeAct (POCA);andmisrepresentationofemploymentand income details in order to be registered as indigent households.

Thetarget for theyear for this indicatorwas50referrals. ThetotalnumberofthereferralsmadetotheNPAwas171.Thetargetfortheyearwasexceededby242%.

Actual 171


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PERFORMANCE MEASURE 2014/15 NARRATIVE

Number of referrals made to the NPA

TARGET 50 Three matters have been referred to the Anti-CorruptionTaskTeam(ACTT)forfurtherinvestigation.111mattershavebeen referred to the SAPS and dockets have been opened. A further40matterswillbehandedovertotheSAPSforfurtheractionshortly.Inonematter,apleaagreementwasreachedandinthreematterstheNPAhasdeclinedtoprosecutethesuspectsunderinvestigation.Onematterisgoingtotrialandaconvictionwasobtainedinanothermatterwithafive-yearsuspendedsentenceandaconfiscationorderforR2million.

ACTUAL 171

Number of referrals made totheAFU

TARGET 15 No feedback has been received in respect of any of themattersthatwerereferred.

ACTUAL 7

Number of instances where potentialdisciplinarymatterswereboughttotheattentionoftherelevantStateinstitution

TARGET 100 Of the3,769matters recommended fordisciplinaryaction,

67havecommencedandafurtherfivehavebeenfinalised.

Eskom has commenced with the disciplinary process in

respectofthe19officialswhofailedtodeclaretheirbusiness

interestswhile conductingbusinesswith Eskom. In respect

of the 3,456 officials who failed to submit their annual

declaration,nodisciplinaryactionhascommencedtodate.

ACTUAL 3,769

Table 2.4: Update on Referrals made during 2014/15


Number of referrals madetotheAFU

Target 15 Referrals weremade for fraud for submitting invoices for paymentforwhich theentities/personswerenotentitled; fordefrauding theDepartmentinrespectofatenderthatwasawarded;formanipulatingprocurement processes and for representing that VATwas due andpayable when it was not; and an entity profited financially fromcontraventionofsection20(1)ofthePSIRAreadwithsection20(2)(b)whichconstituteacriminaloffenceunder theprovisionsofsections38(3)(a),(f)and/or(g)ofthisauthority.

Theoverall target for theyearwas15referralsbutonlysevenwereachieved.Thistargetwasthusunderachieved. ReferralstotheAFUaremade in respectofmatterswhereevidencewhichpoints to thecommissionofacriminaloffenceisobtainedandwhereprescriptionisanissue.Theapproachtofocusonmorecurrentmattersmeansthattheriskofprescriptionismitigated.

Actual 7

Number of instances wherepotentialdisciplinarymatterswere bought to theattentionofthe relevant State institution

Target 100 Atotalof3,769mattersforpotentialdisciplinaryactionwereidentified.Therecommendationsweremadeagainstofficialsforactsoromissionswhich amount to misconduct.

Thetargetfortheyearforthisindicatorwas100matters.Thismeansthatthetargetfortheyearwasexceededby3,669matters, which is due,inmostpart,tothenumberofrecommendationsmadeagainstEskomLtdofficials.

Actual 3,769

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2.4 Detailed Investigations Performance

2.4.1 National

2.4.1.1. Department of Communications

Proclamation R62 of 2014, published on 04

September 2014

a) ScheduletotheProclamation

TheSIUisrequiredtoinvestigatetherecovery

ofanylossessufferedbytheDepartment,in

relationtothefollowingfortheperiod01May

2009to05September2014:

• The donation of R10 million by the

Department towards the hosting

or organisation of the Information

Communication and Technology Indaba

whichtookplacefrom4to7June2012.

• Travel and accommodation expenses or

other benefits which were paid by the

Department in respect of a person who does

notqualifytherefore.

• Therecruitment,selection,andappointment

of an employee to a position that did not

exist in the Communications Unit of the

Department.

• Improperorunlawfulconductbyanofficial

of the Department which resulted in the

Department purportedly breaching a

contract concluded between the Department

andGitshasbayaConsulting.

• Improperorunlawfulconductbyemployees

orofficialsoftheDepartmentorthirdparties

relating to the recruitment, selection, and

appointment of the CFO of the SABC on 14

February2012.

• The procurement of goods, works or

servicesbyoronbehalfoftheDepartment

and payments made in respect thereof in

relation to the Nkowankowa event held

in Limpopo on 21 June 2013 and World

Telecommunications and Information

Society Day event held in Richards Bay,

KwaZulu-Natal,on17May2013.

b) ProclamationStatus

Ongoing.

2.4.1.2. Department of Communications


February 2014

a)ScheduletotheProclamation

The SIU is required to investigate the validity

oftheawardbytheDepartmentofatenderto

render services in respect of a public awareness

campaign relating to the Broadcasting Digital

MigrationProcessProject(DOC/21/2011/12/C)

toMediaCorner(Pty)Ltdandthevalidityofthe

MemorandumofAgreement (MoA) concluded

between the Department and Media Corner

on 29 October 2012. The validity of: (a) the

implementationof theMoA referred to above

and (b) any payments made in terms of the

MoA.Theperiodtobeinvestigatedisfrom01

February2012to24February2014.


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b) InvestigationOutcomes

INDICATOR DESCRIPTION R VALUE/NUMBER

Numberofinstanceswherepotential

disciplinarymatterswerebroughttothe

attentionoftherelevantStateInstitution

Recommendationsweremadeagainst

officialsforactsoromissionswhichamount

to misconduct.

7

NumberofcivilmattersinstitutedinCourt

ortheSpecialTribunal

Applicationproceedingswereinstitutedin

theHighCourtinGauteng.Thereliefsought

isforthetenderfortheBroadcastingDigital

MigrationProcessProjecttobedeclared

invalidandnullandvoid.Thevalueofthe

contractisR756million.

1

c) ProclamationStatus

Ongoing.

2.4.1.3. National Department of Public Works (DPW)

Proclamation R59 of 2014, published on 27 August 2014


TheSIUisrequiredtoinvestigatetheprocurementandadministrationofleasesbytheDepartment

fortheDepartmentorotherNationalDepartmentsandorgansofstateforwhoseaccommodation

needstheDepartmentisresponsible;anyrelatedunauthorised,irregularorfruitlessandwasteful

expenditure, incurredby theDepartment.Theft, fraud,corruption, irregularities,malpracticesor

maladministrationintheaffairsoftheDepartmentinrespectoftheseleases,includingthecauses

ofsuchandany loss,damageorprejudiceactuallyorpotentiallysufferedby theDepartmentor

theStatefortheperiod01June2003to27August2014.Theseareleasesconcludedwithprivate

landlords for and on behalf of the departments concerned.

b)ProclamationStatus

Ongoing.

2.4.1.4. National Department of Public Works (DPW): Prestige Project, Nkandla, KwaZulu-Natal

Proclamation R59 of 2013, published on 20 December 2013

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TheSIUwasrequiredtoinvestigate:

• The procurement of, and contracting for,

goods,worksorservicesbyoronbehalfofthe

Departmentinconnectionwiththeproject;

• Paymentsthatweremadebyoronbehalfof

theDepartmentinrelationtoanyacquisitive

actortransaction;

• Any undisclosed or unauthorised interests

whichtheDepartment’spersonnelmayhave

hadintheDepartment’ssuppliersbiddingfor

work or doing business with the Department

or towhomcontractswere awardedby the

Department,andtheextentofanyactualor

potentialbenefitsderiveddirectlyorindirectly

by the Department’s personnel from such

undisclosed or unauthorised interests in

relationtoanyacquisitiveactortransaction;

• Maladministration of the affairs of the

Department and any losses or prejudice

sufferedbytheDepartmentortheStateasa

resultofsuchmaladministration;and

• Improper or unlawful conduct by the

Department’suppliersorotherthirdpartiesin

relationtoanyacquisitiveactortransaction.



Thenumberofcivilmattersinstituted

inCourtortheSpecialTribunal

The SIU instituted action proceedings in the High

Court in KwaZulu-Natal. Relief is sought against

theprincipalagent,MrMinenhleMakhanya,tothe

valueofR155million.Thismatteriscurrentlybeing

contestedintheHighCourt.

1

Thenumberofreferralsmadetothe

NPA

Contraventionsofsection38(1)(a),(b),(c)(ii)and(n)

ofthePFMA.

3

Numberof instanceswherepotential

disciplinary matters were brought to

the attention of the relevant State

Institution

Recommendations were made against officials for

acts or omissions which amount to misconduct.

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c) ProclamationStatus

Thefinalreportwassubmittedon20August2014.


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2.4.1.5. National Department of Public Works (DPW)

Proclamation R38 of 2010, published on 30 July 2010


The SIUwas required to investigate the incurrenceof irregular expenditure and/or fruitless and

wastefulexpenditureandpaymentofexpenditurenotdue,owingorpayabletothedepartment

fortheperiod01October2003to30July2010focusingonspecificcontracts/tenders, leasingof

buildingsforclientdepartmentsandPrestigeaccommodation.



Potentialvalueofcashand/orassets recoverable

One AOD document signed R1.09million

c)ProclamationStatus

Ongoing.

2.4.1.6. Department of Transport



TheSIUwasrequiredtoinvestigateallegationsbetween10October2005and01August2014with

regardtotheextensionsbytheDepartmentoftheDrivingLicenseCardContractRT(G)6969SA

andtheeNaTiSContractRT1194KAaswellasanyunauthorised,irregularorfruitlessandwasteful

expenditure incurred by the Department in respect of paymentswhichweremade in terms of

ChangeNote47dated11October2010.


Ongoing.

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2.4.1.7. South African Post Office Ltd (SAPO)


February 2014, amended by Proclamation R56

of 2014, published on 01 August 2014



procurementofgoods,worksorservicesbyor

onbehalf of the SAPOandpaymentsmade in

respect thereofand irregularities,malpractices

or maladministration in the affairs of the

SAPO in relation to: (a) the management of

immovable property; (b) the implementation

oftheWebRipostesystem;(c)loansgrantedto

CourierandFreightGroup(Pty)Ltd;and(d)the

failurebyofficialsoremployeesoftheSAPOto

take the necessary steps to prevent the SAPO

fromsufferingfinancial lossesordamagesasa

resultofindustrialaction,Irregularitiesrelating

totherecruitment,selectionandappointment

ofofficialsoremployeesoftheSAPO,payments

whichweremadebytheSAPOtofictitiousofficials

oremployees.Anyundisclosedorunauthorised

interests the officials or employees of the

SAPOmayhavehadwithregardto(a)vendors,

contractors,suppliersorserviceproviderswho

bid for work or conducted business with the

SAPOor(b)contractsawardedbyoronbehalf

of the SAPO. The period to be investigated is

from01January2004to06February2014.

ProclamationR5of2014isamendedby(a)the

further extension of the period referred to in

thisproclamationtothedateofpublicationof

ProclamationR56of2014;and(b)theaddition

ofthefollowingparagraphafterparagraph5of

the schedule in Proclamation R5 of 2014: “6.

IrregularconductbytheBoardMembersofthe

SAPO in relation to thematters set out in the

paragraphsabove”.

b)InvestigationOutcomes


Thefinalreportisbeingpreparedandwillbesubmittedinthenextfinancialyear.

INDICATOR DESCRIPTIONR VALUE/

NUMBERNumber of referrals made to the NPA

Contraventionofsection20(1)ofthePSIRAreadwithsection20(2)(b)whichconstituteacriminaloffenceundertheprovisionsofsections38(3)(a),(f)and/or(g)ofthisauthority.

1

Number of referrals made to the AFU

Anentityprofitedfinanciallyfromcontraventionofsection20(1)ofPSIRAreadwithsection20(2)(b)whichconstituteacriminaloffenceundertheprovisionsofsections38(3)(a),(f)and/or(g)ofthisauthority.

1

Number of instances where potentialdisciplinarymatterswerebroughttotheattentionoftherelevantStateInstitution

Recommendationsweremadeagainstofficialsfor acts or omissions which amount to misconduct.

1


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2.4.1.8. Department of Labour and the Compensation Fund



TheSIUwasmandatedtoinvestigatethefollowingfortheperiod01November2002to01August

2014:

• CompensationclaimpaymentswhichweremadebytheFundandrelatedunauthorised,irregular

orfruitlessandwastefulexpenditureincurredbytheDepartmentand/ortheFund.

• TheconclusionbytheDepartmentand/ortheFundofaPublicPrivatePartnershipAgreement

concluded with Siemens Business Services (Pty) Ltd and the validity of the agreement; a

TerminationSupportAgreementconcludedwithEOHManagedServicesPublicSector(Pty)Ltd;

andanagreementwiththeMedicalServicesOrganisationSouthAfricaforclaimsadjudication

and medical service provider processing services.

• Theprocurementofgoods,worksorservicesbytheDepartmentand/ortheFundandpayments

madeinrespectthereof, inrelationtotheRFPforaTurnaroundStrategy;andtheRFPsfora

Forensic Audit.


Ongoing.

2.4.1.9. Universal Service and Access Agency of South Africa (USAASA)

Proclamation R 20 of 2014, published on 28 March 2014


TheSIUisrequiredtoinvestigatethemaladministrationoftheaffairsoftheAgencyinrelationto:

(a)therecruitmentprocesswhichresultedintheappointmentoftheChiefExecutiveOfficer(CEO)

oftheAgencyin2013;(b)theAgency’sfunding,bywayofasubsidyintheamountofR500million

toaserviceproviderfortheconstructionandexpansionofanelectroniccommunicationnetwork

forEmalahleniLocalMunicipality(EasternCape);and(c)theprocurementbytheAgencyofservices

inrelationtotheRapidDevelopmentofPublicAccessFacilitiesProgrammeandpaymentsmadein

relationthereto.


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2.4.1.10. Department of Rural Development and Land Reform (DRDLR) and the SITA

Proclamation R 7 of 2014, published on 14 February 2014


TheSIUisrequiredtoinvestigate,fortheperiod1January2008to14February2014,any:

• Theft,fraud,corruptionormaladministrationintheaffairsoftheDRDLRinrelationtothelodging

and processing of deeds on the Deeds Registration System of the Pretoria, Cape Town and

BloemfonteinDeedsRegistriesorintheprocessesofrequestingfororthegiving-outofdeeds

information,inamannerthatwascontrarytoapplicable(a)legislation;or(b)manuals,guidelines,

policies,procedures,practicenotes,instructions,prescriptsorpracticesoforapplicabletothe

DRDLRincludingthecausesofsuchfraud,corruptionormaladministrationandanyloss,damage

orprejudiceactuallyorpotentiallysufferedbytheDRDLRortheState.

• TheprocurementofandcontractingfortheInformationandCommunicationsTechnology(ICT)

systems/projectsoranygoods,worksorservicesinrespectoftheICTsystems/projectsbyoron

behalfoftheInstitutionsandirregularpayments.

• The incurrence of unauthorised expenditure, irregular expenditure, fruitless and wasteful

expenditureorexpenditurenotdue,owingandpayable,asaresultofpaymentswhichwere

madebytheInstitutionstotheagentsoftheInstitutions,theInstitutions’suppliersandservice

providersorthirdpartiesfororinrespectoftheICTsystems/projects.

• Fraud,corruptionormaladministrationregardingtheaffairsoftheInstitutionsinrespectofthe

ICTsystems/projects.



The number of civil matters

instituted in Court or the Special

Tribunal

TheSIUinstitutedapplicationproceedingsinthe

North Gauteng High Court in June 2014. The

reliefsought isforthecontractofemployment

betweenMrZTNkosiandUSAASAtobedeclared

unlawful, invalidandforthiscontracttobeset

aside.

1


34


Numberofcivilmattersinstituted

inCourtortheSpecialTribunal

Applicationproceedingswereinstitutedinthe

HighCourt inGauteng to setaside theaward

ofatenderrelatingtothedesign,development

and implementationofaTurnkeySolution for

consolidation of data stores in preparation

for the provision of an e-Cadastre for the

Department.ThevalueofthecontractisR364

million.

1


Ongoing.

2.4.1.11. National Department of Rural Development and Land Reform and its agents (DRDLR)

Proclamation R 53 of 2012, published on 21 September 2012


Theproclamationmandated theSIU to investigateallegationsof irregularities in theapplication,

awardingandadministrationoflandrestitutionclaimsoffundsundertheLandRestitutionProgramme

oftheDRDLR.Theaboveallegationsincludepossiblefraudandcorruptionlevelledagainstemployees

oftheDRDLR,aswellasirregular,unauthorisedandfruitlessandwastefulexpenditure.Theperiod

ofinvestigationwasfrom01April2003to21September2012.



Potentialvalueofcashand/or

assets recoverable

72AODdocumentsweresigned R5.6million

Number of instances where

potential disciplinary matters

werebroughttotheattentionof

therelevantStateInstitution

Recommendationsweremadeagainstofficials

for acts or omissions which amount to

misconduct.

6


Ongoing.

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2.4.1.12. National Department of Rural Development and Land Reform



Theproclamationmandated theSIU to investigateallegationsof irregularities in theapplication,

awardingandadministrationofgrantsandfundsundertheLandReformProgrammeoftheDRDLR.

AllegationsincludepossiblefraudandcorruptionlevelledagainstemployeesoftheDRDLR,aswell

asirregular,unauthorisedandfruitlessandwastefulexpenditure.Theperiodofinvestigationisfrom

01January2006to18February2011.



Potential value of cash and/or

assets recoverable

An AFU preservation order was issued. The

order related to Honeyville Farm which is

situatedintheEasternCape.

R8million

Actualvalueofcashand/orassets

recovered

Sevenfinalforfeitureordersweresecured.Six

wereforfarmsinKwaZulu-Natalandonewas

forafarmintheEasternCape.

R119.5million



were brought to the attention of


Recommendations were made against

officials for acts or omissionswhich amount

to misconduct.

7


Ongoing.


36

2.4.1.13. Department of Co-operative Governance and Traditional Affairs (COGTA)


a)ScopeoftheInvestigation

The SIU is required to investigate the appointment of the South African National Apex Tertiary

Co-operativeLtd (SANACO)by theDepartment tomanageand toprovide technical support and

administrationservicesinrespectoftheWardBasedCo-operativeProgrammeoftheDepartment

andpaymentswhichweremadebytheDepartment inrespectoftheWardBasedCo-operatives

Programmeof theDepartment. Theperiod to be investigated is from26November 2010 to 06

February2014.



Number of referrals made to the

NPA

Contraventions of section 38(1) read with

section 86(1) of the PFMA. Therewas also a

contravention of regulation 25(9)(a) readwith

regulation30(1)(c)oftheCIDBRegulations.

2


AFU

Fraud for submitting invoices for payment for

whichtheentities/personswerenotentitled.

1







misconduct.

10



2.4.1.14. Department of Water Affairs (DWA)

Proclamation R54 of 2012, published on 21 September 2012


The SIU is required to investigate allegations falling within the period 01 January 2004 to 21

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September2012withregardtotheprocurementof,andcontractingfor,goods,worksorservicesby

theDWAandpaymentsmadeinrelationheretoandanyundisclosedorunauthorisedinterestthe

DWA’spersonnelmayhavehadwithregardtocontractors,suppliersorserviceproviderswhobidfor

workorconductedbusinesswiththeDWA.



Actualvalueofcashand/orassets

recovered

MonieswereowedtotheDepartmentforthe

fundingofthePatersonBulkWaterProject.

R2.5million


NPA

Alleged manipulation of procurement

processes, VAT fraud and fraud in respect of

paymentsreceived.

8


AFU

Fraud for submitting invoices for payment

for which the entities/persons were not

entitled; defrauding the Department in

respect of a tender that was awarded; fraud

formanipulatingprocurementprocesses;and

forrepresentingthatVATwasdueandpayable

when it was not.

5







misconduct.

5


Ongoing.

2.4.1.15. Eskom Holdings Ltd



TheSIUwas required to investigateallegations fallingwithin theperiod01 January2006and07

February2012withregardsto:

• ProcurementofhelicopterservicesintheEasternCape.

• Anyundisclosedorunauthorisedinterestwhichtheboardmembers,officialsoremployeesof


38

Eskommayhavehadincontractors,suppliesorservicesprovidersofEskom.

• Theprocurementofcoalsupplies.

• Theprocurementofcoaltransportationservices.

• Theprocurementoffencinginexcessoftheneedforsuchwork,goodsorservices.




NPA

Contraventionsintermsofregulation30(1)(a)

and30(1)(c)oftheCIDBregulations

2


potentialdisciplinarymatters





misconduct.

3475


Ongoing.

2.4.1.16. South African Police Service (SAPS)

Proclamation R42 of 2010, published on 10 August 2010 extended by Proclamation R73 of 2011

published on 22 December 2011


The investigation focused on the Expert and FacilityManagement Services, specifically 33 SAPS

buildingand/or renovationprojects,NationalPoliceDay2009/10and2010/11andotherSupply

ChainManagement(SCM)irregularitiesidentifiedwhichoccurredintheperiodJanuary2005and

August2010.Theperiodcoveredbytheinvestigationwasextendedupto22December2011by

ProclamationR7of22December2011.


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NPA

Fraud for using shell companies to submit

quotations to SAPSwithout these companies’

knowledge or consent.

1







misconduct.

67


Ongoing.

2.4.1.17. Department of Human Settlements (Low Cost Housing Contracts) (NDHS)

Proclamation R7 of 2007, published on 25 April 2007

Proclamation R35 of 2010 extension, published on 30 July 2010

Proclamation R15 of 2012 extension, published on 5 March 2012


TheSIUwasrequiredtoinvestigateanyfraud,corruptionandmaladministrationinrespectofthe

developmentanddeliveryoflowcosthousinginSouthAfrica,bynationalandprovincialdepartments,

localauthorities(andagents)andHousingDevelopmentBoards.


INDICATOR DESCRIPTIONR VALUE/

NUMBERActualvalueofcashand/orassets

recovered

A payment was made by a debtor against an

AOD that was signed with the Department in

November2013.

R57414

The number of referrals made to

the NPA

Fraud and or theft committed in relation to

invoices that were submitted and one referral

wasforthecontraventionofSection86(1)ofthe

PFMA.

6


potentialdisciplinarymatterswere

brought to the attention of the

relevantStateInstitution

Recommendationsweremadeagainstofficialsfor

acts or omissions which amount to misconduct.

4


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The final report is being prepared andwill be

submittedinthenextfinancialyear.

2.4.2. Provincial

2.4.2.1. Kwazulu-Natal Provincial Treasury

(KZN Provincial Treasury)

Proclamation R49 of 2014 published on 24 July

2014 amended by Proclamation R16 of 2015

published on 17 March 2015


The SIU is authorised to investigate the

appointment by the KZN Provincial Treasury,

the Departments and the KwaZulu-Natal

Sharks Board of a service provider to the

“Municipal Infrastructure Crack Team” of the

Treasury, the Departments and the KwaZulu-

Natal Sharks Board to provide services for

the Municipal Infrastructure Intervention

ProgrammeoftheTreasuryandpaymentsmade

totheserviceprovider.Thevalidityoffunding

providedby theTreasury in respectof the: (a)

“CommemoratingPrisonersofWar–StHelena”

event; (b)Durban InternationalNorthSea Jazz

Festival; and (c) KwaZulu-Natal Sharks Board

andanyunauthorised,irregularorfruitlessand

wasteful expenditure incurred by the Treasury

inrespectoftheprovisionofsuchfunding;any

unauthorised,irregularorfruitlessandwasteful

expenditure incurred by theDepartments and

the KwaZulu-Natal Sharks Board in respect of

the funding received from the Treasury. The

periodof investigationisfrom24May2012to

24July2014.


Ongoing.

2.4.2.2. Department of Public Works (DPW):

Prestige Directorate, Western Cape


August 2014


Theprocurementofgoodsandservicesonbehalf

oftheDepartmentbytheDepartment’sPrestige

Directorate and any related unauthorised,

irregular or fruitless andwasteful expenditure

incurred by the Department in relation to 17

PrestigeProjectsintheWesternCape.


Ongoing.

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2.4.2.3. The Guardians Fund (GF) components of the KwaZulu-Natal and Gauteng offices of the

Master of the High Court of the Department of Justice and Constitutional Development (DoJ&CD)

Proclamation R55 of 2012, published on 21 September 2012


Theinvestigationfocusedonallegationsoffraudulentapplicationssubmittedtoandpaymentsmade

bytheKwaZulu-NatalandGautengGuardian’sFund(GF)Offices.Theinvestigationcoverstheperiod

from01January2001toSeptember2012.




assets recoverable

One AOD was signed R14713







misconduct.

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2.4.2.4. Department of Public Works, Kwazulu-Natal Province (KZN DPW)


Proclamation R49 of 2012 extension, published on 07 September 2012

a)ScopeofInvestigation

TheSIUwasmandatedtoinvestigateallegationsoffraud,corruption,financialmismanagementand

otherirregularitiesintheawardingofcontractstoconsultantsandcontractorsoftheKZNDPWduring

theperiod01January2005to07September2012.Theinvestigationfocusedontheprocurement

processandallegedmanipulationthereofbycontractorsandKZNDPWofficialsinordertosecure

tendersaswellasthedeliveryofservices.



42



NPA

Fraudbyconstructioncompanieswhichresulted

in tendersbeing awardedby theDepartment.

TheDepartmentwouldnothaveapprovedthe

tendersifthefalsedocumentationhadnotbeen

submitted. An official also received unlawful

gratification/bribes.

4



2.4.2.5. Department of Health: Gauteng Province (GDoH)

Proclamation R21 of 2010, published on 14 May 2010


Thematter relates to alleged irregularities regarding the affairs of the GDoH in relation to the

procurementoftheservicesofvariousconsultantsandcontractors.Theperiodofinvestigationis

from01January2006to14May2010.Theinvestigationcoversthefollowingareas:

• irregularappointmentofcontractors,suppliersorserviceproviderstorenderservicesand/or

delivergoodsfortheproject;

• irregular procurement of goods,works or services in relation to theproject (including cover

quoting,splittingofordersandevasionofcompetitivebiddingprocesses);

• undue/irregularpaymentsmadetocontractors,suppliersorserviceproviders;

• theStatenothavingreceivedvalueformoneyasregardstheproject;

• Improperorunlawfulconductbycontractors,suppliersorserviceprovidersoftheDepartment

orother thirdparties in relation to theproject (whichwould include theundue influenceof

publicrepresentativesoranyotherpersonontheproject).


In July 2014, a court orderwas granted following an application brought in terms of the POCA

relatingtotherightsaccruingto3P,pursuanttotheprocurementfortheDepartmentofHealthin

termsoftheServiceLevelAgreement(SLA)concludedon02July2007.Thevalueoftheorderwas

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R413 million.

An order was also granted which related to

Erf980, situated inBryanston, Johannesburg.

R2.6millionwaspaidtowardsthisErf.

InNovember2014,acourtorderwasgranted

declaring forfeit to the State the rights

accruing to theBaokiConsortium in termsof

the agreement concluded with the Gauteng

ProvincialGovernmenton03November2008.

ThetotalvalueoftheorderwasR413million.

ThisorderresultedinasavingsofR791million

duetopaymentsthatwerenotmadeinterms

of this contract.


Ongoing.

2.4.3. Local

2.4.3.1. Greater Tubatse Local Municipality:

Limpopo Province


August 2014


For the period 11March 2004 to 01 August

2014,theSIUwasmandatedtoinvestigate(a)

the procurement of goods,works or services

byoronbehalfoftheMunicipality;(b)fruitless

and wasteful expenditure incurred by the

Municipality through a settlement paid to

Phambili; (c) the award of contracts by the

Municipalitytosuppliersinwhichindividualsin

theserviceoftheStateheldinterests;(d)and

thefailurebytheMunicipalitytocollectmoney

due and owing by its debtors in respect of a

costordermadeinfavouroftheMunicipality

bytheNorthGautengHighCourtandmunicipal

services rendered.


Ongoing.

2.4.3.2. Vhembe District Municipality:

Limpopo Province


August 2014


The SIUwasmandated to investigate for the

period 01 May 2010 to 01 August 2014 (a)

the procurement of goods,works or services

by or on behalf of the Municipality; (b) the

misappropriationof fundsandthe incurrence

of wasteful expenditure or expenditure in

relationtopaymentsmadeto itscontractors,

suppliers or service providers; (c) and the

award of contracts by the Municipality to

suppliers in which individuals in the service of

the State held interests.


Ongoing.


44

2.4.3.3. Bushbuckridge Local Municipality: Mpumalanga Province

Proclamation R8 of 2014, published on 14 February 2014


TheSIUwasmandatedtoinvestigatethefollowingfortheperiod01May2010to14February2014:

• Theprocurementofgoods,worksorservicesbyoronbehalfoftheMunicipalityinamanner

thatwasnotfair,equitable,transparent,competitiveorcost-effectiveandcontrarytoapplicable

legislation, manuals, guidelines, practice notes, instructions, codes, policies, procedures,

prescriptsissuedbyNationalTreasuryortheProvincialTreasuryortheMunicipality;

• AnyundisclosedorunauthorisedintereststhepersonneloftheMunicipalitymayhavehadwith

regardtocontractors,suppliersorserviceprovidersbiddingforworkordoingbusinesswiththe

MunicipalityorcontractsawardedbyoronbehalfoftheMunicipality;

• Themisappropriationoffundsandtheincurrenceofwastefulexpenditureorexpenditurenot

due, owing or payable by theMunicipality in relation to paymentsmade to its contractors,

suppliersorserviceproviders;and

• Theirregularissuingofmotorvehiclelicencesandregistrationcertificatesbythepersonnelof

theMunicipality.




assets recoverable

TwoAODdocumentssigned R243630


Ongoing.

2.4.3.4. Midvaal Local Municipality: Gauteng Province (MLM)

Proclamation R 33 of 2011, published on 20 May 2011


TheSIUwasmandatedtoinvestigateallegationsofirregularitiesintheMLMwhichinclude:

• Theimproper,negligentorerroneousdisposaloftheMunicipality’soperatingassetsasbeing

redundantassets;

• ThefailuretoproperlycontroltheMunicipality’sdebtors;

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• ThefailuretoproperlyimplementtheMunicipality’sIndigentPolicy;

• The unlawful or irregular procurement of legal services by or on behalf of theMunicipality,

paymentsmadeinrespectthereofandrelatedirregularorfruitlessandwastefulexpenditureby

theMunicipality;

• Theerroneousissuingoftownplanningcertificates;

• ThefailuretorecordtheMunicipality’sassetsinitsassetregisters;and

• TheappointmentofstaffoftheMunicipalityatanincorrectlevel;

• TheMLMneglectedtofollowuponemployees’arrearmunicipalservicesaccounts.


Ongoing.

2.4.3.5. Ekurhuleni Metropolitan Municipality (EMM): Gauteng Province

Proclamation R 63 of 2010, published on 08 November 2010


TheSIUwasmandatedtoinvestigateallegationsofirregularitiesintheEMMwhichinclude:

• theirregularprocurementofgoodsworksorservicesbyoronbehalfoftheMunicipalityand

paymentsmadeinrespectthereof;and

• themismanagementoffinancesorassetsofthemunicipalityinrespectof:

▫ paymentsmadeforgoodsnotsuppliedorworksorservicesnotrendered;

▫ paymentsmadeundermaintenancecontractsinrespectofequipmentneverdeliveredor

notcommissioned;or

▫ duplicationofpaymentstocontractors,suppliersorserviceproviders;and

▫ the fraudulent and corrupt involvement of officials or employees of theMunicipality or

contactors,suppliersorserviceprovidersoftheMunicipality,inthemakingofsuchpayments.




NPA

Forgery and uttering for unlawfully and

intentionally creating, submittingand receiving

fraudulentquotations.

3






officials foractsoromissionswhichamount to

misconduct.

1


46


Ongoing.

2.4.3.6. Tshwane Metropolitan Municipality (TMM): Gauteng Province

Proclamation R 62 of 2010, published on 08 November 2010


TheSIUwasmandatedtoinvestigateallegationsofirregularitiesattheTMMwhichinclude:

• Therecruitment,selectionandappointmentofstaffintopositionsthattheyarenotqualifiedfor

orotherwisebestsuitedfor;

• MismanagementoffundsandoftheaffairsofmunicipalentitiesoftheMunicipality;

• FruitlessandwastefulexpenditureincurredbytheMunicipality;

• TheirregularprocurementofgoodsorservicesbyoronbehalfoftheMunicipalityoritsmunicipal

entities;

• Themismanagementofthefinances,assetsorotherresourcesoftheMunicipality;and

• AllegedinterferencebytheCityManagerinpendingdisciplinaryproceedingsagainstemployees.




assets recoverable

16AODdocumentssigned R302033


NPA

Fraudulentlyinvoicingandreceivingpayments.

Misrepresentationofemploymentandincome

details in order to be registered as an Indigent

Household.

60







misconduct.

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Ongoing.

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2.4.3.7. North West Province Municipalities

(NWM)

Proclamation R 72 of 2009, published on 10

November 2009


TheSIUwasmandatedtoinvestigateallegations

ofirregularitiesintheNWMwhichinclude:

• The appointment, extension of

appointment,andpromotionofmunicipal

staffcontrarytotheprescriptsofapplicable

lawandmunicipalpoliciesandprocedures;

• The external manipulation of, and undue

preference in the appointment and

promotionofmunicipalstaff;

• The disproportionate appointment and

excessiveremunerationofmunicipalstaff;

• The appointment and disproportionate

remuneration of under-qualified and

unsuitable candidates in municipal staff

establishments;

• The remuneration of non-performing and

underperforming municipal staff without

taking appropriate disciplinary steps

againstsuchstaff;

• Losses of municipal funds due to theft,

fraudandmisallocation;

• Disproportionate, wasteful and irregular

expenditureofmunicipalfunds;

• Mismanagement of expenditure of

municipal funds and resources, and the

accumulationofmunicipaldebt;

• Losses to municipalities caused by

inadequate management of, and control

over,municipalcontractsandresources;

• Theprocurementandalienationof goods

and services contrary to theprovisionsof

the MFMA and other applicable laws, as

wellasmunicipalpolicyandprocedures;

• Thealienationofmunicipallandcontraryto

theprovisionsofsection14oftheMFMA

and not by way of a fair, competitive,

equitable, transparent and cost-effective

process;

• Interference by councillors in the

administration of municipal affairs in

contraventionof theapplicableprovisions

of the Local Government: Municipal

Systems Act, 2000 (Act No. 32 of 2000)

(MSA)andtheMFMA;

• Themisuseandmisappropriationoffunds

derivingfromtheMunicipalInfrastructure

Grant(MIG);and

• The misuse of municipal resources for

privatebenefit.


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NPA

Fraud,forgeryandutteringandoffenceinterms

ofsection173(1)oftheMFMA.

1


Ongoing.

2.4.4. State Owned Entities

2.4.4.1. The State Information Technology Agency (Pty) Ltd (SITA)

Proclamation R53 of 2014, published on 01 August 2014, amended by Proclamation R15 of 2015,

published on 17 March 2015


Theinitialproclamationdeterminedtheperiodofinvestigationtocommenceon08September2012

andendon01August2014andincludedpaymentswhichweremadebytheSITAtoIBMinterms

ofanagreementdated30April2013.The2015proclamationamendstheperiodofinvestigationto

03August2012until17March2015.Theschedulewasalsoamendedtoincludeanyreferenceto:

• A “contract”, which means any: (i) Integrated Supply Agreement, (ii) Strategic Relationship

DocumentofUnderstanding,(iii)EnterpriseLicenceAgreement,(iv)EnterpriseSoftwareSolution

Offering,(v)EnterpriseSoftwareandServicesOptionor(vi)ServiceLevelAgreement.

• “Contracting”, which includes, but is not limited to, any negotiation processes involving a

contract,theconclusionandsigningofacontractandanynovation,renewal,variation,extension,

amendment,cancellationorterminationofacontract.

• “IBM”, which refers to the International Business Machines Corporation and Subsidiary

Companies,includingIBMSA(Pty)Ltd(RegistrationNo.1952/000308/07).

• “iFirm”,whichreferstoiFirmConsulting(Pty)Ltd(RegistrationNo.:2012/226990/07.

• “iFirmcontracts”,whichrefers to theagreementsbetweentheSITAand iFirmdated04April

2014and21May2014.

• “PersonnelofaStateInstitution”,whichincludesanymemberofaboard,director,official,officer,

employee,member,agent,vendor,contractororsub-contractor,supplierorserviceproviderof

aStateInstitution.

• “Personnel of IBM”,which includes anymember of the board, director, employee,member,

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agent, vendor, contractor, sub-contractor,

supplierorserviceproviderofIBM.

• “Personnel of iFirm”, which includes any

memberoftheboard,director,employee,

member, agent, vendor, contractor, sub-

contractor, supplier or serviceproviderof

iFirm.

• “Personnel of the SITA”, which includes

anymemberoftheboard,director,official,

officer,employee,member,agent,vendor,

contractor, sub-contractor, supplier or

serviceprovideroftheSITA.

• “Solution”,whichrefersto:(i)theprovision

of any cloud infrastructure services

solution, (ii) the provision of any goods,

works or services, as envisaged in Tender

RFB 989/2012 or (iii) any integrated

procurement model for any Government

DepartmentorStateInstitution.

• “State Institution”, which means any

department for whom the SITA is

responsible to procure goods, works or

services on behalf of the public body, as

envisaged in the SITA Act, Act No. 88 of

1998.

b)InvestigationHighlights

Theinvestigationintotheawardingofatender

to IBM which exceeded board approval by

R85 million and the investigation into the

appointment and awarding of contracts of

R10 million and R265 million to iFirm has

commenced.

The SIU will investigate the procurement of

goods and services by SITA, for itself or for

and on behalf of the Departments for whose

procurement SITA is responsible; as well

as the binding of SITA, the Departments or

Public Bodies concerned to incur, irregular,

unauthorised or fruitless and wasteful

expenditure; and the SIU will review current

matters with a view to identifying non-

compliancewiththeprovisionsofthePFMAand

associated Treasury Regulations, Preferential

Procurement Policy Framework Act, Act No.

5of2000(PPPFA)andassociatedRegulations

and contraventionof theCompaniesAct,Act

No.71of2008, in respectof the IBMtender

and the iFirm contract.


Ongoing.

2.4.4.2. The State Information Technology

Agency (Pty) Ltd (SITA)


September 2012



procurementofgoods,worksorservicesbySITA

for itself or for and on behalf of Departments

forwhoseprocurementSITAisresponsible,as

envisaged in theSITAAct,1998,oronbehalf

ofpublicbodieswhichsorequestedSITAand

the failure to collectmonies due, owing and

payabletoSITA.Theperiodofinvestigationis

from07October2003to07September2012.


50








officials foractsoromissionswhichamount to

misconduct.

8

Actual savings Recommendations were made that the IFMS

tenderbestoppedasfraudwasidentified.

R130million



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3.1. Fraud and Corruption

Thissectioncoversthefraudpreventionplans

and the progress made in implementing the

fraudpreventionplan.Theanti-corruptionplan

isdividedintofourparts:prevention,detection,

investigation and resolution. The Internal

IntegrityUnit(IIU)isinvolvedinallfourareas.

Prevention

Pre-employment screening is done on any

prospective candidate before joining the

SIU. Re-screenings are done periodically.

Memberswhocomeintocontactwithsensitive

documentation or information undergo the

vetting process currently performed by the

StateSecurityAgency(SSA).Inthiswaypossible

fraudandcorruptionisprevented.

Regarding conflicts of interest, the IIU has a

system whereby members need to declare

theirassetsonanannualbasis.Iftheyreceive

external remuneration, theyhave toapply for

permission which is approved or declined by

the Head of the Unit. No SIU member may

accept any gift froma serviceprovider.Other

gifts have to be declared in the gift registers

thatarepresentinalltheregionsandsignedoff

bythemember’smanagerortheregionalhead.

Detection

Instances of possible fraud and corruption

have been detected through re-screenings,

whichresultedininvestigations.Inmanycases

membersreporttotheIIUwhentheybecome

aware of colleagues who are involved in adverse

activities.

Investigation

The IIU has the capacity to conduct internal

investigationsupon receiving amandate from

theHeadoftheUnit.

Resolution

The IIU’s complaint affidavit initialises the

disciplinary process. The internal integrity

officer who investigates a matter will testify

in the disciplinary hearing. IIU members also

serve other members with suspension letters

andinrecoveringunitpropertysuchaslaptops

etc. If thematter isofacriminalnature (such

as fraud), the IIUwill report it totheSAPSon

instructionoffromtheHeadoftheUnit.

Mechanismsareinplacetoreportonfraudand

corruption.Incasesofwhistleblowing,officials

make confidential disclosure about suspected

fraudandcorruption.Aninternalfraudhotline

hasbeenapprovedbytheHeadoftheUnitand

willbeimplementedsoon.Memberscanreport

wrongdoingtoanyIIUmemberwhowillreport

themattertotheHeadoftheIIU.Inmanycases,

reportshavebeenmadeanonymously,through

e-mails,telephonecallsandnotes.

Allseriousdisciplinarymattersinvolvingfraud,

corruption, theft etc. is reported to the Anti-

CorruptionWorkingGroup(ACWG)oftheJCPS

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onamonthlybasis.Adisciplinaryinvestigation

takesplaceandthedisciplinarycommitteethen

decides whether to proceed with disciplinary

actionornot.Criminalmattersarereportedto

theSAPSon instruction fromtheHeadof the

Unit.

3.2. Minimising Conflict of Interest

SIUmembers have to declare their assets on

an annual basis. This includes directorships,

companies, outside remuneration, property

etc. The IIU verifies whether all companies

and directorships have been declared using

WinDeed reports supplied by the Companies

and Intellectual Property Commission

(CIPC) and will follow up if discrepancies are

discovered. Before a member can start earning

outside remuneration, he or she needs to

request permission, which is granted by the

HeadoftheUnit.TheHeadoftheIIUwillmake

recommendations and point out if the is any

actual or potential conflict of interest or risk

involved.Aninstructionregardingthereceiving

of gifts supplements the SIU Gift Policy and

clearly states that no gifts may be accepted

fromserviceproviders.Othergiftsneedtobe

declared in the gift register and signedoffby

themember’smanageror theRegionalHead.

Ifaconflictofinterestisidentified,themember

willbequestionedonthematter.Dependingon

thenatureand seriousnessof thematter, the

member may need to undergo a disciplinary

process.

3.3. Code of Conduct

Ourvaluesarethekeyprinciplesthatguideour

conductandrelationships.Theydefinethetype

ofinstitutionthattheSIUaspirestobeandmust

bevisibleinthewayweconductourselves,how

we engage with each other and other agencies

and how we deliver value. Our values create the

moral and ethical compass that guides us as we

pursueourmandatewithintegrityandhonesty.

TheSIUcurrentlyhasasignedcodeofconduct.

However,anewcodehasbeendraftedtoalign

theSIUtobestpracticesinthechangingworld.

When there is a contraventionof the codeof

conduct,members can reportwrongdoing to

anyIIUmemberwhowillreportthemattertothe

HeadoftheIIU.TheHeadoftheUnitwillthen

sign a mandate to investigate. Members can

report wrong doing to their line manager who

willdealwiththematterand/orreportittothe

HumanResources(HR)department.Thematter

isassignedtoaninvestigatorwhomustconduct

aninvestigation.Areportonthecontravention

of thecodeof conduct is sent to theHeadof

the IIU whowill assess thematter andmake

recommendationstotheHeadoftheUnit.The

matterwillthenbereferredtotheDisciplinary

Committee (DC) todealwithaccording to the

prescripts of the internal disciplinary policy.

Allseriousdisciplinarymattersinvolvingfraud,

corruption,theftetc.arereportedtotheACWG

oftheJCPSonamonthlybasis.


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3.4. Health, Safety and Environmental Issues

Duringtheyearunderreview,allOccupationalHealthandSafetyRepresentativesintheSIUoffices

receiveda refresher course. The course included thenewlyappointed representatives.All office

representativeshavebegunwith their duties. First aid andfirefighting trainingwasprovided for

membersintherespectiveoffices.AllSIUofficeshavealsobeenprovidedwithfirstaidboxes.

There have been nine incidents reported during the year under review as detailed in Table 3.1

below.TheincidentsarereportedtoandregisteredwiththeDepartmentofLabourandnecessary

investigations have been conducted by the Occupational Health and Safety Representatives to

ensurethatthecausesoftheproblemswereidentifiedandeliminatedwherepossible.

Table 3.1: Number Of Reported Injuries On Duty According To Demographic Group

GENDERNO. OF INJURIES

REPORTED

MALE 5

FEMALE 4

TOTAL 9

RACIAL GROUPNO. OF INJURIES

REPORTED

AFRICAN 1

COLOURED 4

INDIAN 1

WHITE 3

TOTAL 9

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3.5. Audit Committee Report

Wearepleasedtopresentourreportforthefinancialyearended31March2015.

Audit Committee members and attendance

The Audit Committee consists of the members listed hereunder. During the current year, four

meetingswereheld.

Table 3.2: Audit Committee Members And Meeting Attendance

NAME OF MEMBERNO. OF MEETINGS

ATTENDED

ProfHdeJager–Chairperson 4

MrMMaliehe 4

MrHHlomane 4

MrMNtumba 3

TheAuditor-GeneralofSouthAfrica(AGSA)andrepresentativesofthefirmstowhomtheinternal

functionwasco-sourcedwereinvitedandattendedallthemeetings.TheHeadoftheSIUandother

seniorstaffmemberswerealsoinvitedandattendedthemeetings.

Audit Committee responsibility

TheAuditCommitteereportsthatithascompliedwiththeresponsibilitiesarisingfromsection77of

thePFMAandsection27.1.1-13oftheTreasuryRegulations.TheAuditCommitteealsoreportsthat

ithasadoptedappropriateformaltermsofreference,whicharecontainedinitsAuditCommittee

Charter,hasregulateditsaffairsincompliancewiththisCharteranddischargedallitsresponsibilities

as contained therein.


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The effectiveness of internal control

The SIU’s systems of internal control are

designed to provide assurances that, inter

alia, assets are safeguarded and liabilities

and working capital are managed effectively

and efficiently. From the various reports

submitted by the internal auditors and the

AGSA,theCommitteeconcludedthatthereare

weaknesses in several of the components of

the SIU.Where shortcomingswere identified,

management is in theprocessofattending to

them.Urgentfollow-upbytheinternalauditors

is needed.

Internal Audit

During the review period the internal auditors

continuedtoprovidetheAuditCommitteeand

management with independent information

and assurances of the effectiveness of the

internal controls for those areas examined in

terms of the Internal Audit Plan based on the

risk assessment. The internal audit function

wasco-sourcedduringtheyear.

Financial statements

The Audit Committee has:

• Reviewed and discussed the audited

annualfinancialstatementsandtheAnnual

Performance Report included in this Annual

ReportwithmanagementandtheAGSA;

• Taken note of the changes to the annual

financial statements after having been

submittedtotheAGSA;and

• Reviewed and discussed the AGSA

management report and responses of

management thereto.

Management reports

The Audit Committee is satisfied with the

contentandqualityofthemanagementreports

preparedandissuedbytheSIUfortheperiod

under review.

Risk management

There are certain shortcomings in the risk

managementstrategyoftheSIU,management

hasbeenmadeawareofthemandiscurrently

attendingtotheseshortcomings.

Report of the AGSA

TheAuditCommitteeconcursandacceptsthe

unqualifiedopinionoftheAGSAontheannual

financial statements of the SIU for the year

ended31March2015.

The Audit Committee urged management to

giveattentiontothedifferentmattersraisedby

the AGSA in itsmanagement letter and audit

reportandtoensuretheappropriatecorrective

actionsaretakentopreventrecurrenceinthe

future.

Auditor General of South Africa

TheAuditCommitteehasmetwiththeAGSAto

ensure that there are no unresolved issues as at

31March2015.

Chairperson of the Audit Committee

Prof.HdeJager

31July2015

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4.1 Introduction

Employeesremainourmostvitalandvaluableasset. It is throughtheirdedicationthat theSIU’s

successeshavebeensustainedthroughouttheyears.Duringtheyearunderreview,weintroduced

some changes to operational processes and procedures. In response to these changes, our HR

department had to refocus its processes to be able to attract, develop and retain high-calibre

employees.Thealignmentoftheworkforceplanandidentificationoftrainingneedsforthechanging

businessrequirementsweresomeofthecriticalprojectsundertakenduringtheyear.

4.2 Key achievements

ThefollowingweresomeofthekeyHRachievements:

TheappointmentoftheHeadofInternalIntegrity,HeadofHRandtheCFO.Forthefirsttimeinfive

yearsthesepositionsareoccupiedbypermanentemployees.

• Aworkforceplanidentifyingtheneedsofachangingoperationalenvironmentwasdeveloped

and aligned to the business needs.

• Aprojecttoautomatetherecruitmentandselectionprocesswasundertakentoensureefficiency

andtransparencyintheprocess.Thisprojectwillbecompletedattheendof2015.

• Acomprehensiveskillsauditofallemployeeswasundertaken.Theauditidentifiedcriticalskills

requiredfortheorganisationandacomprehensivetrainingplanhasbeendevelopedinlinewith

changingbusinessrequirements.

• Atotalof93bursarieswereofferedtoemployeesatvariouslevelsofstudyinthefieldsofforensic

accounting,criminaljustice,forensicinvestigationsandanti-corruption,amongothers.

• MetropolitanwasappointedasthenewserviceprovideroftheEmployeeWellnessProgramme.

TheserviceofferinghasbeenlaunchedandwasverywellreceivedbySIUstaff.

• Severalwellnessdaysandeventswereheldduringtheperioddealingwithmen’shealthand

stressandemployeeswereencouragedtodonatebloodduringcriticalperiodsofneed.

• In order to provide employees with a wider variety of benefits, the Government Employee

PensionFund(GEPF)wasimplementedasanalternativetotheSIUProvidentFund.

• Anautomatedleavemanagementsystemhasbeenimplemented,whichenablesemployeesto

applyforleaveelectronically.

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4.3 Human Resources Oversight Statistics

4.3.1 Personnel cost by programme

Table 4.1: Personnel costs by programme

CATEGORYPERSONNEL

EXPENDITURE (R’000)AVERAGE EMPLOYEE

COUNT FOR THE PERIOD

AVERAGE PERSONNEL COST PER EMPLOYEE

(R’000)

BusinessManagement 13352 24 556

BusinessOperations 230361 455 506

Business Support 31000 104 298

TOTAL 274 713 583 471

Note:Personnel expenditure in the audited annual financial statements amounts to R275 739 137 while the HR Report

amount is R274 713 379. The difference of R1 025 758 is made up of training costs and accrual for leave pay, which are

not processed through the payroll.

4.3.2 Personnel cost by salary band

Table 4.2: Below details personnel costs in terms of salary band

OCCUPATIONAL

LEVELS

PERSONNEL EXPENDITURE

(R’000)

% OF PERSONNEL EXPENDITURE TO

TOTAL PERSONNEL COST (R’000)

AVERAGE EMPLOYEE COUNT FOR THE PERIOD

AVERAGE PERSONNEL COST

PER EMPLOYEE (R’000)

TopManagement 1852 0.67 1 1852

SeniorManagement 31091 11.32 26 1195

Professionalqualified 139057 50.61 201 691

Skilled 77467 28.2 202 383

Semi-skilled 24013 8.75 141 170

Unskilled 1 232 0.45 12 102

TOTAL 274 713 100 583 471


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4.3.3 Performance rewards

Table 4.3 : Personnel performance rewards

OCCUPATIONAL

LEVELS

PERFORMANCE REWARDS

(R’000)

PERSONNEL EXPENDITURE

(R’000)

% of performance rewards to total personnel cost

(R’000)

TopManagement 0 1852 0

SeniorManagement 2618 31091 0.96

Professionalqualified 6790 139057 2.48

Skilled 975 77467 0.36

Semi-skilled 777 24013 0.29

Unskilled 50 1 232 0.02

TOTAL 11 213 274 713 4.11

4.3.4 Training costs

Table 4.4: Employee training costs

CATEGORY PERSONNEL EXPENDITURE

(R’000)

TRAINING EXPENDITURE

(R’000)

TRAINING EXPENDITURE

AS A % OF PERSONNEL

COST.

NO. OF EMPLOYEES

TRAINED

AVG TRAINING COST PER

EMPLOYEE (R’000)

Business Management

13352 34 0.3 7 5

Business

Operations230361 578 0.2 264 2

Business Support 31000 111 0.4 37 3

TOTAL 274 713 723 0.2 308 2

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4.3.5 Employment and vacancies

Table 4.5: Employment and vacancies according to occupational level

CATEGORY 2013/14 NO. OF

EMPLOYEES

2014/15APPROVED

POSTS

NO. OF EMPLOYEES

MARCH 2015

2014/15VACANCIES

2014/15 % OF

VACANCIES

Operations 463 450 430 20 4%

Support 99 130 116 14 10%

TOTAL 562 580 546 34 5%

Table 4.6: Employment and vacancies according to skills level

OCCUPATIONAL LEVELS 2013/14 NO. OF

EMPLOYEES

2014/15APPROVED

POSTS

NO. OF EMPLOYEES

MARCH 2015

2014/15VACANCIES

2014/15 % OF

VACANCIES

TopManagement 1 1 0 1 100%

Executive/SeniorManagement 24 28 26 2 7%

Professionalqualified 195 194 179 15 8%

Skilled 207 206 199 7 3%

Semi-skilled 140 139 132 7 5%

Unskilled 12 12 12 0 0

TOTAL 562 580 546 34 5%


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4.3.6 Employment changes

Table 4.7: Employment appointments and terminations

OCCUPATIONAL LEVELS APPOINTMENTS 2014/15

TERMINATIONS2014/15

TopManagement 0 1

Executive/SeniorManagement 5 5

Professionalqualified 14 15

Skilled 1 9

Semi-skilled 1 7

Unskilled 0 0

TOTAL 21 37

Note:SeniorManagementAppointments:CFO,Head:IIU,SeniorForensicLawyer(2),Head:HR

Terminations:HeadofUnit,CFO,ProgrammeManager(2)andSeniorForensicLawyer(2)

4.3.7. Reasons for staff leaving

Table 4.8: Reasons for staff attrition

CATEGORIES NUMBER PERCENTAGE OF TOTAL NO. OF STAFF LEAVING

Death 2 5%

Resignation 23 62%

Dismissal 0 0%

Retirement 0 0%

Ill health 0 0%

Expiryofcontract 12 33%

Other 0 0%

TOTAL 37 100%

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4.3.8 Labour relations: Misconduct and disciplinary action

Table 4.9: Disciplinary action data

NATURE OF DISCIPLINARY ACTION NUMBER

VerbalWarning 0

WrittenWarning 3

FinalWrittenWarning 2

Dismissal 0

TOTAL 5

4.3.9 Equity target and employment equity status

Table 4.10: Employment equity targets and status for male employees

OCCUPATIONAL LEVELS MALE

AFRICAN COLOURED INDIAN WHITE

Current Target Current Target Current Target Current Target

TopManagement 0 1 0 0 0 1 0 1

SeniorManagement 4 3 2 2 3 3 9 9

Professionalqualified 47 50 14 15 17 19 46 44

Skilled 84 90 8 7 11 12 5 5

Semi-skilled 28 29 0 0 0 1 3 4

Unskilled 0 0 0 0 0 0 0 0

TOTAL 163 173 24 24 31 36 63 63


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Table 4.11: Employment equity targets and status for female employees

OCCUPATIONAL LEVELS FEMALE

AFRICAN COLOURED INDIAN WHITE

Current Target Current Target Current Target Current Target

TopManagement 0 1 0 0 0 0 0 0

SeniorManagement 4 3 0 1 2 2 2 2

Professionalqualified 20 28 1 1 4 5 31 32

Skilled 38 42 5 6 14 15 29 29

Semi-skilled 81 83 5 5 7 7 10 10

Unskilled 12 12 0 0 0 0 0 0

TOTAL 155 169 11 13 27 29 72 73

Table 4.12: SIU employees with disabilities

OCCUPATIONAL LEVELS

DISABLED STAFF

MALE FEMALE

Current Target Current Target

TopManagement 0 0 0 0

SeniorManagement 0 0 0 0

Professionalqualified 0 0 0 1

Skilled 0 0 0 0

Semi-skilled 0 0 0 2

Unskilled 0 0 0 0

TOTAL 0 0 0 3

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5.1 Statement of Responsibility for the Financial Statements

Tothebestofourknowledgeandbelief,weconfirmthefollowing:

AllinformationandamountsdisclosedintheAnnualReportareconsistentwiththeannualfinancial

statementsauditedbytheAuditor-General.Theannualfinancialstatementsarecomplete,accurate

andfreefromanyomissions.ThefinancialstatementswerepreparedinaccordancewiththeAnnual

Report Guide as issued byNational Treasury. The annual financial statementswere prepared in

accordancewiththeStandardsofGRAPapplicabletotheSIU.

Theaccountingauthorityisresponsibleforthepreparationoftheannualfinancialstatementsand

forthejudgmentsmadeinthisinformation.Theaccountingauthorityisresponsibleforestablishing

and implementing a system of internal control that has been designed to provide reasonable

assuranceastotheintegrityandreliabilityoftheperformanceinformation,thehumanresources

informationandtheannualfinancialstatements.

The external auditorswere engaged to express an independent opinion on the annual financial

statements.

Inouropinion,theannualfinancialstatementsfairlyreflectthefinancialaffairsoftheentityforthe

financialyearended31March2015.

Chief Financial Officer Acting Head of Special Investigating Unit

NtombiMothibeliCA(SA) AdvGerhardVisagie

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5.2 Report of the Auditor-General

Report on the financial statements

Introduction

Ihaveaudited thefinancial statementsof the

SpecialInvestigatingUnitsetoutonpages71to

110,whichcomprisethestatementoffinancial

positionasat31March2015,thestatementof

financial performance, statement of changes

in net assets, statement of cash flows and

statement of budget comparison for the year

thenended,aswellasthenotes,comprisinga

summaryofsignificantaccountingpoliciesand

otherexplanatoryinformation.

Accounting authority’s responsibility for the

financial statements

The accounting authority is responsible for

the preparation and fair presentation of

thesefinancial statements in accordancewith

the South African Standards of GRAP and

the requirements of the PFMA and for such

internal control as the accounting authority

deemsnecessarytoenablethepreparationof

financialstatementsthatarefreefrommaterial

misstatement,whetherduetofraudorerror.

Auditor-general’s responsibility

My responsibility is to express an opinion on

thesefinancialstatementsbasedonmyaudit.

I conducted my audit in accordance with

International Standards on Auditing. Those

standards require that I comply with ethical

requirementsandplanandperform theaudit

to obtain reasonable assurance about whether

thefinancialstatementsarefreefrommaterial

misstatement.

An audit involves performing procedures to

obtain audit evidence about the amounts and

disclosures in the financial statements. The

procedures selected depend on the auditor’s

judgement, including the assessment of the

risksofmaterialmisstatementof thefinancial

statements,whether due to fraudor error. In

making those risk assessments, the auditor

considersinternalcontrolrelevanttotheentity’s

preparationandfairpresentationofthefinancial

statements in order to design audit procedures

thatareappropriate inthecircumstances,but

not for the purpose of expressing an opinion

on the effectiveness of the entity’s internal

control. An audit also includes evaluating the

appropriateness of accounting policies used

andthereasonablenessofaccountingestimates

madebymanagement,aswellasevaluatingthe

overallpresentationofthefinancialstatements.

I believe that the audit evidence I have obtained

issufficientandappropriatetoprovideabasis

formyauditopinion.

Opinion

Inmyopinion,thefinancialstatementspresent

fairly, in all material respects, the financial

positionof theSpecial InvestigatingUnitasat


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31March 2015 and its financial performance

and cash flows for the year then ended in

accordance with the South African Standards of

GRAPandtherequirementsofthePFMA.

Emphasis of matter

I draw attention to the matter below. My

opinion is not modified in respect of this

matter.Asdisclosedinnote33tothefinancial

statements, the corresponding figures for 31

March2014havebeen restatedasa resultof

an error discovered during the period under

reviewinthefinancialstatementsoftheSpecial

InvestigatingUnitat,andfortheyearended,31

March2014.

Report on other legal and regulatory

requirements

In accordance with the Public Audit Act of

South Africa, 2004 (Act No. 25 of 2004), and

the general notice issued in terms thereof,

I have a responsibility to report findings

on the reported performance information

against predetermined objectives for selected

objectivespresentedintheAnnualPerformance

Report, non-compliance with legislation and

internalcontrol.Theobjectiveofmytestsisto

identifyreportablefindingsasdescribedunder

each subheading but not to gather evidence

to express assurance on these matters.

Accordingly, I do not express an opinion or

conclusiononthesematters.

Predetermined Objectives

I performed procedures to obtain evidence

about the usefulness and reliability of the

reported performance information for the

following selectedobjectivespresented in the

Annual Performance Report of the entity for

theyearended31March2015:

• Objective1:Quality forensic investigations

andcivillitigationonpages24to25

• Objective 2: Strategic partner relations

developedandmaintainedonpages25to

26

I evaluated the reported performance

information against the overall criteria of

usefulness and reliability. I evaluated the

usefulness of the reported performance

information to determine whether it was

presented in accordance with the National

Treasury’s annual reporting principles and

whether the reported performance was

consistent with the planned objectives. I

further performed tests to determine whether

indicators and targets were well defined,

verifiable, specific, measurable, time bound

and relevant, as required by the National

Treasury’sFrameworkforManagingProgramme

Performance Information (FMPPI). I assessed

the reliability of the reported performance

informationtodeterminewhetheritwasvalid,

accurate and complete.

I did not identify any material findings on

the usefulness and reliability of the reported

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performance information for the following

objectives:

• Objective1:Quality forensic investigations

andcivillitigation

• Objective 2: Strategic partner relations

developed and maintained

Additional matters

Although I identified no material findings on

the usefulness and reliability of the reported

performance information for the selected

objectives, I draw attention to the following

matter:

Achievement of planned targets

Refer to the Annual Performance Report on page

24to26forinformationontheachievementof

theplannedtargetsfortheyear.

Compliance with legislation

I performed procedures to obtain evidence

that the entity had complied with applicable

legislationregardingfinancialmatters,financial

management and other related matters. My

findings on material non-compliance with

specificmattersinkeylegislation,assetoutin

thegeneralnoticeissuedintermsofthePublic

AuditAct,areasfollows.

Annual financial statements

Thefinancialstatementssubmittedforauditing

were not fully prepared in accordance with

the prescribed financial reporting framework

as required by section 55(1)(b) of the PFMA.

Material misstatements in the statement of

budget comparison, current liabilities and

non-current assets identified by the auditors

in the submitted financial statement were

subsequently corrected and the supporting

recordswereprovidedsubsequently, resulting

in the financial statements receiving an

unqualifiedauditopinion.

Procurement and contract management

Goods and services of a transaction value

above R500 000 were procured without

inviting competitive bids, as required by

TreasuryRegulation16A6.1.Insomeinstances,

deviations were approved by the accounting

authority, even though it was not impractical

to invite competitivebids, in contraventionof

TreasuryRegulation16A6.4.

Internal control

I considered internal control relevant to my

audit of the financial statements, Annual

Performance Report and compliance with

legislation. The matters reported below are

limited to the significant internal control

deficiencies that resulted in the findings on

non-compliancewithlegislationincludedinthis

report.

Leadership

Leadership did not adequately exercise

oversight responsibility with regards to some

aspects of financial reporting and compliance

and related internal controls.


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Financial and performance management

Management did not adequately implement effective controls to ensure accurate and complete

financialstatements.

Pretoria

31July2015

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5.3 Annual Financial Statements

SPECIAL INVESTIGATING UNIT

EstablishedintermsofAct74/1996(Proclamation118/2001)

Statement of Financial PositionFor the year ended 31 March 2015

2015 Restated 2014

Notes R R

Assets

Current assets 351 791 394 297 965 153

Cashandcashequivalents 10 121307051 75296784

Bankbalances–recoveries 5 21345189 22383162

Prepayments 9 1989936 2589050

Tradeandotherreceivablesfromexchangetransactions 7 204397206 196835019

Tradeandotherreceivablesfromnon-exchangetransactions 8 626048 776846

Consumables on hand 6 61685 84292

Assets held for sale 4 2064279 -

Non-current assets 33 923 471 36 454 744

Propertyandequipment 2 30071479 32384865

Intangible assets 3 3851992 4069879

Total assets 385 714 865 334 419 897

Liabilities

Current liabilities 52 603 829 73 066 838

Tradeandotherpayablesfromexchangetransactions 11 5143611 8796262

Tradeandotherpayablesfromnon-exchangetransactions 12 143116 43823

Provisions 15 21397152 21128211

Income received in advance 14 4574761 20715380

Payables–recoveries 13 21345189 22383162

Total liabilities 52 603 829 73 066 838

Net assets

Accumulated surplus 333111036 261353059

Total net assets and liabilities 385 714 865 334419897


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Statement of Financial PerformanceFor the year ended 31 March 2015

2015 Restated 2014

Notes R R

Revenue

Revenue from non-exchange transactions 16 301 949 049 305 646 011

Governmentgrant 296813000 295859000

CARA funds 5136049 9787011

Revenue from exchange transactions 232 066 579 220 395 302

Services rendered 16 226911547 216254221

Interestearned–callaccounts 19 5140791 4127396

Other income 18 14 241 13685

Total Revenue 534 015 628 526 041 313

Expenses

Employeescosts 17 (275747637) (259127369)

Travelandaccommodation (8649183) (15580804)

Depreciation 2 (6493944) (8481427)

Amortisationcosts 3 (195439) (195617)

Impairment loss 4 (255588) -

Otheroperatingexpenses 20 (64404118) (66991139)

Debt impairment 7 (106511742) (31799032)

Total expenses (462 257 651) (382 175 388)

Surplusfortheyear 71757977 143865925

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Statement of Changes in Net AssetsFor the year ended 31 March 2015

Accumulated Surplus

Total

Notes R R

Balance at 31 March 2013 117 487 133 117 487 133

Surplusfortheyearaspreviouslyreported 121851078 121851078

Correctionofpriorperioderror 33 22014847 22014847

Total changes 143 865 925 143 865 925

Balance at 31 March 2014 restated 261 353 059 261 353 059

Surplusfortheyear 71757977 71757977

Balance at 31 March 2015 333 111 036 333 111 036


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Statement of Cash flowsFortheyearended31March2015

2015 Restated 2014

Notes R RCash flows from operating activities

Receipts

GrantsReceived 296813000 295859000

Cash received from services rendered 118723579 58365559

Other receipts 14 241 13685

Interest income 5140791 4127396

420 691 611 358 365 640

Payments

Compensationofemployees (275747637) (259127370)

Cash paid for goods and services (85947439) (101579881)

(361 695 076) (360 707 251)

Cash generated/(utilised) from operations 25 58 996 535 (2 341 611)

Cash flows from investing activities

Purchase of assets 2 (12986268) (3541189)

Proceeds from sale of assets - 11958

Cash movement on recoveries 13 (1037973) 542701

Net cash outflows from investing activities (14 024 241) (2 986 530)

Cash flows from financing activities

Movementinpayablesonrecoveries 1037973 (542701)

Net increase/(decrease) in cash and cash equivalents 46 010 267 (5 870 842)

Cashandcashequivalentsatthebeginningoftheyear 75 296 784 81167626

Cash and cash equivalents at the end of the year 10 121 307 051 75296784

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Statement of Budget ComparisonFortheyearended31March2015

Actual Total

R

Approved Budget

R

Adjustments

R

FinalBudget

R

Difference: Final Budget and Actual

R

Income 534 015 628 510 269 000 (97 615 546) 412 653 454 121 362 174

Governmentgrant 296813000 296813000 - 296813000 -

CARA funds 5136049 - - - 5136049

Projectsincome 226911547 209642004 (97942004) 111700000 115211547

Interest earned 5140791 3813996 326458 4140454 1000337

Other Income 14 241 - - - 14 241

Expenses (462 257 651) (510 269 000) (97 615 546) (412 653 454) (49 604 197)

Directcost:Salaries (275747637) (298594248) (38494248) (260100000) (15647637)

Directcost:Consultants (553379) (8094374) (7400001) (694373) 140994Directcost:Travelandaccommodation

(8649183) (12723567) (2529017) (10194550) 1545367

Directoperationalcosts (3308471) (8895508) (5310000) (3585508) 277037Projectadministrationcost

(12479860) (23541584) (10516000) (13025584) 545724

Administrationcosts (154829738) (145017303) (27565900) (117451403) (37378335)

Depreciation (6689383) (13402416) (5800380) (7602036) 912653

Surplus for the year 71 757 977 - - - 71 757 977

Assets 12 994 690 18 500 000 (1 500 000) 17 000 000 4 005 310

Refer to note 37 for detailed commentary on the difference between the final budget and actual total


76

Basis of Preparation

Accounting policies

Fortheyearended31March2015

The annual financial statements are prepared

in accordance with the South African Standards

ofGRAPasissuedbytheAccountingStandards

Board inaccordancewithSection91(1)ofthe

PFMA.

The principal accounting policies, applied

in the preparation of these annual financial

statements,aresetoutbelow.Theseaccounting

policies are consistent with those applied in the

preparation of the prior year annual financial

statements,unlessspecifiedotherwise.

A summary of the significant accounting

policies, which are consistently applied, are

disclosed below.

Presentation currency

Theseannualfinancialstatementsarepresented

inSouthAfricanRand,which is the functional

currencyoftheentity.

Going concern

These annual financial statements were

prepared based on the expectation that the

entity will continue to operate as a going

concernforatleastthenext12months.

Comparative information

When the presentation or classification of

items in the annual financial statements is

amended, prior period comparative amounts

are also reclassified and restated, unless such

comparativereclassificationand/orrestatement

is not required by a Standard of GRAP. The

natureandreasonforsuchreclassificationsand

restatements are also disclosed.

Where material accounting errors, which

relate to prior periods, have been identified

in the current year, the correction is made

retrospectively as far as is practicable and

the prior year comparatives are restated

accordingly. Where there has been a change

in accounting policy in the current year, the

adjustmentismaderetrospectivelyasfarasis

practicableandtheprioryearcomparativesare

restatedaccordingly.

Thepresentationandclassificationof items in

thecurrentyearisconsistentwithpriorperiods.

Standards, amendments to standards and

interpretations issued but not yet effective

The following Standards of GRAP and/or

amendments thereto have been issued by

theAccountingStandardsBoard,butwillonly

becomeeffectiveinfutureperiodsorhavenot

been given an effective date by the Minister

of Finance. The entity has not early-adopted

any of these new Standards or amendments

thereto,buthasreferredtothemforguidance

in the development of accounting policies in

accordancewithGRAP3asreadwithDirective

5.

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GRAP 18 Segment reporting

The standard requires the identification and

aggregationof the operating segments of the

entityintoreportablesegments.Foreachofthe

reportable segments identified details of the

financialperformanceandfinancialpositionwill

bedisclosed.Thepreciseimpactofthisonthe

financial statementsof theentity is stillbeing

assessed but it is expected that thiswill only

resultinadditionaldisclosureswithoutaffecting

theunderlyingaccounting.Thisstandarddoes

nothaveaneffectivedateyet.

GRAP 5 Borrowing costs

Theaccountingstandardisstillbeingassessed

but it is expected that this will not have any

impactontheentitysinceitcurrentlydoesnot

haveanyborrowingcosts.

GRAP 100 (revised) Discontinued Operations

The precise impact of this on the financial

statementsoftheentity isstillbeingassessed

but it is expected that this will only result in

additional disclosures without affecting the

underlyingaccounting.Thisstandarddoesnot

haveaneffectivedateyet.

GRAP 32 Service concession agreements grator







GRAP 108 Statutory receivables







GRAP 17 Service concession arrangements:

where grantor controls a significant residual

interestinanasset







GRAP 16 Intangible assets – website costs







Significant judgments and estimates

Theuseofjudgment,estimatesandassumptions

is inherent to the process of preparing annual

financial statements. These judgments,

estimatesandassumptionsaffecttheamounts

presented in the annual financial statements.


78

Uncertainties about these estimates and

assumptions could result in outcomes that

require amaterial adjustment to the carrying

amount of the relevant asset or liability in

future periods.

Depreciation and amortisation

Depreciation and amortisation recognised on

propertyandequipmentand intangibleassets

are determined with reference to the useful

lives and residual values of the underlying

items. The useful lives and residual values of

assetsarebasedonmanagement’sestimation

of the asset’s condition, expected condition

at the end of the period of use, its current

use, and expected future use and the entity’s

expectations about the availability of finance

to replace the asset at the end of its useful life.

Inevaluatingthehowtheconditionanduseof

the asset informs the useful life and residual

value management considers the impact of

technologyandminimumservicerequirements

of the assets.

Allowance for doubtful debts

The measurement of receivables is derived

after consideration of the allowance for

doubtful debts. Management makes certain

assumptions regarding the categorisation of

debtorsintogroupswithsimilarriskprofilesso

thattheeffectofanyimpairmentonagroupof

receivableswouldnotdiffermateriallyfromthe

impairment that would have been determined

had each debtor been assessed for impairment

on an individual basis. The determination of

thisallowanceispredisposedtotheutilisation

of estimates, assumptions and management

judgments.

Property and equipment

Initialrecognitionandmeasurement

Property and equipment are tangible non-

current assets that are expected to be used

duringmorethanoneyear.

Itemsofpropertyandequipmentarerecognised

as assets when it is probable that future

economic benefits will flow to the entity and

thecostoftheitemcanbemeasuredreliably.

Items of property and equipment are initially

recognised as assets on the acquisition date

and recorded at costwhere acquired through

exchange transactions. However, when items

ofproperty,plantandequipmentareacquired

through non-exchange transactions, those

itemsare initiallymeasuredat their fair value

asatthedateofacquisition.

The cost of an item of property, plant and

equipment is the purchase price and other

costsdirectlyattributabletobringtheassetto

thelocationandconditionnecessaryforittobe

capable of operating in themanner intended

by theentity.Tradediscountsand rebatesare

deducted in arriving at the cost at which the

asset is recognised.

Propertyandequipmentwithacostvalueofless

thanR5000arenotcapitalised,butexpensed

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immediately.

Subsequentmeasurement

Subsequent to initial recognition, items of

propertyandequipmentaremeasuredatcost

lessaccumulateddepreciationandimpairment

losses.

Depreciation

Depreciation is calculated on the depreciable

amount,usingthestraight-linemethodoverthe

estimatedusefullivesoftheassets.Components

ofassets thataresignificant in relationto the

wholeassetandthathavedifferentusefullives

are depreciated separately. The depreciable

amountisdeterminedaftertakingintoaccount

anassets’residualvalue,whereapplicable.

The assets’ residual values, useful lives and

depreciation methods are reviewed at each

financialyear-endandadjustedprospectively,if

appropriate.

Theannualdepreciationratesarebasedonthe

followingestimatedassetusefullives.

ITEM AVERAGE USEFUL LIFE

Leasehold improvements Over the lifespan of the lease

Officeequipment 15years

Furniture 20years

Motorvehicles 8years

Computer hardware 10years

Impairments

Theentitytestsforimpairmentwherethereis

anindicationthatanassetmaybeimpaired.An

assessmentofwhetherthereisanindicationof

possible impairmentisdoneateachreporting

date. Where the carrying amount of an item

ofpropertyandequipmentisgreaterthanthe

estimatedrecoverableamount(orrecoverable

serviceamount),itiswrittendownimmediately

toitsrecoverableamount(orrecoverableservice

amount)andanimpairmentlossischargedto

the Statement of Financial Performance.

An impairment is reversed only to the extent

that the asset’s carrying amount does not

exceed the carrying amount that would have

been determined had no impairment been

recognised. A reversal of the impairment

is recognised in the Statement of Financial

Performance.

Derecognition

Items of property and equipment are

derecognised when the asset is disposed of or

when there are no further economic benefits

or service potential expected from the use

of the asset. The gain or loss arising on the

disposal or retirement of an itemof property

andequipmentisdeterminedasthedifference

between the sales proceeds and the carrying

value and is recognised in the Statement of

Financial Performance.


80

Intangible assets

Initialrecognitionandmeasurement

An intangible asset is an identifiable non-

monetary asset without physical substance.

The entity recognises an intangible asset

in its Statement of Financial Position only

when it is probable that the expected future

economicbenefitsorservicepotentialthatare

attributabletotheassetwillflowtotheentity

and the cost or fair value of the asset can be

measuredreliably.

Intangibleassetsareinitiallyrecognisedatcost.

Where an intangible asset is acquired by the

entity for no or nominal consideration (i.e. a

non-exchangetransaction),thecostisdeemed

tobeequaltothefairvalueofthatassetonthe

dateacquired.

Where an intangible asset is acquired in

exchange for a non-monetary asset or

monetaryassetsoracombinationofmonetary

andnon-monetaryassets,theassetacquiredis

initiallymeasuredatfairvalue(thecost).Ifthe

acquired item’s fairvalue isnotdeterminable,

itsdeemedcost is thecarryingamountofthe

asset(s)givenup.


Intangible assets are subsequently carried

at cost less accumulated amortisation and

impairments.

Thecostofanintangibleassetisamortisedover

theusefullifewherethatusefullifeisfinite.The

amortisationexpenseonintangibleassetswith

finite lives is recognised in the Statement of

FinancialPerformanceintheexpensecategory

consistentwith the function of the intangible

asset.

Intangibleassetswithindefiniteusefullivesare

not amortised, but are tested for impairment

annually.

Amortisationandimpairment

Amortisationischargedtowriteoffthecostof

intangible assets over their estimated useful

livesusingthestraight-linemethod.

Theannualamortisationratesarebasedonthe

followingestimatedaverageassetlives:

ITEM USEFUL LIFE

ComputerSoftware 25years

Impairments

The entity tests intangible assets with finite

useful lives for impairment where there is an

indication that an assetmay be impaired. An

assessment of whether there is an indication

of possible impairment is performed at each

reporting date. Where the carrying amount

of an item of an intangible asset is greater

than the estimated recoverable amount (or

recoverableserviceamount),itiswrittendown

immediately to its recoverable amount (or

recoverableserviceamount)andanimpairment

loss is charged to the Statement of Financial

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Performance.

Derecognition

Intangible assets are derecognised when the

asset is disposed of or when there are no

furthereconomicbenefitsorservicepotential

expectedfromtheasset.Thegainorlossarising

on thedisposalor retirementofan intangible

assetisdeterminedasthedifferencebetween

thesalesproceedsandthecarryingvalueand


Performance.

Financial instruments

Initialrecognition

The entity recognises a financial asset or a

financial liability in its Statement of Financial

Position when, and only when, the entity

becomesapartytothecontractualprovisions

oftheinstrument.Thisisachievedthroughthe

applicationoftradedateaccounting.

Upon initial recognition the entity classifies

financial instruments or their component

parts as a financial liabilities, financial assets

or residual interests in conformity with the

substance of the contractual arrangement and

totheextentthatthe instrumentsatisfiesthe

definitions of a financial liability, a financial

asset or a residual interest.

Financial instrumentsareevaluated,basedon

theirterms,todetermineifthoseinstruments

contain both liability and residual interest

components (i.e. to assess if the instruments

are compound financial instruments). To the

extentthataninstrumentisinfactacompound

instrument, the components are classified

separately as financial liabilities and residual

interestsasthecasemaybe.

Initialmeasurement

Whenafinancialinstrumentisrecognised,the

entitymeasuresitinitiallyatitsfairvalueplus,

in the case of a financial asset or a financial

liabilitynotsubsequentlymeasuredatfairvalue,

transaction costs that aredirectly attributable

totheacquisitionorissueofthefinancialasset

orfinancialliability.


Subsequent to initial recognition, financial

assetsandfinancial liabilitiesaremeasuredat

fairvalue,amortisedcostorcost.

All financial assets and financial liabilities are

measured after initial recognition using the

followingcategories:

Financialinstrumentsatfairvalue

• Derivatives.

• Compound instruments that are designated

at fair value i.e. an instrument that includes

a derivative and a non-derivative host

contract.

• Instruments held for trading.

• Non-derivativefinancial assets or financial

liabilities with fixed or determinable

paymentsthataredesignatedat fairvalue


82

atinitialrecognitionand

• An investment in a residual interest for

whichfairvaluecanbemeasuredreliably.

Financial instruments that do not meet the

definitionoffinancialinstrumentsatamortised

costorfinancialinstrumentsatcost.

Financialinstrumentsatamortisedcost

Non-derivative financial assets or non-

derivative financial liabilities that have fixed

or determinable payments, excluding those

instruments that the entity designates at

fair value at initial recognitionor areheld for

trading.

Financialinstrumentsatcost

Investmentsinresidualinterests,whichdonot

have quotedmarket prices and forwhich fair

valuecannotbedeterminedreliably.

The entity assesseswhich instruments should

be subsequently measured at fair value,

amortisedcostorcost,basedonthedefinitions

offinancial instrumentsat fairvalue,financial

instruments at amortised cost or financial

instruments at cost as set out above.

Derecognition

Afinancialassetisderecognisedattradedate,

when:

Thecashflowsfromtheassetexpire,aresettled

orwaived;

a) Significantrisksandrewardsaretransferred

toanotherparty;or

b)Despitehavingretainedsignificantrisksand

rewards,theentityhastransferredcontrol

oftheassettoanotherentity.

A financial liability is derecognised when the

obligation is extinguished. Exchanges of debt

instruments between a borrower and a lender

aretreatedastheextinguishmentofanexisting

liabilityandtherecognitionofanewfinancial

liability.Wherethetermsofanexistingfinancial

liability aremodified, it is also treated as the

extinguishmentof anexisting liability and the

recognitionofanewliability.

Gainsandlosses

A gain or loss arising from a change in the fair

value of a financial asset or financial liability

measured at fair value is recognised in surplus

ordeficit.

For financial assets and financial liabilities

measured at amortised cost or cost, a gain

or loss is recognised in surplus or deficit

when the financial asset or financial liability

is derecognised or impaired or through the

amortisationprocess.

Offsetting

Theentitydoesnotoffsetfinancialassetsand

financialliabilitiesintheStatementofFinancial

Positionunlessalegalrightofset-offexistsand

thepartiesintendtosettleonanetbasis.

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Impairments

Allfinancialassetsmeasuredatamortisedcost,

or cost, are subject to an impairment review.

Theentityassessesattheendofeachreporting

periodwhetherthereisanyobjectiveevidence

thatafinancialassetorgroupoffinancialassets

is impaired.

Policies relating to specific financial

instruments

Cashandcashequivalents

Cash and cash equivalents are measured at

amortisedcost.

Cash includes cash on hand and cash with

banks. Cash equivalents are short-termhighly

liquidinvestmentsthatareheldwithregistered

banking institutions with maturities of three

monthsorlessandaresubjecttoaninsignificant

risk of change in value.

ForthepurposesoftheCashFlowStatement,

cash and cash equivalents comprise cash on

hand and deposits held on call with banks.

Tradeandotherreceivables

Trade and other receivables are initially

recognised at fair valueplus transaction costs

thataredirectlyattributabletotheacquisition

andsubsequentlystatedatamortisedcost,less

provision for impairment. All trade and other

receivables are assessed at least annually for

possible impairment. Impairments of trade and

other receivables are determined in accordance

with the accounting policy for impairments.

Impairmentadjustmentsaremadethroughthe

use of an allowance account.

Baddebtsarewrittenoff intheyear inwhich

they are identified as irrecoverable. Amounts

receivablewithin12monthsfromthereporting

dateareclassifiedascurrent.Interestischarged

on overdue accounts.

Tradeandotherpayables

Trade payables are initially measured at fair

value plus transaction costs that are directly

attributable to the acquisition and are

subsequentlymeasuredatamortisedcostusing

theeffectiveinterestratemethod.

Incomereceivedinadvance

Initially measured at cost and subsequently

measured at cost if the fair value cannot be

reliablydetermined.

Non-current assets held for sale

Recognition

Non-current assets and disposal groups are

classified as held for sale if their carrying

amount will be recovered through a sale

transaction rather than through continuing

use. This condition is regarded as met only

whenthesaleishighlyprobableandtheasset

(or disposal group) is available for immediate

sale in its present condition. Management


84

mustbe committed to the sale,which should

be expected to qualify for recognition as a

completedsalewithinoneyearfromthedate

ofclassification.

Measurement

Non-current assets held for sale (or disposal

group) aremeasured at the lower of carrying

amount and fair value less costs to sell.

A non-current asset is not depreciated (or

amortised)whileitisclassifiedasheldforsale

orwhileitispartofadisposalgroupclassified

as held for sale.

Interestandotherexpensesattributabletothe

liabilitiesofadisposalgroupclassifiedasheld

forsalearerecognisedinsurplusordeficit.

Derecognition

Non-current assets and disposal groups held

for sale are derecognised upon disposal of the

item or where no further economic benefits

or service potential is expected to flow from

the asset or disposal group.Gains/losses that

result from the derecognition of non-current

assets or disposal groups held for sale are

recognised in surplus/deficit in the period of

thederecognition.

Leases as lessee

Recognition

Leases are classified as finance leases where

substantiallyalltherisksandrewardsassociated

with ownership of an asset are transferred to

theentitythroughtheleaseagreement.Assets

subjecttofinanceleasesarerecognisedinthe

StatementofFinancialPositionattheinception

of the lease, as is the corresponding finance

leaseliability.

Assets subject to operating leases, i.e. those

leaseswhere substantially all of the risks and

rewards of ownership are not transferred to the

lessee through the lease, are not recognised

in the Statement of Financial Position. The

operatingleaseexpenseisrecognisedoverthe

course of the lease arrangement.

Measurement

The lease expense recognised for operating

leases is charged to the Statement of Financial

Performance on a straight-line basis over the

termof the relevant lease. To theextent that

the straight-lined lease payments differ from

the actual lease payments the difference


Position as either lease payments in advance

(operating lease asset) or lease payments

payable (operating lease liability) as the case

may be. This resulting asset and/or liability

is measured as the undiscounted difference

between the straight-line leasepayments and

thecontractualleasepayments.

Derecognition

The operating lease liability is derecognised

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when the entity’s obligation to settle the

liability is extinguished. The operating lease

assetisderecognisedwhentheentitynolonger

anticipateseconomicbenefitstoflowfromthe

asset.

Consumablesonhand

Consumablesonhandareinitiallymeasuredat

cost except where consumables are acquired

atnocost,or fornominal consideration, then

their costs are their fair value as at the date of

acquisition.

Subsequently consumables on hand are

measuredatcostuntiltheyareconsumed.

Currentreplacementcostisthecosttheentity

incurs to acquire the asset on the reporting

date.

Employee benefits

Short-termemployeebenefits

Short-term employee benefits encompass all

thosebenefitsthatbecomepayableintheshort-

term, i.e. within a financial year orwithin 12

monthsafterthefinancialyear.Therefore,short

termemployeebenefitsincluderemuneration,

paidvacationleave,sickleaveandbonuses.

Short-term employee benefits are recognised

in the Statement of Financial Performance

as services are rendered, except for non-

accumulating benefits, which are recognised

when the specific event occurs. These short

termemployeebenefitsaremeasuredattheir

undiscountedcostsintheperiodtheemployee

renderstherelatedserviceorthespecificevent

occurs.

Post-employmentbenefits

Theentityprovidespost-employmentbenefits

for itsofficials.Thesebenefitsareprovidedas

either defined contribution plans or defined

benefit plans. The entity identifies as defined

contribution plans any post-employment plan

intermsofwhichithasnoobligationtomake

further contributions to the plan over and

above the monthly contributions payable on

behalfofemployees(forexampleintheevent

of a funding shortfall). Any other plans are

consideredtobedefinedbenefitplans.

Definedcontributionplans

Contributions made towards the fund are

recognised as an expense in the Statement

of Financial Performance in the period that

such contributions become payable. This

contribution expense is measured at the

undiscountedamountofthecontributionpaid

orpayabletothefund.Aliabilityisrecognised

to the extent that any of the contributions

havenotyetbeenpaid.Converselyanassetis

recognisedtotheextentthatanycontributions

have been paid in advance.

Provisionsandcontingencies

Provisionsarerecognisedwhen:

• the entity has a present obligation as a


86

resultofapastevent;

• it isprobablethatanoutflowofresources

embodying economic benefits or service

potential will be required to settle the

obligation;and

• a reliable estimate can be made of the

obligation.

Theamountofaprovisionisthebestestimate

oftheexpenditureexpectedtoberequiredto

settle the present obligation at the reporting

date.

Ifanentityhasacontractthat isonerous,the

present obligation (net of recoveries) under

the contract is recognised and measured as a

provision.

Revenuefromexchangetransactions

Revenue fromexchange transactions refers to

revenue that accrues to the entity directly in

returnforservicesrenderedorgoodssold,the

valueofwhichapproximatestheconsideration

receivedorreceivable,excludingindirecttaxes,

rebates and discounts.

Recognition

Revenue from exchange transactions is only

recognised once all of the following criteria

havebeensatisfied:

a) Theentityretainsneithercontinuing

managerial involvement to the degree

usuallyassociatedwithownershipnor

effectivecontroloverthegoodssold;

b) Theamountofrevenuecanbemeasured

reliably;and

c) Itisprobablethattheeconomicbenefits

orservicepotentialassociatedwiththe

transactionwillflowtotheentityandthe

costs incurred or to be incurred in respect

ofthetransactioncanbemeasured

reliably.

Revenue arising out of situations where the

entity acts as an agent on behalf of another

entity (theprincipal) is limited to the amount

ofanyfeeorcommissionpayabletotheentity

as compensation for executing the agreed

services.

Grants, transfers and donations received or

receivable are recognised when the resources

that have been transferred meet the criteria

for recognition as an asset and there is not a

corresponding liability in respect of related

conditions.

Measurement

Interest earned is recognised as income using

theeffectiveinterestratemethod.

Accounting for non-exchange transactions and

disclosure of financial assistance

Government grants are recognised when it is

probablethatthefutureeconomicbenefitswill

flowtotheorganisationandwhentheamount

of the grant can be reliable measured.

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Government grant is recognised as revenue

toanextent that there’sno furtherobligation

arisingfromthereceiptofthetransferpayment.

A liability is recognised to an extent that the

grant is conditional.The liability is transferred

torevenueasandwhentheconditionsattached

to the grant are met.

Non-exchange transactions are recognised

whenthereisreasonableassurancethat:

• the entitywill complywith the conditions

attachingtothem;and

• the grants will be received.

Non-exchange transactions are recognised as

income over the periods necessary to match

them with the related costs that they are

intended to compensate.

A non-exchange transactions that becomes

receivable as compensation for expenses or

losses already incurred or for the purpose

of giving immediate financial support to the

entitywithnofuturerelatedcostsisrecognised

as income of the period in which it becomes

receivable.

Relatedparties

Theentityhasprocessesandcontrols inplace

toaidintheidentificationofrelatedparties.A

relatedparty isapersonoranentitywiththe

ability to control or jointly control the other

partyorexercisesignificantinfluenceoverthe

other party, or vice versa, or an entity that is

subjecttocommoncontrol,orjointcontrol.

Related party relationships where control

existsaredisclosed regardlessofwhetherany

transactions took place between the parties

duringthereportingperiod.

Where transactions occurred between the

entityandanyoneormorerelatedparties,and

thosetransactionswerenotwithin:

• normal supplier and/or client/recipient

relationships on terms and conditions no

more or less favourable than those which it

is reasonable to expect the entity to have

adoptedifdealingwiththatindividualentity

orpersoninthesamecircumstances;and

• terms and conditions within the normal

operating parameters established by the

reportingentity’slegalmandate;

TheSIUoperatesinSouthAfricatogetherwith

other entities directly or indirectly owned by

the South African government. As a result of

thebroad scopeof the SIU’s activities, anyof

the afore-mentioned entities are considered

to be potential related parties. Senior (key)

management is defined as individuals with

the authority and responsibility for planning,

directing and controlling the activities of the

entity.Allindividualsfromthelevelofexecutive

management up to the Head of the Unit are

regardedaskeymanagementperthedefinition

oftherelevantGRAPStandard.


88

Close family members of key management

personnel are considered to be those family

memberswhomaybeexpectedtoinfluence,or

beinfluencedbykeymanagementmembersin

theirdealingswiththeSIU.

Other related party transactions are also

disclosed in termsof the requirementsof the

standard.

Comparative figures

Where necessary, comparative figures have

been reclassified to conform to changes in

presentationinthecurrentyear.

Irregular and fruitless and wasteful expenditure

Irregularexpenditure

Irregular expenditure is expenditure that is

contrarytothePFMAorisincontraventionof

theentity’ssupplychainmanagementpolicies.

Irregular expenditure excludes unauthorised

expenditure.Irregularexpenditureisaccounted

forasexpenditureintheStatementofFinancial

Performance and where recovered, it is

subsequentlyaccounted foras revenue in the

Statement of Financial Performance.

Fruitlessandwastefulexpenditure

Fruitless and wasteful expenditure is

expenditurethatwasmade invainandwould

have been avoided had reasonable care been

exercised.Fruitlessandwastefulexpenditureis

accountedforasexpenditureintheStatement

ofFinancialPerformanceandwhererecovered,

it issubsequentlyaccountedforasrevenuein

the Statement of Financial Performance.

Recovery of irregular, fruitless and wasteful

expenditure

The recovery of irregular and fruitless and

wasteful expenditure is based on legislated

procedures, and is recognised when the

recoverythereoffromtheresponsibleofficials

is probable. The recovery of irregular and

fruitlessandwastefulexpenditureistreatedas

other income.

Post-reportingdateevents

Events after the reporting date are those

events,bothfavourableandunfavourable,that

occurbetweenthereportingdateandthedate

when the financial statements are authorised

for issue.

Twotypesofeventscanbeidentified:

• those that provide evidence of conditions

thatexistedatthereportingdate(adjusting

eventsafterthereportingdate);and

• those that are indicative of conditions

that arose after the reporting date (non-

adjustingeventsafterthereportingdate).

Theentitywill adjust theamounts recognised

inthefinancialstatementstoreflectadjusting

eventsafterthereportingdateoncetheevent

has occurred.

Theentitywilldisclosethenatureoftheevent

and an estimate of its financial effect or a

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statementthatsuchestimatecannotbemade

inrespectofallmaterialnon-adjustingevents,

where non-disclosure could influence the

economic decisions of users taken on the basis

ofthefinancialstatements.

Financecost

Finance cost comprises interest expense on

finance leases and impairment of financial

liabilities, carried at amortised cost, using the

effectiveinterestrate.

Budget Comparison Basis for preparation

The Special Investigating Unit prepares its

annual budget on an accrual basis in terms of

thePFMAandtheNationalTreasury’sMedium

Term Expenditure Framework guidelines

issued annually. The Statement of Financial

Performance is also prepared on an accrual

basis.

Recoveries

Recoveries are collections done on behalf of

Departments and paid over on regular intervals.

Themoneyiscollectedintoabankaccountand

remains in thebankaccountuntilpaidout to

the relevant Department.

Surplus or deficit

Gainsandlosses

Gains and losses arising from fair value

adjustments on investments and loans, and

from the disposal of assets, are presented

separatelyfromotherrevenueintheStatement

of Financial Performance.

Income, expenditure, gains and losses are

recognised in surplusordeficit except for the

exceptionalcaseswhererecognitiondirectlyin

netassetsisspecificallyallowedorrequiredby

aStandardofGRAP.


90

Notes to the Annual Financial Statement

2. Property and Equipment

2015 Cost/Valuation

R

Accumulated amortisation

and accumulated impairment R

Carryingvalue

R

Furnitureandfixtures 1671232 (652545) 1018687

Motorvehicles 8464212 (363038) 8101174

Officeequipment 6238180 (3015215) 3222965

ITequipment 30205551 (13053929) 17151623

Leasehold improvements 6122503 (5545473) 577030

Total 52 701 679 (22 630 200) 30 071 479

2014

Furnitureandfixtures 8621461 (2567180) 6054281

Motorvehicles 8606925 (4936412) 3670513

Officeequipment 8206720 (3114662) 5092058

ITequipment 26766870 (10556068) 16210802

Leasehold improvements 6192603 (4835392) 1357211

Total 58 394 580 ( 26 009 715) 32 384 865

Reconciliation of Property and Equipment – 2015

Opening balance

R

Addition

R

Disposal/ Written-off

R

Assets held for sale

R

Depreciation

R

Total

R

Furniture and fixtures

6054281 134791 (4609627) - (560758) 1018687

Motorvehicles 3670513 8464212 - (2319867) (1713685) 8101174

Officeequipment

5092058 185114 (1508643) - (545564) 3222964

ITequipment 16210802 4202151 (363073) - (2898258) 17151623

Leasehold improvement

1357211 - (4502) - (775679) 577030

Total 32 384 865 12 986 268 (6 485 844) (2 319 867) (6 493 944) 30 071 479

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2. Property and Equipment (cont.)

Reconciliation of Property and Equipment - 2014

Opening balance

R

Additions

R


R

Depreciation

R

Total

R

Furnitureandfixtures 6491806 860257 (372843) (924939) 6054281

Motorvehicles 4409635 - (6) (739116) 3670513

Officeequipment 5641081 1037368 (33442) (1552949) 5092058

ITequipment 18887488 863742 (59612) (3480816) 16210802

Leasehold improvements 2361185 779822 (189) (1783607) 1357211

Books and law reports 37 - (37) -

Total 37 791 232 3 541 189 (466 129) (8 481 427) 32 384 865

3. Intangible Assets

Cost/Valuation

R

Accumulated amortisation and

Accumulated impairment

R

Carryingvalue

R

2015

Computersoftware 4857419 (1005427) 3851992

2014

Computersoftware 4890460 (820581) 4069879

Reconciliation of Intangible Assets

Openingbalance

R

Additions

R


R

Amortisation

R

Total

R

2015

Computersoftware 4069879 - (22448) (195439) 3851992

2014

Computersoftware 4265495 - - (195616) 4069879


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4. Assets held for sale

ThemanagementofSIUhascommittedtoaplantosellanoldvehiclefleetbecausethefleetisnolongerperformingatthelevelrequiredbytheSIU.AnactiveprogrammetolocateabuyerhasbeenputinplaceastheentityhasstartedwiththeSCMprocesstoprocuretheservicesofanauctioneerwhowillauctionthevehiclesforSIU. Thedisposaloftheentirevehiclesfleetthroughauctionisexpectedtobecompletedbyendofthesecondquarterintheupcomingfinancialyear.Thecarryingamount of the assets held for sale has been assessed is lower than the fair value less cost to sell the vehiclefleetthroughauction,thereforethereisnolossonreclassification.

2015R

2014R

Opening balance - -

Reclassificationfromnon-currentassets(propertyandequipment) 2319867 -

Less:Impairmentloss (255588) -

Closing balance 2 064 279 -

5. Trust account bank balances - recoveries

Bank balances 21 345 189 22 383 162

Payables-Recoveries 21320988 22359360

AccruedinterestpayabletoNationalTreasury 24201 23802

Total payable 21 345 189 22 383 162

TherecoveriesamountiscollectedonbehalfofDepartmentsandisidentifiedeitherthroughsignedacknowledgement of debts (AODs) or court orders issued by the Special Tribunal. Amounts arecollectedintrustaccountsandremaininthetrustaccountuntilpaidovertotherelevantdepartmentatleastonceayear.ThecashamountsareheldintrustaccountsandarenotavailableforusebytheUnit.

6. Consumables on hand

2015R

2014R

Opening balance 84291 145780

Purchasesduringtheyear 1985507 2225268

Used/expensedduringtheyear (2008113) (2455340)

Closing balance 61 685 84 292

Statonerycomprisesstockonhandatvariousregions.

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7. Trade and other receivables from exchange transactions

2015R

2014R

TotalDebtors 374963777 260889847

Less Provision for impairment losses

TheUnit’stradereceivablesarestatedafterprovisionforimpairmentlossesbasedonmanage-ment’sassessmentoftheirrecoverability.Ananalysisoftheallowancefollows.

Balanceatthebeginningoftheyear 64054828 32255796

Charged to Statement of Financial Performance 106511743 31799032

Balance at the end of the year 170 566 571 64 054 828

NetTradedebtors 204397206 196835019

8. Trade and other receivables from non-exchange transactions

Advancesandstudyloans 580227 731024

Rental deposits 33 429 33 429

Other receivables* 12 393 12 393

Total 626 048 776 846

Thecarryingamountsoftradeandotherreceivablesapproximatetheirfairvalue.*TheotherreceivableamountisowedbyaserviceproviderwhohadincorrectlychargedSIUVATwhileheisnotVATregistered.ThisamountrepresentstheVATportionthathewasnotentitledto.Theamounthasbeenfullyprovidedforasdoubtfuldebtamount.

9. Prepayments

Prepaidexpenses 1989936 2589050

Prepaidexpensesconsistmainlyofpaymentsrelatedtoannualsoftware licencerenewals to theamount of R1.3 million.

10. Cash and cash equivalents

Current account 121307051 75296784


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Cashandcashequivalentscomprisebankdepositsthatareavailableondemand.IncludedinthecashbalancesofR121.3millionat31March2015areamountsearmarkedforthefundingofexpenditurefortheAnti-CorruptionTaskTeam(ACTT)amountingtoR4.6million

11. Trade and other payables from exchange transactions

2015R

2014R

Tradepayables 3632839 6717784

AccruedExpense:OperatingLease 1277109 1868293

Employeecosts-deductions 233663 210185

Total 5 143 611 8 796 262

Tradepayablesandaccrualsprincipallycompriseamountsoutstandingfortradepurchasesandon-goingcosts.Theleavepayaccrualistheemployees’entitlementtoannualleave,recognisedwhenitaccruestoemployees.AprovisionismadefortheestimatedliabilityforannualleavedueasaresultofservicesrenderedbyemployeesuptothedateoftheStatementofFinancialPosition.Employeescostdeductionscomprisestatutorysalarydeductionstobepaidovertotherelevantauthorities.Theaccruedexpense relating tooperating leases comprise theaggregateof all operating leasesamortisedonastraightlinebasisovertheperiodsoftheindividualleases.

12. Trade and other payables from non-exchange transactions

2014R

2015R

Other 143116 43823

Tradepayablesandaccrualsprincipallycompriseamountsoutstandingfortradepurchasesandon-goingcosts.Theamountcomprisesmoneythatneedstobepaidforcompassionaterelatedexpensesandthefleetmanagementcard.

13. Payables - Recoveries

2015R

2014R

Payables-recoveries 21345189 22383162

ForfurtherdetailsseeNote5onmoneycollectedonbehalfofDepartmentsthatstillneedstobepaid over.

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14. Income received in advance

2015R

2014R


ReceivedfromCriminalAssetsRecoveryAccountFunds - 9000000

RecognisedasRevenueduringtheyear (5136049) (9787011)

PaidbacktoDepartmentofJustice(CARAFunds) (11004570) -

Closing balance 4 574 761 20 715 380

15. Provisions

BonusesR

Leave PayR

TotalR

Balance–March2013 11855845 9421587 21277432

Provisionraisedfortheyear 12105823 8140669 20246492

Provisionutilisedduringtheyear (11855845) (8539868) (20395713)

Balance – March 2014 12 105 823 9 022 388 21 128 211

Provisionraisedfortheyear 12100000 9190763 21290763

Provisionutilisedduringtheyear (12105823) (8915999) (21021822)

Balance – March 2015 12 100 000 9 297 152 21 397 152

16. Revenue

2015R

2014R

Revenue arising from non-exchange transactions 301 949 049 305 646 011

GrantfromDoJ&CS 296813000 295859000

CriminalAssetRecoveryAccountFund 5136049 9787011

Revenue arising from exchange transactions 226 911 547 216 254 221

CostrecoverychargedtoGovernmentdepartments 226911547 216254221

Total 528 860 596 521 900 232


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17. Employee costs

2015R

2014R

Salaries and wages 251154380 234964016

Providentandfuneralfundcontributions 21264076 20229632

Medicalaidcontributions 200520 176838

Training 723190 1072389

Relocationcost 145538 655492

UnemploymentInsuranceFund(UIF),COlDandRSClevies 1957365 1 921 229

Accrualforleavepay 302568 107773

Total 275 747 637 259 127 369

18. Other operating income from exchange transactions

TFIContractRecoveries 8100 -

Sundryincome 6141 12 393

DepartmentofLabour:COlDrefunds - 1 292

Total 14 241 13 685

19. Finance income

Call accounts 5140791 4127396

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20. Other operating expenses

2015R

2014R

Internal audit fees 977271 1102803

Externalauditorsfees 2540747 2282780

Bank charges 255526 340951

Conferences and seminars - 603805

Consultingandprofessionalfees* 553380 5097831

Consumables 26523 75394

Courier services 309136 375896

Datascanning,tracesanddeedsearches 173529 318934

Donations - 108300

Staffandmeetingsrefreshments 11749 321077

Equipment-consignmentamounts 1451991 1512408

Insurance 661067 761734

InternalIntegrityscreeningexpenses 474334 956227

Legal fees** 1612732 490179

Latepaymentcharge 64836 18546

Scrapping loss*** 6508293 454169

Magazines,booksandperiodicals 133746 362139

Mediaandpromotions 527325 643068

Fleetmanagementexpenses 1581911 2590438

Officeexpenses 6341204 6296707

Otherexpenses - 66819

Printing,faxandpostingexpenses 6917635 7184928

Relocationandrecruitmentcost 77576 75463

Rent paid 22331600 21811962

Repairs and maintenance 48483 184362

Security 449 941 414296

Softwarelicenses 4801107 5291780

Specialist Services**** 3009210 4283071

Stationery 2008113 2455340

Subscriptionsandmembershipfees 345252 288459

TranscriptionFees 209901 107829

Total 64 404 118 66 991 139


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*ThereductioninconsultingandprofessionalfeeswasduetoterminatingtheprocurementoftheforensicconsultantsfortheACTT

**IncludedinthelegalcostexpenseofR1.6millionabove,isR1.2millionrelatingproclamationsandthisamounthavebeenrecoveredfromtherelevantdepartmentbeinginvestigated.

***TheincreaseinthescrappinglosswasduetothehighnumberofassetswithacostpricelessthanR5000thatwerescrappedduringthecurrentyear

**** Included in Specialist services expense of R3 million above, is R1.5 million relating toproclamationsandthisamounthasbeenrecoveredfromtherelevantdepartmentbeinginvestigated.

21. Irregular expenditure

2015R

2014R

Detailsofirregularexpenditurearesetoutbelow


Irregularexpenditurecondoned 590422 -

Irregularexpenditureawaitingcondonation 4909987 14290149

Total 65 449 325 59 948 916

Analysisofexpenditureawaiting condonationperageclassification

Currentyear 4909987 14290149

Prioryear 51 092 458 45658767

Total 56 002 445 59 948 916

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Details of irregular expenditure - current year

Condoned by (condoning

authority)

Incident 1:ConsultationworkwascompletedwithoutSCMapproval.

Not Condoned - 19380

Incident 2: Service provider used without proper documenta-tionandfollowingproperSCMprocedures.

Not Condoned 2589830 7240198

Incident 3:ReporteditingservicesbyJanineSmitoccurredwithoutfollowingSCMprocess.

Not Condoned - 3352

Incident 4:ExpenditureontemporaryemployeesprocuredthroughrecruitmentagencieswithoutfollowingtheSCMpro-cesses and procedures.


Incident 5:NotfollowingproperSCMprocesseswhenextend-ingtheexistingcontractsthatlapse.

Not Condoned 1149987 1199543

Incident 6:Purchasesnotapprovedbydelegatedofficials. Not Condoned - 9500

Incident 7: Incorrect awarding of points to bidders based on oldregulationandSCMpolicy.

Not Condoned 716491 941356

Incident 8:NoproperdeviationsinplacefordeviatingfromnormalSCMprocesses.


Incident 9: Serviceproviderofferingspecialistservicesonaprojectcontinuedtoworkontheprojectbeyondthecontract-edamountwithoutpriorauthorisation

Condoned 590422 -

Incident 10:Serviceproviderofferingspecialistservicesonaprojectcontinuedtoworkontheprojectbeyondthecontract-edamountwithoutpriorauthorisation

Not Condoned 93336 -

Incident 11:NoproperdeviationsinplacefordeviatingfromnormalSCMprocessesforthetravelagencyservices

Not Condoned 360343 394 124

Total 5 500 409 14 290 149

Incident 1: A fixed price has been negotiated beforehandwith places for accommodation. ThenormalSCMprocesswasnotfollowedtoobtainthreequotations.Theseexpenseshavenotbeencondoned.Incident 2: Service provider used without proper documentation and following proper SCMproceduresregardingcostsrelatingtothebookingofflightsviaatravelagentaswellashiringofcars for travel purposes.Anemployeewasdisciplinedforthis irregularexpenditureandafinalwarningwasissuedtothisemployee.Incident 3:ReporteditingservicesbyJanineSmitoccurredwithoutfollowingSCMprocess.Incident 4:TheSIUhasutilizedtheservicesoftemporaryemployeesprocuredthroughrecruitmentagenciesforanumberofyears.AlthoughtheannualcostofcompanyoftheindividualtemporaryemployeeshasnotanddoesnotexceedR500000inanyinstanceanddespitetheshorttermnature


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oftheappointments,theaggregateannualexpenditureonalltemporaryemployeesistheproper

(andonly)financialcriteriononwhichadecisiononwhethertoembarkonacompetitivebidding

process(tenderprocess)shouldbebased.

SomeoftheseexpenseswerecondonedbythepreviousActingHeadofSIU(AdvNMokhatla).

Incident 5: NotfollowingproperSCMprocesseswhenextendingtheexistingcontractsthatlapse.

IncludedinthisamountistherentalfortheSIUNelspruitbranch.

ThisirregularexpenditureiscurrentlyunderinvestigationwiththeaimofsubmittingittoNational

Treasuryforcondonement.

Incident 6:Purchasesnotapprovedbydelegatedofficials.Delegationofauthoritydoesnotmake

provisionfortherelevantemployeestosignthedocumentation.

Incident 7:Incorrectawardingofpointstobidders.Incorrectawardingofpoints,calculationwas

basedonoldregulationandSCMpolicy

Incident 8:NodeviationsinplacefordeviatingfromnormalSCMprocesses.Theseamountsinclude

amountsforconsultantsappointedtohelpwithforensicinvestigationstothevalueofR4083526.

ThisirregularexpenditureiscurrentlyunderinvestigationwiththeaimofsubmittingittoNational

Treasuryforcondonement.

Incident 9: Serviceproviderofferingspecialistservicesonaprojectcontinuedtoworkontheproject

beyondthecontractedamountwithoutpriorauthorisation.TheHeadoftheUnitthencondoned

theadditionalworkperformedbeforethepaymenttothesupplierwasmade.

Incident 10:Serviceproviderofferingspecialistservicesonaprojectcontinuedtoworkontheproject

beyond the contracted amount without prior authorisation. The condonement of this irregular

expenditurebytheActingHeadofSIUisintheprocessofbeingfinalised.

Incident 11:NoproperdeviationsinplacefordeviatingfromnormalSCMprocessesfortravelagency

services.TheseamountsincludeamountspaidtoRenniesforservicesrendered.Anewtraveltender

is now in place.

22. Related parties

Controllingentity

DepartmentofJusticeandConstitutionalAffairs

Entitieswithinthesameportfolio:

NationalProsecutingAuthority

Legal Aid Board South Africa

Public Protector of South Africa

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SouthAfricanHumanRightsCommission

JusticeModernisation

President’sFund

Guardian’sFund

CriminalAssetRecoveryAccount

Other related party transactions

2015R

2014R

RentalpaidbyDepartmentofPublicWorks–notincludedinexpenditureasSIUdoesnotpaytherentexpense

3 994 131 3338206

23. Operating lease

Totaloffutureminimumleasepaymentundernon-cancellableoperatingleasesforthefollowingperiods

Notlaterthanoneyear 5322414 4950340

Laterthanoneyearandnotlaterthanfiveyears 3790874 4630888

Rental commitments in respect of properties and copiers 9 113 288 9 581 228

24. Member’s emoluments

ThefollowingtablerecordstheemolumentspaidtomembersoftheExecutiveCommittee.

SalaryR

Medical Pension R

Otherbenefits R

BonusR

TotalR

Adv V Soni 1849994 - 1636 - 1851630

AdvGVisagie 1106977 221 434 1888 141055 1471354

P Letwaba 103419 - 297 - 103716

MNyathi 1482826 164758 1888 187048 1836520

L Lekgetho 1299023 38262 1888 100865 1440038

F Davids 15515 - 149 - 15664

NMothibeli 823948 26250 1574 - 851772

Total 6 681 702 450 704 9 320 428 968 7 570 694


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• AdvVSoniresignedon28February2015• MrFDavidsresignedinDecember2013butreceivedafinalpaymentinApril2014• MrPLetwabaresignedinApril2014• MrsNMothibelijoinedtheSIUasCFOinJune2014

Executive Management 2014

SalaryR

Medical Pension R

Otherbenefits R

BonusR

TotalR

Adv V Soni 1009087 - 892 - 1009979

AdvNMokhatla - - - - -

F Davids 806929 89659 1259 136526 1034372

MNyathi 1387351 155874 1888 15510 1560623

CKwant 966442 - 1888 166565 1134895

P Letwaba 262150 - 446 - 262597

TCronje 803035 89226 1888 105449 999598

B Chitwa 857839 128664 1888 148710 1137101

GVisagie 1040384 207528 1888 233984 1483784

JWells 869798 96644 1888 186699 1155029

L Lekgetho 878190 35690 1888 136880 1052649

PModipa 976413 35690 1888 188760 1202751

TNjozela 673223 - 1565 - 674788

Total 10 530 841 838 975 19 266 1 319 083 12 708 165

• AdvNMokhatla’scontractendedinSeptember2013• AdvVSoniwasappointedHeadoftheUnitinOctober2013• MrFDavidsresignedinDecember2013• MrLetwabawasappointedasCFOinDecember2013• MrsTNjozela’scontractterminatedon31December2013• MrLLekgethohasbeentheActingProjectsDirectorsince7October2013• MrChitwawastheActingHeadoftheIIUfrom1October2012toJune2014• MrModipaactedasProjectsDirectoruntil30September2013• MrsMNyathiwasreinstatedinJune2012andreceivedadditionalbackpayintheamountof

R15510

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24. Member’s emoluments (cont.)

2015R

2014R

Remuneration(incl.disbursements)ofAuditCommitteemembers

HDeJager(Chairman) 84000 84000

MMaliehe 50000 50000

HHlomane 50000 80220

MNtumba 40000 54088

Total 224 000 268 308

Remuneration(incl.disbursements)ofRemunerationCommitteemembers

JChabani - 72000

- 72 000

25. Cash generated from operations

Surplus 71757977 143865925

Adjustments for:

Depreciation 6493944 8481427

Amortisation 195439 195618

Impairment loss 255588 -

Debt impairment 106511743 31799032

Lossondisposalofpropertyandequipment 6508293 454169

Changes in working capital:

Inventories 22605 61489

Prepayments 599113 (2138962)

Increase in receivables(113923

131)(165536

713)

Decreaseinpayables (3284417) (18721582)

Income received in advance* (16140619) (802013)

58 996 535 (2 341 610)

*TheR16millionmovement in theCARAFund ismadeupof theR11millionpaidback to theDepartmentofJusticeandR5millionthatwasrecognisedasrevenueinthecurrentyear.Refertonote 14 above.


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26. Risk management

Financial risk managementThe SIU’s risk management committee monitors and manages the financial risks relating totheoperationsof theUnit through internal risk reportswhichanalyseexposuresbydegreeandmagnitudeofrisks.Theserisksincludemarketrisk,creditriskandliquidityrisk.

Compliancewithpoliciesandexposure limits is reviewedby the internalauditorsonacontinualbasisandregularlyreportedtotheauditcommittee.

TheSIUdoesnotenterintoortradefinancialinstruments,includingderivativefinancialinstruments,forspeculativepurposes.

Liquidity riskTheSIUmanagesliquiditybymonitoringforecastandaccrualcashflowsandmatchingthematurityprofilesoffinancialassetsandliabilities.

Allfinancialassetandliabilitieshaveamaturityprofileoflessthan12months.

Interest rate riskDepositsattractinterestataratethatvarieswithprime.TheSIUpolicyistomanageinterestraterisksothatfluctuationsinvariableratesdonothaveamaterialimpactonprofit/(loss).

Interest rate sensitivity analysisThe sensitivity analysis below has been determined based on financial instruments exposure tointerestratesatthereportingdate.Forfloatingrateinstruments,theanalysisispreparedassumingtheamountoftheinstrumentoutstandingatthereportingdatewasoutstandingforthewholeyear.

Thebasispointsincreaseordecrease,asdetailedinthetablebelow,andthiswasdeterminedbymanagementandrepresentmanagement’sassessmentofthereasonablypossiblechangeininterestrates.

Apositive number below indicates an increase in cash balances. A negativenumber indicates adecrease in cash balances

Thesensitivityanalysisshowsareasonablepossiblechangeintheinterestrate,eitheranincreaseordecreaseintheinterestpercentage.Theequalbutoppositepercentageadjustmenttotheinterestratewould result in an equal but opposite effect on cash balances and therefore has not beenseparatelydisclosedbelow.Thisdisclosureonlyindicatestheeffectofthechangeininterestrateonunaccummulated cash balances.

Therewerenochangesinthemethodsandassumptionsusedinpreparingthesensitivityanalysisfromoneyeartothenext.

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2014R

Estimatedrateincreases 100 100Estimatedincreaseinbasispoints 1208463 752968

Effectoncashbalances 1208563 753068

Credit riskCredit risk consistsmainlyof cashdeposits, cashequivalents and tradedebtors. Theentityonlydepositscashwithmajorbanksthathavehighqualitycreditstandingandalsolimitsitsexposuretoanysinglecounter-party.

Trade receivables comprise other departments in terms of partnership agreements to carry outspecificengagementsaccountedforontheaccrualbasis.Managementevaluatedcreditriskrelatingtocustomersonanon-goingbasis.

Thecarryingamountoffinancialassetsinthefinancialstatements,isthenetofimpairmentlosses,andrepresentsthemaximumexposureoftheSIUtocreditrisk.

Current 93904081 86078985

60days 38451763 19825071

90days 25796036 9763055

>90days 216811897 145222736

Subtotal 374 963 777 260 889 847

Impairment of receivables (170566571) (64054829)

Total 204 397 206 196 835 018

Debtors past due but not impaired

60days 38451763 19825071

90days 25796036 9763055

>90days 46245326 81167907

Total 110 493 125 110 756 033


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Categories of financial instruments

Financial assets measured at amortised cost

2015R

2014R

Tradeandotherreceivables 207074876 200285799

Financial assets measured at amortised cost

Tradeandotherpayables 52603830 72971928

Allamountsareshort-termandthecarryingvaluesareconsideredtobeareasonableapproximationof the fair value.

27. Taxation

TheSIUisnotaregisteredvendorforVATpurposes,asnotaxablegoodsorservicesaredelivered.Noprovisionfornormalincometaxismade,astheUnitisapublicenterpriseandfundedbygovernmentgrants.

28. Guarantees

TheSIUhasaguaranteeinplacewithFirstNationalBankinfavourofAtlasPropertiesLtdtothevalueofR231,817.TheguaranteeisfortheUnit’sofficesinCapeTownandtheexpirydateis29October2017.

29. Capital commitments

Authorisedcapitalexpenditurealreadycontractedfor:

PropertyandEquipment 2018174

30. Contingent liabilities

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SeverallegalactionsandapplicationsarependinginvolvingtheSIU.Thesearegivenoutinthetablebelow.

Plaintiff Nature of claim Amount (R)

HLubita Unfairlabourpracticedispute 500000

SSubramoney ClaimingbackpayfromtheSIU 96000

RduPreez Unfairlabourpractice 150000

V Dlani Unfairlabourpractice 240000

CPlaatjie Claim to be promoted 120000

B Nkila Unfairlabourpractice 120000

TGclitshana Unfairdiscrimination 150000

MNyathi DefamationclaimbyMNyathiagainsttheSIU 2150000

MBotha Claims for services rendered 316000

31. Post-reporting date events

TheSIUreceivedapprovalfromTreasuryfortherolloveroffundsattheendof2014/15financial

yearamountingtoR121million.Theapprovalwasreceivedon10June2015.

Theunfair labourpracticedisputeby49forensic investigatorswasfinalisedthroughasettlement

agreementandalllegalfeesanddamagespaidinfullinJuly2015.

32. Standards of GRAP approved but not yet effective

ThestandardsofGRAP listedbelowhavebeenapprovedbutarenotyeteffectiveandhavenot

beenimplementedbytheSIU.Thesestandardswillbeimplementedinthefinancialyearthatthey

becomeeffective.ItisnotexpectedthattheinitialapplicationofthesestandardsofGRAPwillhave

asignificantimpactontheUnit’sfinancialstatements.

GRAP5Borrowingcosts

GRAP16Intangibleassets–Websitecosts

GRAP17Serviceconcessionarrangements:Wheregrantorcontrolsasignificantresidualinterestinanas-set

GRAP18SegmentReporting

GRAP32Serviceconcessionarrangements(Grantor)

GRAP100(revised)Discontinuedoperations

GRAP108StatutoryReceivables


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33. Prior period errors

33.1Duringthe2014/15yeartheSIUreceivedaninvoicelaterelatingtoworkdonein2014whichwasnotprovidedfor.ThereisnoeffectontaxationfromthiserrorastheUnitisapublicentityanddoesnotpayincometax.

Thecorrectionoftheerror(s)resultsinadjustmentsasfollows:

2014R

Statement of Financial Position

Tradecreditors (307646)

Statement of Financial Performance

Internal audit fees 113446

Travelexpenditureonaproject 194200

Total 307646

Decrease in profit for the period 307 646

33.2Duringthe2014/15financialyear,itwasrecognisedthatnotallexpenseswereaccountedforinpreviousyearsagainstthemoneyreceivedforCARA.ThereisnoeffectontaxationasaresultofthiserrorastheUnitisapublicentityanddoesnotpayincometax


Statement of Financial Position

Income received in advance 418765


Revenuefromnon-exchangetransactions (418765)

Increase in profit for the period (418 765)

33.3Duringthe2014/15financialyear,itwasdiscoveredthattherewasaninvoicetotheDepartmentofRuralDevelopmentthatshouldhavebeenraisedasitwasworkdoneduringthe2013/14financialyear.ThereisnoeffectontaxationduetothiserrorastheUnitisapublicentityanddoesnotpayincometax.

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2014R

Debtors 21903728


Revenuefromexchangetransactions (21903728)

Increase in profit for the period (21 903 728)

34. Recoveries of previous fruitless and wasteful expenditure

2015R

2014R

Misuseoffunds - 414

35. Losses due to criminal conduct

2015R

2014R

Lossofcomputerequipment(LaptopsandPortreplicator) 54588 46598

Fourdifferentmemberslosttheircomputerequipment(laptopsandportreplicators)throughtheft.Twolaptopswerestolenfrommembers’cars,onelaptopwasstolenfromtheirhomesandoneportreplicatorwasstolenfromtheirhome.TwodifferentemployeeslefttheemploymentofSIUwithoutgivingpropernoticeandthisresulted inone laptopandoneportreplicatornotbeingrecoveredfrom them.

36. Fruitless and wasteful expenditure

2015R

2014R

Latepaymentcharge 64836 -

TheCOIDpremiumwaspaidlatewhichresultedinpenaltiesbeingchargedandpayabletothem.


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37. Comparison between the final budget and actual amounts covering the period 1 April 2014 to 31 March 2015

Basis of preparationTheSpecialInvestigatingUnit(SIU)preparesitsannualbudgetonanaccrualbasisintermsofthePFMAandtheNationalTreasury’sMediumTermExpenditureFrameworkguidelinesissuedannually.TheStatementofFinancialPerformanceispreparedonanaccrualbasis.

RevenueTheover-recoveryinincomeisduetothefollowing:Theactualincomeisbasedonallactiveprojects,subsequenttotheamendmentstotheSIUAct,whichallowstheUnittochargeandrecoverforservicesrendered.ItisdifficultfortheSIUtobudgetaccurately for the project incomewithout knowing the proclamations thatmay be issuedwhilecompletingthebudget.Theprojectincomewasbasedonactiveproclamationduringthebudgetingperiod.However,duringthe2014/15financialyear,12newProclamationswerepublished,threeofwhichwereamendments.Thiscontributedtotheincreaseintheactualprojectincome.

ExpenditureTheover-spendingunderexpenditureisduetothefollowing:Theactualprovision fordoubtfuldebt (amountingtoR106.5million) ismorethan thebudgetedamountbecausetheentitycannotaccuratelydeterminetheamounttobeprovidedfor.Thesalarycostalsoincludesaprovisionforperformancebonuseswhichwasnotprovidedfor.TherewasalsoaboutR3millionbackpaidforthe2013/14performanceappraisalfollowingaCCMArulingonthematter.

Capital ExpenditureTheunderspendingincapitalexpenditureisduetotheinclusionofICTcablingforthenewPretoriaofficeaccommodationwhichhasbeendelayedandwillonlyhappenduringthe2015/16financialyear.

Adjustments to the original budgetThefollowingadjustmentswereeffectedtotheApprovedBudget:• Ananalysisofvacantpositionswasperformedandanadjustmentmadeinsalariescostswas

madeinrelationtotheresultsoftheneedsanalysis.• ForensicSpecialistsbudgetwhichrelatedtoACTTmatterswasadjustedout.• Allotherexpensesandprojectincomewereadjustedinlinewithexpectedproclamationsand

theactualinvestigativeworkbeingcompleted.

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NOTES


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NOTES


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Documents

HUMAN RESOURCE MANAGEMENT FINANCIAL INFORMATIONpmg-assets.s3-website-eu-west-1.amazonaws.com/151015SIU_AR.pdf · HUMAN RESOURCE MANAGEMENT FINANCIAL INFORMATION 1.3 Background to