MEDIA RELEASE

MEDIA STATEMENT

REMARKS BY THE DIRECTOR GENERAL OF HOUSING AT A JOINT MEDIA

BREAKFAST WITH THE SPECIAL INVESTIGATING UNIT (SIU) ON MEASURES IMPLEMENTED TO PREVENT FRUAD AND CORRUPTION IN HOUSING.

PARK HYATT HOTEL, JOHANNESBURG, MARCH 11, 2009

Following allegations that officials employed by Government and many other individuals who do not qualify for the housing subsidy were allocated houses from 1994 to 2004, the Minister of Housing, Dr Lindiwe Sisulu invited the Auditor - General to do a detailed audit and review of the Housing Subsidy Systems (HSS) in order to identify weakness in housing information management systems that resulted in people who are not supposed to get the subsidy getting them.

On completion of the audit, the Auditor General reported that a number of Government officials, municipal officials and private individuals have fraudulently received houses they were not supposed to receive between 1994 and 2004. The Auditor General concluded that close to 30 000 officials who work for Government at different levels have fraudulently benefited from the housing subsidy scheme.

The Auditor General also found that our systems when we started the housing subsidy in 1994 where not the best, they had some weaknesses and those weaknesses led to some officials taking advantage of the system and participating in fraudulent activities.

The following are some of the weaknesses in our system that existed from 1994 to 2004, we are sharing this with you such that you can help the nation understand the journey we have travelled as the Housing Team (National, Province and Municipalities to address these problems and to develop systems that not only identify fraudulent activities but also prevent them.

The Auditor general identified the following weaknesses from 1994 to 2004, we had started ourselves by then to review our systems and to introduce more controls and upgrade technology.

- In some cases Subsidy approvals were granted to government employees whose earnings/salaries were in excess of the housing subsidy threshold.

- Some approvals were granted after the applicants’ date of death according to Home Affairs.

- Subsidies approved for a specific applicant by more than one provincial administration across different provinces.

- Subsidies awarded to individuals receiving monthly remuneration from the GEPF in excess of the subsidy threshold.

-- Manual overrides of the Housing Subsidy System in the approval of housing subsidies resulting in fraudulent activities by officials.

Further more after the Director General and his Team appeared before SCOPA the Committee directed us to also rectify the following:

(a) That the department establishes an ID verification mechanism that is linked to data in the Home Affairs database.

(b) That the department must ensure that policy guidelines with respect to the administration and awarding of subsidies are enforced.

(c) The National Department of Housing institutes a comprehensive strategy of co-operation and integration with Provincial departments.

Together with our Provincial and Municipal partners we have taken a number of actions to ensure that our systems are able to identify fraudulent applications, and to prevent officials from creating opportunities for fraudulent applications to go through.

We have also taken a number of actions to ensure that all the issues identified by the Minister, MinMEC, AG, and SCOPA were rectified:

- Key to approval of fraudulent applications was the ability of officials to override the system, today the override of search results on the HSS is no longer conducted by an individual. The HSS has been enhanced to enforce a second level of authorization by a senior official at the level of the Chief Financial Officer or delegated official.

- A junior user scrutinizes the search results and determines if an override is required. In cases where such overrides need to be performed, the junior user will record the reasons for the override to be conducted and seek approval for a senior official.

- The senior user, delegated to perform this function by the Chief Financial Officer, evaluates the details on a case by case basis and approves or declines the request for an override. A real time report is available on HSS Online indicating the various search overrides conducted over a specific period.

- Also not available in the early days of the subsidy was the ability to verify information with other state agencies, today we have a checking mechanism built into the HSS, based on the formula provided by the Department of Home Affairs to confirm the validity of an ID, will prevent the capturing of any invalid ID’s.

- The ID’s captured on the HSS are selected by the Provincial Housing Department and submitted for overnight searches against the Population Register, via HSS Online. The outcome of the search results is available to the Provincial Housing Departments the next morning.

- In addition, the Department has enhanced the Housing Subsidy System’s application verification mechanism. The System now also tests applications against the PERSAL, Government Employee Pension Fund, UIF, Deeds Office and other Government agencies and through PERSAL we are able to verify Government employee salary data.

- Provincial Housing Departments are upgrading their filing systems, information management and data capturing systems in accordance with the provisions of the National Archives and Records Services Act (43 of 1996), data and document management protocols and intensive training is being implemented.

- A (Joint Standing Committee) JSC consisting of officials from the DoH, Provincial Housing Departments, SITA and the Auditor-General (as an observer) is established to give oversight on the implementation of systems.

The Auditor General also reported that between 1994 and 2004: 6 905 officials were identified during the audit as having received houses they were not suppose to receive.

The SIU is assisting provinces in investigating the cases identified by the audit for both municipal officials and Government officials. The presentation by the SIU will cover our progress and the road we will still have to travel.

Following the report of the AG and the process to enhance, upgrade and modernise our systems across all spheres of Government the Minister and the MEC (MinMEC) had to decide what to do with those who benefited from fraudulent applications. This included officials of Government, officials working for municipalities, private individuals and other role players in the housing value chain like conveyancers and project managers.

MinMEC resolved that we must approach the Special Investigation Unit to investigate, prepare cases for all who are found to have a case to answer for and recover the money and invest it back into housing. We also agreed that all Government officials when the prosecution process is completed we must all encourage their Departments and Municipalities to take them through disciplinary processes. The SIU will share more details on how far we are in all this processes.

We are also very much concern of the fraud and corruption by contractors and developers. We continue to be pained by the impact of their activities as they leave many poor people in shoddy and low quality houses. They also waste a lot of state funds. We will also find those contractors, take them through the systems and ensure that they return the funds back to the state, we will be more harsh to the officials of Government who help them in these fraudulent activities.

In conclusion before I hand over to the SIU let me say that our commitment to root our fraud and corruption in housing is very clear, we will prosecute all officials involved in fraud, we will recover the funds and also take disciplinary steps and many people would be dismissed from their jobs. As for contractors and others in the value chain, they must know that we will not allow them to continue to waste Government funds, we will not standby and allow them to build shoddy houses. Thank you.