Water and Sanitation welcomes progress with SIU investigations into past improper management of various water projects

DWS welcomes progress with SIU investigations into past improper management of various water projects

The Department of Water and Sanitation (DWS) welcomes the progress made by the Special Investigating Unit (SIU) on investigations into the mismanagement of the Giyani Water Project under the Lepelle Northern Water Board in Limpopo, and tenders related to Covid-19 water contracts which were managed by Amatola Water Board in the Eastern Cape, among other investigations. The investigations are bringing us closer to finality with regard to the tale of malfeasance that befell the water sector, costing billions of rands.

The SIU made a presentation on the status and outcomes of its investigations into the Giyani Water Project to the Standing Committee on Public Accounts (SCOPA) in Parliament on 14 November 2023. Shortly thereafter the SIU made a presentation to the Minister of Water and Sanitation, Senzo Mchunu, to update him on the progress with eight separate investigations related to the Department of Water and Sanitation (DWS) and its water boards, for which the SIU has obtained Presidential proclamations.

One of the major investigations relates to the awarding of a contract to LTE Consulting by the Lepelle Northern Water Board (LNW) in 2014, for the Giyani Water project. The SIU has completed this investigation and will be submitting the Final Presidential Report to the President shortly. The SIU has found that the R4,1 billion contract was irregularly awarded and is taking civil litigation action in the High Court to have the contract declared unconstitutional, invalid, and set aside.

The SIU found that the supply chain management processes that were undertaken by LNW were flawed and contrary to legislation. It also found that the value of the appointment of LTE Consulting was irregularly increased from R90 million to R2.2 billion, and later to R4.1 billion. It further found evidence of prices being inflated and a corrupt relationship between LNW, the service provider and the department.

The SIU has instituted civil proceedings by way of a damages claim in the Special Tribunal against former employees of LNW, to a value of R1.9 billion. The SIU has also successfully submitted court applications to the Special Tribunal to preserve the pensions of two implicated LNW officials. Furthermore, the SIU made a disciplinary referral to the Board of LNW in respect of two LNW managers in 2018, for negligence and contravening the PFMA. One of the managers resigned before the disciplinary hearing was held and the other manager was subjected to a disciplinary hearing by LNW and dismissed in 2022. The SIU has also made criminal referrals to the Specialized Commercial Crime Unit to investigate possible criminal charges against the two former LNW managers, for alleged collusion, fraud, and forgery.

Another major ongoing investigation by the SIU has been into allegations of irregularities in the management of COVID-19 relief funds by the Amatola Water Board (AWB) in 2020. The allegations related to the provision of water tankers, rainwater harvesting tanks, and boreholes to various communities in the Eastern Cape. The investigation has found that parts of the procurement were irregular and that prices were inflated. The SIU has also instituted civil court proceedings and has made 17 criminal referrals. It made two disciplinary referrals to the AWB which resulted in the dismissal of one employee by AWB and the termination of the contract of another.

One of the SIU’s completed investigations was into the 2012 Vuwani pipeline project under DWS. The SIU found procurement irregularities and made a disciplinary referral to DWS. The implicated employee in the Department was charged with misconduct but was found not guilty. The Department filed an application before the Labour Court for a judicial review of the finding of the disciplinary hearing. The employee was dismissed from the Department on other procurement-related charges on 4 November 2022.

The SIU has also investigated certain information technology contracts which were entered into between DWS and SAP and EOH between 2014 and 2016. It found the award of these contracts to be irregular and made a disciplinary referral to DWS. The Deputy Director General involved was dismissed on 4 November 2022 after having been found guilty of misconduct in a disciplinary hearing instituted by DWS. The SIU successfully negotiated with SAP to repay R413 million to the Department and with EOH to repay R192 million to the Department.

Other investigations still underway by the SIU include an investigation into the Emergency upgrading of the Thukela Goedertrouw Transfer Scheme Evidence in 2016, for which the SIU has made a referral to the NPA against a former Acting DG of DWS. Another investigation focused on allegations on maladministration and corruption by officials of Umgeni Water between 2018 and 2019. In this case the SIU has made a referral to the National Prosecuting Authority for fraud, corruption, and money laundering against 61 individuals and the dockets have been opened. It has also made a referral to the Asset Forfeiture Unit in respect of 45 individuals and entities to recover the proceeds of crime, as well as 18 disciplinary referrals to Umgeni Water. The Water Board has since briefed a team of attorneys and advocates to deal with the disciplinary matters and administrative action referrals.

The SIU is still busy with an investigation into the appointment of Blackhead Consulting by LNW in 2014 for the raising of the wall of the Tzaneen dam. It is also still busy with an investigation into drought relief procurements by Lepelle Northern Water Board and Amatola Water Board in 2020.

DWS is serious about fighting fraud and corruption and collaborates with the SIU by sharing information such as Internal Audit reports and ensuring that documents are provided timeously to ensure the successful investigation of the allegations. The collaboration also extends to proactive measures intended to prevent fraud and corruption in the Department in future. These include the joint awareness session that was held by the Department in collaboration with the SIU and the Association of Certified Fraud Examiners (ACFE) on 14 November 2022, to encourage officials to play a pro-active role in the on-going battle against fraud and corruption. Officials of the department and the water boards are encouraged to report any incidents of fraud and corruption to the national anti-corruption hotline, and all allegations are investigated independently by the Department’s internal audit unit. Regular fraud and corruption awareness sessions are also held with officials in the department.

During the period 2019/20 to 2022/23, a total number of 265 reported fraud and corruption cases were investigated by the Department through its Chief Directorate of Internal Audit and 197 of the allegations were confirmed to be true while 68 were unfounded. These cases resulted in an amount of R997 million being recovered through civil recovery processes and a judgement of R27.5 million in favour of the Department. 108 cases are currently under investigation and are due to be completed during the 2023/24 financial year.

DWS now subscribes to zero-tolerance to any acts of corruption or financial misconduct, either by the department or its entities. As indicated above, the Department and the water boards have been implementing the disciplinary referrals made by the SIU and have also been implementing the SIU’s recommendations to address the administrative weaknesses which enabled fraud and corruption incidents to occur. The Department also makes regular follow-ups with the law enforcement agencies such as the Directorate for Priority Crime Investigation (DPCI) and the National Prosecution Authority (NPA) regarding all matters that the SIU referred for criminal investigation and facilitates the submission of information/ documentation to these agencies to ensure the successful investigation and prosecution of matters referred to them.

Since Minister Mchunu was appointed in August 2021, he has emphasized good governance and focused on appointing competent and fit and proper board members to the Water Boards. As a result, there has been a major reduction in the levels of new irregular expenditure. The department has also embarked on a process of amending the Water Services Act which will enable it to optimize its oversight over these utilities without hindrance and ensure that their governance is in line with the relevant regulatory frameworks. It has also established an Oversight Audit Committee covering the Department and its entities, chaired by an external Advocate, to monitor progress with reducing irregular, fruitless, and wasteful expenditure.

Furthermore, the Department has developed improved Standard Operating Procedures for issuing directives to the water boards. This SOP regulates the responsibilities, steps and scope required by the relevant branches of the DWS before a Ministerial Directive to a Water Board can be executed. This includes the confirmation of funding and procurement processes.

For more information, contact Wisane Mavasa Spokesperson for the Department of Water and Sanitation on 060 561 8935.

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