Government’s priorities
It makes infinite sense that fighting crime (including fraud and corruption) is one of the priorities in Government’s Programme of Action.
In fighting crime and corruption we also move quicker towards the realisation of the other priorities outlined by government, namely:
- education
- health
- rural development/agrarian reform and food security
- creating decent work and economic growth
- nation building and good governance
Building a better future together
We have to fight crime and corruption collectively:
- to prevent the wastage of our taxpayers’ money
- to create an environment for economic growth
- to move quicker towards the realisation of the priorities outlined in the Government’s Programme of Action.
Provincial Treasury’s fight against fraud and corruption
Committed to improve and implement effective steps towards the detection and elimination of fraud and corruption
Internal audit unit:
- Respond to issues of fraud and corruption in provincial departments, public entities and municipalities
How fraud and corruption is picked up by treasury:
- Allegations of fraud, corruption, maladministration, theft, mismanagement of funds and misrepresentations constantly received through:
- NACH (Hotline) via the Office of the Premier
- Directly from whistle blowers
- Executing authorities
- Senior management of government institutions
- Identified through normal assurance reviews
Outcomes of investigations presented to relevant institutions with recommendations (civil recoveries, disciplinary action, criminal investigations)
No capacity to undertake criminal investigations – therefore good relationships with law enforcement agencies imperative to ensure investigation
Currently formalising relationships with HAWKS, SAPS, SIU and NIA
Prevention:
Goal: a “fraud free” environment within the provincial administration where investigations are minimised.
Enhanced risk management processes (processes now include fraud risk assessments as pro-active measure to identify potential incidents of fraud and corruption.
In process to acquire case management system: will assist department with management of registered cases (monitoring progress of cases under investigation) expect implementation pilot by November 2010.
Project Unembeza (IT fraud):
- Response to threats to provincial accounting information systems (BAS) and personnel information system (PERSAL)
- Pilot of Unembeza in 2007: to identify reasons why systems and networks were vulnerable to external attacks
- Project implemented in all provincial departments since 2008: resulted in 19 criminal charges (cases in various phases – some convictions)
- Review conducted in 2009 (include follow up on implementation of recommendations given to each department after 2008 finalisation
- Recommendations of 2009 network security assessment provided recommendations:
- How to address identified vulnerabilities
- Proposed roadmap towards a more secure information security environment – to reduce remote potential exploitation of systems and fraudulent transactions.
No mercy for fraudsters: last fraudulent cases in relation to this type of fraud were registered in 2007/08, and ever since then, no cases has been reported
But we are constantly on the look out for potential loopholes: focus for 2010/11: to develop and implement a comprehensive it risk and control framework to guide the process to regularly assess potential risk exposures and ensure security strategy alignment with risk assessment and responding to business needs
Other deterrents implemented in treasury:
Biometric Access Control Systems (BACS) Project:
- The system requires the use of a finger print to log into BAS and PERSAL and replace the password system. It will to a large extent eliminate password irregularities and fraud
- Now fully implemented in all department in BAS and PERSAL: gives us much better audit trail
Cash management controls:
- All payments over R500 000 require a tender system
- All payments of R1 million (where quotes had to be used for some reason) come to Treasury, which verify the bank accounts of the service providers. This enables us to:
- Pick up bogus bank accounts
- Ensure that the right people are paid
- Makes top management of different departments aware that “big money” is coming through because they have to sign it
- Acts as a deterrent because fraudsters know that Treasury will be checking
Challenge: fraudsters can split the amounts, e.g. two payments of R499 000. Currently working on measures to tighten the screws also on smaller amounts.
Constantly updating Practise Notes to cover loopholes
Review of supply chain management:
Conduct of SCM officials:
- Identified: lack of proper delegation and poor segregation of roles. e.g. very junior officials approving large orders and processing payments
- Provincial Treasury, jointly with National Treasury, in process of improving the assignment of SCM delegations to the correct level
- Also looking at making it almost impossible to deviate from competitive tendering processes. Accounting officers may deviate from inviting competitive bids but unfortunately it has been abused
- Treasury also enforcing the use of transversal or general period contracts in the province.These contracts are normally negotiated by relevant treasuries and are usually cheaper.This is provided for in Section 16A.6.5 of the Treasury Regulations
- Will also be introducing in due course a live price list of regularly procured items throughout government (using the existing IT systems). Anyone who procures goods and services at a price that is above the market price will have to provide very good reasons.
Enforce national legislation:
- Code of conduct for all SCM practitioners: have to declare any interests
- Ensure establishment of bid committees that take decisions independently in all departments to ensure that there is no situation created for collusion in the awarding of tenders
- Appeal to public: please notify us if know of anything suspicious re SCM officials. Compliance unit in SCM will investigate all allegations
Contract management: non-compliance mainly because of absence of proper contract management:
- Currently introducing contract management to ensure that services providers are not simply paid but have achieved set performance measures
- All contracts that Province has with various service providers will be renewed
- First phase: development of a contract inventory (contract database)
- Second phase: includes a clause-by-clause review of each contract to ensure that delivery has met promise. In the long run it will ensure value for money and that the province does not pay for what has not been delivered.
Tender appeals tribunal
- Already in place for provincial departments: have reversed several cases
- Offers public the opportunity to question any process in the awarding of tenders
now also to be implemented in municipalities:
- Currently in process of informing all municipalities of new system
- Phase one (pilot project) before end of the year (two municipalities)
Revamping of database:
- Cleaning up and establishment of a new single suppliers’ database for all provincial departments and municipalities to promote accountability and compliance
- Suppliers were asked to re-register
- Acts as a deterrent for fraud and corruption – now linked with external organisations (SARS, CIPRO, CIDB)
- It will also identify service providers with poor track records or under investigation
- All suppliers have to give stipulate their core businesses and their locations.
Are we winning?
- The audit outcomes (both for municipalities and provincial government departments) clearly shows a general improvement in compliance with financial reporting
- All municipalities and provincial departments must be achieving unqualified audit opinion reports by 2014. By setting that target we do not say that a clean audit implies real service delivery but it is a crucial step in the promotion of a culture of accountability and responsibility
- The cost-cutting measures have certainly also acted as a deterrent by making top management more aware of managing finances in their departments
- Treasury can advise, and put deterrents in place – but we cannot do it alone:
We can win the war if:
- officials enforce Practise notes and other legislation
- departments act on recommendations
- members of the public inform us about possible fraudulent transactions.
For more information please contact:
Ntokozo Maphisa
Cell: 082 773 0937
