By Chantelle Benjamin

18 April 2012 – At least four cases, valued at R171-million and involving several departments within government, are likely to be highlighted by the Special Investigating Unit (SIU) on 20 April when it reports to parliament on successful crime cooperative initiatives.

The SIU’s investigation into the embattled SABC – believed to involve tens of millions of rands – comes to an end mid-year.

By the end of 2011, eight criminal matters had been lodged with the Brixton Commercial Crimes Unit, five of these have been finalised and are to be submitted to the National Prosecuting Authority (NPA) to determine whether or not to pursue criminal investigations.

SIU spokesperson Marika Muller confirmed that the unit’s experience mirrored statements made in February this year by Finance Minister Pravin Gordhan that procurement in government was one of the biggest problems when it came to corruption and fraud.

In an announcement on a review of about 3 000 government property leases during the 2012/13 national budget before a sitting of the national assembly, Gordhan said one of the lessons learnt from placing several provincial departments under administration was the need to clean up tender systems.

“We need stricter oversight of the supply chain management process,” he told parliament.

Ekurhuleni

An example of ongoing procurement problems has been identified in Ekurhuleni, where this month the goods of a businessman and two Ekurhuleni employees were seized by the Asset Forfeiture Unit (AFU) pending the outcome of a trial for alleged fraud and corruption relating to an ICT tender worth R32-million.

The contact was allegedly awarded to Meropa Schabeng Technology in 2008. The three have since been arrested by the Hawks.

In 2009 the Ekurhuleni Metropolitan Council approached the SIU to investigate some contracts relating to procurement, where irregularities were a concern. The investigation was approved in 2010.

Apart from the ICT investigation, the SIU is also assisting the municipality with regards to tender irregularities in various departments, including the solid waste department where 10 contracts involving 19 contractors with a value of R500-million, are under investigation.

Department of Human Settlements

Also on the list of priorities for the SIU is the Department of Human Settlements, which is one of the unit’s longest running projects. The total value of projects under investigation within the department involve possible fraud to the value of R2-billion.

One case that falls under this department forms one of the 20 cases of alleged corruption prioritised for investigation by President Jacob Zuma’s anti-corruption task team (ACTT) announced in July 2010.

The ACTT is made up of individuals from the SIU, NPA, AFU, Hawks, the office of the accountant general in national treasury, the Financial Intelligence Centre and the South African Revenue Service.

The case involves businessman Rajkapoor “Teddy” Lakraj and contracts with the KwaZulu-Natal department of public works valued at R87-million.

Lakraj, who is expected to return to Durban’s Commercial Crimes Court on 26 April, has been charged with 148 counts of fraud and corruption, including using his domestic worker Nomfanelo Maqephula and her daughter Hlengiwe as fronts to obtain housing contracts from the KwaZulu-Natal department of public works and charging for work not done.

Assets worth about R68-million have been retained by the AFU, including two properties, cash and vehicles, and will be seized if Lakraj is found guilty.

Five provincial public works employees have also been charged with fraud relating to this matter.

Lakraj’s two companies Quantum Leap Investments 24 (trading as Teddy’s Construction) and Dreamteam Trading 562 (trading as Siyasiza Builders) are alleged to have secured over 3 000 contracts over several years, according to court documents.

He is one of 14 contractors allegedly under investigation in the province. The other cases involve homes built in, among other places, Mtubatuba, Eshowe and Ulundi.

A report to the Parliamentary Portfolio Committee on Justice and Constitutional Development in October 2011 by the SIU said at least 20 cases were identified in the 2010/11 financial year and another seven in the 2011/12 financial year.

“A review of the housing subsidy system indicated that at least 50% of all projects are problematic in some way (when it came to the building of houses). Contractors are (billing) for building houses which may: not exist at all; be extensively incomplete; be seriously defective; or not correspond to the numbers agreed to – paid for building more houses than was the case,” the SIU said.

Land reform

The SIU has also launched a wide-scale investigation into land reform and rural development cases, as part of an ACTT investigation.

Following a government proclamation in February 2011, the unit set up a team consisting of 35 members made up of lawyers, forensic investigators and forensic data specialists, which is looking at about 36 different matters involving grants, estimated in October 2011, to be worth about R495-million.

Investigations revealed that several farms had been fraudulently transferred to entities and individuals who did not qualify as beneficiaries in terms of the programme.

In a massive data-gathering exercise, the SIU has created a central database where over 5-million documents relevant to the land reform investigation have been scanned and are now being reviewed and analysed. The database will assist in highlighting irregularities.

By the end of 2011, three individuals – employees of the Rural Development and Land Reform Department’s Land Reform Programme and a businessman – had been arrested in KwaZulu-Natal for fraud and corruption charges relating to grants worth nearly R40-million.

Three farms relating to the case and estimated to be worth about R51-million were seized in October 2011. It appears the farms, intended for employees working on the farms, were purchased and transferred into a company owned by the businessman.

Health and social development

Another ACTT case, in which the SIU has been involved for some time, is the Takalani Home for the Mentally Disabled in Diepkloof, Soweto, which followed an investigation into fraud and mismanagement conducted by the Gauteng department of health and social development.

Court documents filed in July 2010 by the then health and social development MEC Qedani Mahlangu, to have the board of the home temporarily removed and placed under administration, revealed that audit reports going back 10 months had revealed poor living conditions for the children and that at least R1.5-million of the R2-million donated to the home had allegedly been transferred to an unknown account.

In February two senior staff members, including former director Lynnette van Rooyen, were arrested and appeared in the Johannesburg Commercial Crimes Court on charges including corruption, theft, fraud and money laundering.

Graft hotspots

The SIU indicated in its report to parliament towards the end of 2011 that areas where its investigations had increased were procurement, public works, rural development and land reform, local government and education and health.

By the end of the year the SIU was investigating procurement contracts to the value of R9.1- billion and had found irregularities in procurement to the value of R1.4-billion in the period between April and June 2011. Conflict of interest matters amounted to R3.4-billion, with irregularities found relating to conflict of interest of R99-million in the period between April and June 2011.

Gordhan’s procurement statement was made at the time questions were being raised over the leasing of police headquarters in Durban and Pretoria, for which suspended national police commissioner Bheki Cele has since faced a public hearing by a board of inquiry and now awaits a decision by its chairperson Judge Jake Moloi over his conduct.

Ironically it was Cele, along with the Independent Complaints Directorate, who commissioned the initial SIU investigation into the building or renovation of 33 police stations across the country, with priority being given to investigations in Pienaar, Hazyview, Brighton Beach and eSikhawini police stations.

In the last financial year 2010/11 the SIU became part of three major initiatives: the ACTT; the Multi Agency Working Group on procurement in the finance cluster and the special investigation unit in the Department for Public Service and Administration.

SIU’s former head Willie Hofmeyr told parliament in October 2011 that his unit was investigating over 16 departments and public entities, concentrating on fewer cases, with greater emphasis on procurement irregularities.

It will be interesting to see what emerges at the next presentation by acting head of the SIU Advocate Nomvula Mokhatla on Friday …

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Excerpt
At least four cases, valued at R171-million and involving several departments within government, are likely to be highlighted by the Special Investigating Unit on 20 April when it reports to parliament on successful crime cooperative initiatives.