State Capture investigations at SOEs struggle amid lack of investigative and forensic skills, Scopa hears

If the Hawks thought highlighting that its investigators had taken 653 statements between June and November 2023 was evidence of action and progress, it didn’t quite land at the Standing Committee on Public Accounts (Scopa) on Wednesday.

The elite police unit presentation traversed plenty of state-owned entity (SOE) terrain amid a blur of numbers – 43 under investigation, and 12 in court in both own-initiative State Capture matters and those referred to it by the Special Investigating Unit (SIU).

But it got stuck on convictions – two. One was ex-SAA board chairperson Dudu Myeni who, for naming a protected Zondo Commission witness, was fined R120,000 or two years’ jail, with half suspended. The other was ex-Free State human settlements department head Mpho Mokoena, whose 10 and five-year jail terms for corruption in a R500-million RDP housing saga were wholly suspended on condition he did not commit similar offences.

Some 15 months after Chief Justice Raymond Zondo formally submitted all State Capture commission reports, public impatience is running high with demands that people, including politicians, should be seen in orange overalls.

The slow pace is not necessarily through a lack of intent, but more a dearth of skills, particularly in specialist forensic auditing and digital and data analysis – but also in the investigation and prosecution skills required in complex financial crime probes.

This means the Investigating Directorate (ID) functions on secondments – 15 from the Hawks, five from the Independent Police Investigative Directorate (Ipid) and four SAPS detectives, ID boss Andrea Johnson told MPs on Wednesday.

And the directorate must go on tender and ask the National Treasury for skills like forensic auditing and data analysis.

“We are unable to secure and retain experienced personnel. The non-permanence of the ID affects (this)... We have quite a lot of staff on contracts, with contracts expiring early in 2024,” said Johnson, adding that all agencies were looking at the same small pool of skills.

Parliament is processing the necessary legislation to establish the ID as a permanent directorate in the National Prosecuting Authority (NPA) in a move to bolster the directorate.

Read more in Daily Maverick: ‘Reimagining of Parliament’ thwarted by patchy application of State Capture report proposals

But for now, State Capture cases are investigated on a multi-level cooperation basis, signed and sealed with various memorandums of understanding. 

The SIU requires a presidential proclamation and focuses on civil litigation and recovery and refers disciplinary matters to the relevant institutions. 

Criminal referrals against various CEOs of passenger rail agency Prasa over its security contract are referred to the Hawks, as emerged on Wednesday, and also to the NPA.

Meanwhile, the NPA’s Asset Forfeiture Unit (AFU) has to date secured freezing orders worth billions of rands – including houses, luxury cars, and two fish restaurant franchises – regardless of the status of criminal and court proceedings.

The Hawks investigate not only SIU referrals, but also their own State Capture cases, and others, and then refer to the NPA for a decision. If they get a “yes”, it goes to court – where it may get stuck in postponements and various countersuits, particularly in contested cases. 

In contrast, SIU civil recovery and settlement proceedings usually involve agreements at SAA, Transnet, Eskom and elsewhere. The SIU will get a court order even if agreement is reached, so there is no retraction, the unit’s chief national investigating officer Leonard Lekgetho told MPs.

The issue with collaborative handling of State Capture cases, or for that matter other complex financial crimes, is that the information is all over the place.

For example, at SAA the SIU has completed its probe into the turn-around strategy which effectively was written for one bidder, and recommended the cancellation of this contract, which the national airliner did for a R130-million saving. The AFU is now litigating to recover the remaining R40-million. A criminal referral was made to the Hawks, but no disciplinary action referrals happened “as officials have left the employ of SAA,” according to the SIU. 

It was a refrain throughout Wednesday’s Scopa meeting.

For example, the Transnet 1,064 locomotive tender with China South Rail, now renamed CRRC eLoco, that also involves Trillian and Regiments Capital having received vast sums as facilitators. Investigations stretch from the SIU and the Hawks to the NPA, with the AFU having secured a R1.658-billion restraint order regarding the Transnet pension fund

Criminal charges were brought by the NPA in August 2022 against a host of Transnet ex-executives, including Brian Molefe and Anoj Singh and board directors, as the SIU has pursued civil legal action with Transnet to set aside the locomotive contract valued at R54.5-billion, according to presentations to MPs on Wednesday. 

These documents also showed the SIU obtained a R870-million settlement agreement between Transnet and McKinsey, but also others involving Wabtec and Alstrom for R79-million and R365-million. The October 2019 R180-million settlement agreement with Regiments has become unenforceable.

In another layer, the South African Revenue Service (Sars) has an interest given its claim that the overseas company failed to pay its full tax dues. This had Public Enterprises Minister Pravin Gordhan travel to China in March 2023 to try to undo the stalemate as the company did not provide spare parts. This didn’t succeed.

Complicated? Sure.

And it’s that which makes it difficult to present a simple statement of action to a public whose gatvol level is undermining trust in public institutions.

Add to that, chock-a-block court rolls that often mean months of postponement delays and lack of cooperation by government officials from directors-general down.

“We often don’t get cooperation from officials in the state. It cannot be that when we investigate (these cases), the doors of departments are closed,” said Deputy National Director of Public Prosecutions Rodney de Kock, adding that usually, investigators had to apply for search and seizure warrants. 

“What you want is the cooperation of the DGs and the officials…”

That government departments and SOEs have not retained information and original documents, as emerged on Wednesday, must raise questions about the integrity of state administration, never mind the additional complications for prosecutions.

Courts must be convinced of a copy’s integrity, which usually also requires skilled data analysts. Segue to the dearth of skills among law enforcement, from data and cyber analysis to forensic audit.

The Hawks operate at 53% staffing levels, although that’s better than the SAPS detective services which averages just over 40%, but only 13.8% of commercial crime investigators, according to a parliamentary reply.

Read more in Daily Maverick: Specialist skills-deprived SAPS lumbers on to tick the boxes of performance targets amid downbeat perceptions

Coincidentally, the lack of forensic and specialist investigation and auditing skills, alongside understaffing, was sharply highlighted in the anti-money laundering and terror financing watchdog, the Financial Action Task Force, in its October 2021 report.

But sometimes there is a break. 

The SIU has submitted evidence of irregularities to the companies, authorities and public enterprises to ensure former board directors at Transnet and SAA are declared delinquent directors, which would ban them from ever serving on a board again. 

This would be an important signal of intolerance of corruption and malfeasance from inside the state. 

“Impunity in our country is not a given. A lot of work is being done and a lot of work must still be done. Law enforcement is hard at work to get cases enrolled and assets secured,” said De Kock. DM