2011-10-12

Cape Town - The head of both the special investigating unit and the asset forfeiture unit said on Wednesday the country could lose as much as 20% of
its total procurement budget to graft annually, in response to a question about the extent of government corruption in South Africa.

"I think that may not be an unrealistic estimate," Willie Hofmeyr told Parliament's justice committee, adding that it translated to between R25bn and R30bn.

The SIU was currently investigating 558 procurement contracts to the value of R1.9bn and 360 cases of conflict of interest where R3.4bn was involved.

Hofmeyr said the fight against corruption was hindered by a shortage of investigators and the low rate of criminal convictions of officials found with their
fingers in the till.

"We should have 7 000 people whose job it is to investigate corruption and I think we have 700.

"Our policies are pretty good but if there are not consequences for breaching them... a culture of impunity spreads pretty quickly."

Hofmeyr welcomed the cancellation of the flawed lease contracts with Roux Shabangu for new police headquarters but went on to highlight further
problems in the police and public works departments.

"From the kind of things we have found the SAPS leases are not an uncommon practice elsewhere."

SIU investigations have shown that public works paid at least R35m to entities where staff held undeclared interests and were investigating
irregularities to the tune of R330mlinked to the building and renovation of 33 police stations.

However, he said, the worst leeching of taxpayers' money was not happening at national level.

"Local government is where the problems are the worst and where oversight mechanisms are the least."

Asked about the implications of the Constitutional Court judgment in the Glenister case, Hofmeyr said if a central anti-corruption agency were
created he would like the SIU to be part of it and believed the Hawks also had a central role to play.

"There isn't really a centre from which government's anti-corruption efforts are driven. I think there is a bit of a gap there. The Glennister judgment
is an urgent issue that needs to be resolved soon," he said.

"If there is a new corruption unit set up we would like very much to be part of it."

The court found that the legislation that created the Hawks did not give the unit enough independence and gave Parliament 18 months to amend it.

Funding trouble

The special investigating unit ran into severe funding trouble this year when Eskom established that legally it may not be paid by state entities that
solicit its help, MPs heard.

He told the justice committee the corruption-busting entity had expected to earn R240m from such agreements but instead had to turn to Treasury
to tide it over.

"We are getting an additional R97m from Treasury this year," he told MPs.

Hofmeyr said the SIU was alerted to the problem by Eskom in June after the electricity utility had asked it to probe "corporate governance issues",
notably persistent problems surrounding its coal supply contracts.

He said the SIU obtained two legal opinions which confirmed that provided by Eskom, upsetting a 7-year-old practice that had seen it accepted
remuneration from a range of state entities.

"We got our own legal opinion at the end of June and then a second opinion that confirmed it and accepted we have got a problem," he said.

"Basically, we are not allowed to charge departments for our services. Everybody was a bit blind-sided by this issue."

Hofmeyr mentioned the matter in a briefing on the SIU's annual report.

He said the unit had not wanted to make it public until it was confident of finding both long and short term solutions because it did not want its staff to
fear for their jobs, he said.

An amendment to the SIU Act that would make such payments legitimate is in the pipeline, Hofmeyr said. At present, the legislation is silent on the issue.

- SAPA