Millions ‘lost’ in dubious state contracts

The Department of Water Affairs has budgeted nearly R60 million for the Special Investigating Unit (SIU) to probe its alleged corrupt contracts – but it stands to lose more than R200m, spent on dubious contracts, which it may not recover. The department has also failed to discipline officials at the centre of several of the allegations – despite it spending R5m on investigations by external forensic audit firms, which recommended follow-up action. Government departments have up to three years after crimes are committed to take steps to recoup the money.

But The Sunday Independent has seen an internal document addressed to acting director-general Trevor Balzer, warning the department to follow recommendations on the concluded investigations – or forfeit the money. “Legal Services advised that the risk of not implementing the necessary recommendations timeously is that prescription might kick in. “The department has three years within which action must be taken after having knowledge about a matter,” reads the document. The document was created to brief the acting director-general about the status of the department’s fraud cases and the cases being referred to the SIU. It also asks for the recommendations in cases investigated to be followed and seeks approval to pay the unit R10m for the investigation.

Department spokesman Sputnik Ratau did not comment on the R10m request in the document and said the department had not yet paid any money to the unit. Ratau said Water Affairs Minister Edna Molewa had personally met with the unit to discuss her unhappiness with the lack of progress and unnecessary delays. However, SIU spokesman Boy Ndala confirmed the department had put aside R58.6m for the probe. The unit’s investigation was promulgated by President Jacob Zuma last December and will delve into investigations that have not been finalised by the department, some of which date to 2009. The money would cover the costs of a dedicated team of 39 forensic specialists, said Ndala.

This includes project managers, investigators, legal representatives, accountants, data analysts, cyber forensic experts, water specialists and civil engineers. The investigation was expected to take 24 months to complete and the final report is expected in October next year. “Some of the matters referred for investigation are highly complex and will require consultations with various experts during the course of the investigation,” said Ndala. According to the proclamation, the unit will probe the department’s involvement in the Patterson Bulk Water Supply Project within the Sunday River Municipality. The document says R10.3m was involved in the project.

Apart from the cases being referred to the SIU, the state of investigations handled internally by the department and the Public Service Commission appear to be in disarray, despite the large amounts of money involved in the allegedly dodgy contracts. There are 90 cases being dealt with in the department – but some have been dealt with by external forensic audit firm Gobodo and will not be sent to the unit for further investigation. According to the document, of the 90 cases, 18 have yet to be started, 19 are in progress and a further 53 have been investigated on some level by the Public Service Commission, the department’s internal audit unit or external forensic investigators.

The Sunday Independent tallied:

• Five cases, involving around R30m, that have been referred to the police for further action.
• 14 cases investigated externally that have been closed.
• 23 cases that have been investigated and reports have been issued.

Of the 23 cases where investigations have been conducted, The Sunday Independent has established that in seven cases the department followed the recommendations listed. But in at least seven cases the department has not implemented the recommendations, or is still questioning if there are recommendations to follow. It also paints a picture of money being paid for independent investigators at Gobodo forensics, but the department failing to implement the recommendations. Ratau said the department had already spent close to R5.4m on corruption investigations since 2010. According to the document, at least seven of the probes have been left without recommendations being implemented.

Some of the cases left unattended include:

• The utilisation of the Olifants River Water Resources Development, involving at least R238m.
• Fraudulent invoices to construction companies involving about R960 000.
• Deviating from the procedures in leasing photocopy machines in the North West regional office, involving just under R500 000.
• Alleged corruption at the Roodeplaat directorate involving R991 000.

The SIU’s investigation also appears to implicate several departmental officials in corrupt activities, including them conducting business with the department. Officials will be investigated for granting variation orders exceeding the acceptable percentages of the original contract price in relation to contracts awarded to The Forest Fire Association, Syringa Biosciences, Buca Management and Projects and Brainwave CC Projects, states the proclamation. More corruption is also suspected in the appointment of 86 contract workers, which followed the dismissal of the originally appointed 104 contract workers, in respect of the Expanded Public Works Programme, which included the construction of water infrastructure in Mpumalanga. Ratau said the department was determined that the unit find the origin of the money being queried, so that they could act with clear evidence in hand.