EXCLUSIVE: Exposed, SIU Bosses’ Web of Lies

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Sello Theletsane and Solly Makganoto

JOHANNESBURG – Officials of the Special Investigating Unit (SIU) are required to maintain the highest standards of proper conduct and integrity at all times, but allegations levelled against the leadership of the Special Investigating Unit suggest the opposite. These are the same officials of the agency tasked with the forensic investigation of serious malpractices or maladministration relating to state institutions, state assets and public money.

Africa News 24-7 is in possession of two memorandums that have been submitted to the Parliamentary Portfolio on Justice and Correctional Services in which serious allegations of among others, tax fraud and gross mismanagement are levelled against executives of the SIU including the unit’s head Advocate Andy Mothibi. Speaking on condition of anonymity, for fear of victimisation, a disgruntled senior SIU staff member said: “To Mothibi and his inner circle, lying has gone beyond being a defence mechanism; it has become a coping mechanism and a survival technique.”

In one memorandum that was sent to the Portfolio Committee on Justice and Correctional Services, dated 3 October 2018, an SIU staffer accuses newly-recruited SIU Chief Governance Officer Sam Muofhe of attempts to circumvent statutory SARS requirements. It is alleged he wanted to structure his salary in such a way that he did not pay tax. The staffer alleges that Muofhe instructed her to allocate 108 000 kilometres as the total kilometres that he would be travelling between 1 July 2018 and 28 February 2019.

The staffer says she refused to carry out such an instruction. In the memorandum, the staffer further accuses the unit’s chief financial officer Andre Gernandt of tax fraud in that his tax status in the SIU payroll is that of 25% taxpayer because he has classified himself as a non-standard employee when he is, in fact, a full-time employee. In another memorandum dated 5 October 2018 addressed to Parliament and Corruption Watch by Rev Bafana Khumalo of Sonke Gender Justice, the appointment of the CFO is questioned and branded irregular.

In the memorandum, Mothibi is accused of abusing his power to recruit the CFO, with whom he had a working relationship prior to both joining the SIU. Khumalo states that Gernandt used to work for the Road Accident Fund(RAF) as CFO. While employed at the RAF Gernandt allegedly presided over a tender which was won by Medscheme, Mothibi’s previous employer. “A few months after awarding this tender to Medscheme, Gernandt left RAF and went to work for Medscheme, where he reported to Mothibi.”

Adds Khumalo: “Mothibi then resigned from Medscheme at the end of April to take up a position at the SIU as the unit’s head on 1 May 2016. Gernandt resigned from Medscheme at the end of May 2016. Whilst the process of appointing a CFO had already started, Adv. Mothibi ordered Human Resource Management to abandon that process. Four months after being appointed as Head of the SIU, Adv. Mothibi appointed Gernandt as CFO of the SIU, outside the recruitment process, without any interviews as directed by the internal policies. It later transpired that Mr Gernandt was his former colleague who reported directly to him at Medscheme Holdings between 2014 and 2016.”

Contacted for a comment Khumalo said: “President Ramaphosa was quoted in the SIU’s 2017/18 Annual report: “When our people see corruption, it means there is corruption”. Added Khumalo: “These are words of a leader who is implying that there are no holy cows and that no one is above the law.” Khumalo said the matters that he has raised in his memorandum to parliament and those that have been raised by whistle-blowers paint a picture of a SIU leadership that could possibly be compromised.

“It is therefore in the interest of the SIU leadership that these allegations are clearly ventilated so that the unit lives up to its Vision of being: “The state’s preferred and trusted forensic investigation and litigation agency”. “We call upon the Unit to lead by example. Rather than going on a witch hunt to punish whistle-blowers, it is important that the SIU should take a lead and advocate the fact that whistle-blowing is not just a paper exercise, but a tool that must be utilized by everyone, in private and public sector, to help curb the scourge of corruption.”

Corruption Watch draft memo _final version (1)

Khumalo concluded: “It is therefore important that rather than focusing on whistle-blowers, the SIU should support the call for an investigation into its affairs. It is only through an investigation that the President’s words can be proven wrong.” Africa News 24-7 has since established that due diligence and background check may not have been undertaken by SIU management in its recruitment of Gernandt who was found to have lied under oath by the courts during his tenure as acting chief executive of the Road Accident Fund(RAF).

There was a case in February 2011 in the Western Cape High Court (CASE NO: 8853/2010) in which it was mentioned that Gernandt was not truthful in some of his explanations. “The acting chief executive officer of the Fund initially denied that it was, or had ever been the policy of the Fund not to make settlement offers until 20 days before trial in a claim subject to a court action. That averment was quite extraordinary in the context of a written instruction to that effect issued to all regional managers of the Fund on 28 August 2008 (less than a month before the first applicant’s attorney’s letter referred to in para [34], above). The Fund had, a few weeks earlier, also issued an internal instruction that its staff members were not to make tenders of settlement in litigious matters before a trial date had been set. These policies were withdrawn only after litigation had been instituted against the Fund to have the instructions declared unlawful. Mr Gernandt explained the error in his initial answering affidavit by stating that he had been unaware of the facts, having taken up his current position only in January 2010. It remains regrettable, to say the least, that the acting chief executive officer of the Fund could have made these unfounded denials under oath without properly verifying that he had good reason to do so. Whether the fault was his personally, or due to bad briefing by his support staff, we cannot say.”

Africa News 24-7 sent questions to the SIU and in its response, the SIU denied all allegations of impropriety levelled against its executives. However, Africa News 24-7 has since established that the SIU was less than honest in its response which is riddled with untruths which are highlighted at the bottom of this article.

Here are the questions that Africa News 24-7 sent to the SIU and the answers.

  1. In a memorandum that was sent to the Portfolio Committee on Justice and Correctional Services, dated 3 October 2018, which Africa News 24-7 is in possession of, a payroll administrator at the SIU accuses the chief financial officer Andre Gernandt of making perverse decisions with regards to SIU payroll practices which resulted in payroll discrepancies. What is your comment to claims that the CFO abused his authority with the occupational detriment circumstances with protective information directed to him by Head of the Unit Adv Mothibi?

Answer:

Mr Gernandt denies making any perverse decisions with regards to payroll practices which resulted in payroll discrepancies. All decisions and actions taken by him in relation to the payroll and for that matter, any of his duties, have been, and are in line with relevant policies, procedures, regulations and legislation.

Mr Gernandt has certainly not abused his authority in relation to information that came to his knowledge or through information that was referred to him by the Head of the Unit, which was not made as protective information to the HoU. He did not make any decision that had or has lead to occupational detriment circumstances. Mr Gernandt did not make or implement any decision that could have lead to “occupational detriment circumstances.”

  1. The CFO is further accused of tax fraud in that his tax status in the SIU payroll is that of 25% taxpayer because he has classified himself as a non-standard employee when he is, in fact, a full-time employee. Can you comment on this?

Answer:

Mr Gernandt was employed at the SIU on a short-term contract as an independent contractor from 17 October 2016 up to 15 July 2018 before he was appointed on a permanent basis after a standard recruitment process and having been interviewed by a panel. He was loaded onto the payroll system by the payroll administrator with the relevant tax rates to be deducted, without any interference or instruction from him.

Mr Gernandt was not even aware that he was loaded with a fixed PAYE rate of 25% until June 2018. It is standard practice to load short-term contractors/independent contractors with a standard rate of 25% and it was presumed that the payroll administrator had the necessary knowledge in this regard, and this being the reason why the administrator loaded him as an employee with this rate (There is audit trail proof that payroll administrator personally loaded Mr Gernandt on the payroll system).

  1. Have these allegations against the CFO been brought under Adv Mothibi’s attention, if so, has any investigation been launched?

Answer:

Adv Mothibi became aware of this as a result of the questions posed by Portfolio committee, but there was no need to investigate any further as Mr Gernandt had not done anything wrong, or transgressed any policies in this regard.

  1. In another memorandum dated 5 October 2018 addressed to Parliament and Corruption Watch by Rev Bafana Khumalo of Sonke Gender Justice, the appointment of the CFO is questioned and branded irregular. It is alleged that Adv Mothibi abused his power to recruit the CFO, with whom he had a working relationship prior to both joining the SIU. Can you provide proof of Mr Gernandt’s application for the job of CFO?

Answer:

Proof can be provided that Mr Gernandt applied for the job of CFO.

  1. Were interviews conducted for this position and when?

Answer:

The position was advertised but no suitably skilled candidates could be sourced from the advertisement. Thereafter, the current CFO, Mr Gernandt was headhunted and appointed on a contract based on the established SIU practice to headhunt and appoint employees on contract if suitable candidates could not be sourced through normal advertisement practices. The CFO, Mr Gernandt was appointed on a contract based on the established SIU practice to headhunt and appoint employees on contract. The said practice, which was applied to previous Chief Financial Officers and other staff, allows headhunting for specialised skills such as Chartered Accountants. The practice entails receiving a CV of the recommended person and engage with the Head of SIU on being satisfied that the person would bring the required specialised skill, the person would be appointed on fixed term contract.

The CFO had led the SIU to a first-ever clean audit for the 2016/17 financial year as well as a subsequent clean audit for the 2017/18 financial year.

  1. Can you disclose the names of panellists who sat in these interviews?

Answer:

For the short term contract recruitment process, please see above answer in When Mr Gernandt applied for the permanent post of CFO, interviews were conducted and a panel interviewed all shortlisted candidates through the normal interview and scoring processes.

  1. Is there a record of recruitment processes including score-sheets of the panel and their recommendations?

Answer:

For the short term contract recruitment process, please see above answer in When Mr Gernandt applied for the permanent post of CFO, interviews were conducted and a panel interviewed all shortlisted candidates through the normal interview and scoring processes.

  1. Did Mr Gernandt report directly to Adv Mothibi whilst the two worked together at Medscheme?

Answer:

Mr Gernandt reported directly to the CEO of Afrocentric Health Ltd, the listed company that owns Medscheme.  Mr Gernandt had a dotted line responsibility to Adv Mothibi with regards to his contractual operational obligations on a day to day basis.

  1. Did Adv Mothibi recruit Mr Gernandt to Medscheme from the Road Accident Fund, his previous employer where he allegedly presided over a tender that was won by Medscheme – Adv Mothibi’s previous employer?

Answer:

Adv Mothibi did not recruit Mr Gernandt to Medscheme, as Adv Mothibi, in fact, joined Medscheme after Mr Gernandt was contracted to the holding company of Medscheme, Afrocentric Health Ltd.  Mr Gernandt certainly did not preside over any tender awarded to Medscheme as letting the RAF in March 2013, and the tender was published in July/August of 2013, and awarded in December 2013/January 2014.

Any allegation in this regard is made with blatant disregard for the facts,  malicious and made with the intention to misconstrue facts and to mislead any third party.

  1. If this is the case, does this not justify claims that the recruitment of Mr Gernandt was a reward for the favours he carried out for Medscheme while he still worked at RAF?

Answer:

See response in 9 above.

  1. In an article published in The Sunday Independent on 20 August 2017, Adv Mothibi claimed that the recruitment of the CFO was above board. Do you still stand by that statement?

Answer: 

Certainly. Mr Gernandt’s recruitment was done within the ambit of the policies and practices of the SIU.

  1. Newly-recruited SIU Chief Governance Officer Mr Sam Muofhe has also been accused of attempts to circumvent statutory SARS requirements. It is alleged he wanted to structure his salary in such a way that he did not pay tax. The Payroll administrator alleges that Muofhe instructed her to allocate 108 000 kilometres as the total kilometres that he would be travelling between 1 July 2018 and 28 February 2019. The payroll administrator says she refused to carry out such an instruction. Have these allegations been brought under your (Adv Mothibi’s) attention, if so what action is being taken?

Answer:

  • Any statement that alleges that Adv Muofhe “wanted to structure his salary in such a way that he did not pay tax” is rejected and denied.
  • In relation to the allegations made against AdvMuofhe, it is stated that he has never met with the payroll administrator.
  • Further, Salary structuring is allowed both in terms of DPSA and SARS Directives respectively.
  • When Adv Muofhe joined the SIU; Another(not the person making the allegations) payroll administrator (Person X) from the Total Rewards Branch met with him to structure his package.
  • Person X seemingly did not comprehend fully how to structure salaries nor did Adv Moufhesince this is not his area of expertise. He, therefore, linked Person X with his financial consultant; so that both could work together and structure his package lawfully.
  • The payroll administrator, Person X, worked together and structured the package accordingly and appropriately in terms of both DPSA and SARS Directives. At no point was there any attempt to influence the structuring of Adv Muofhe’s package inappropriately as proffered by the payroll administrator making the allegation.
  • Upon the completion of the process between Person X and Adv Muofhe’s consultant; Person X brought the structured package to Adv Muofhe to sign off which he did upon getting confirmation from both Person X and the consultant that the package complied with all the legal prescripts.
  1. It is further claimed that the SIU has been mandated to investigate the State Attorney’s Office for irregular activities. It is further alleged that the SIU is conflicted in this matter since it relies on the State Attorney’s Office for all SIU labour matters. Is the SIU conflicted in this matter as alleged?

Answer:

It is not clear what evidence has been proffered or established to make these serious allegations and in the absence of evidence to support this, the Unit vehemently denies this misleading statement as it is baseless and unfounded. We would, therefore, suggest that to objectively make a determination on this “suspicion,” that the Honourable Minister give consideration to engage the State Security Agency (SSA) so that the veracity of the allegation is tested objectively. The SSA has at all times been approached to assist SIU in accordance with SSA mandate to assist State Institution.

The Proclamation to investigate the State Attorney was issued by the Presidency through the Department of Justice. It is also a trite fact that the SIU briefs the State Attorney in order to execute on its mandate and functions. The SIU, therefore, followed all the correct protocols in obtaining the proclamation and is of the view that there is no conflict of interest.

  1. If there’s conflict of interest, can the SIU be in a possession to carry out this particular investigation with honesty and integrity?

Answer:

See the above answer in 13.

  1. Lastly, one of your EXCO members who has since been retrenched has referred her matter to the CCMA. Our sources tell us that the matter is still unresolved. With this in mind, Africa News 24-7 will be sending a request to the CCMA commissioner to cover the arbitration proceedings. Will the SIU object to this?

Answer:

We have no mandate to answer questions which should otherwise be directed at the CCMA

Regards

SIU Management

 

Here are the lies

  1. In its response, the SIU claims the position of chief financial officer(CFO) was advertised but no suitably skilled candidates could be sourced from the advertisement. Thereafter, the current CFO, Mr Gernandt was headhunted and appointed on a contract based on the established SIU practice to headhunt and appoint employees on contract if suitable candidates could not be sourced through normal advertisement practices.

FACT

It’s a blatant lie that no suitably skilled candidates could be sourced from the advertisement. Africa News 24-7 has proof that dozens of highly skilled candidates, including chartered accountants, applied for the job. Africa-News 24-7 has seen an email dated 31 August 2016 from an SIU executive to SIU head Andy Mothibi in which the executive is full of praise of three applicants. See the picture below:

  1. The SIU claims Mothibi did not recruit Gernandt to Medscheme, as Mothibi, in fact, joined Medscheme after Gernandt was contracted to the holding company of Medscheme, Afrocentric Health Ltd.

FACT

Mothibi started at Medscheme in October 2013. Gernandt joined the company in January 2014. Mothibi left the Medscheme end of April 2016 to join the SIU on 1 May 2016. According to Gernandt’s CV, he (Gernandt) left Medscheme at the end of May 2016.

 

  1. The SIU claims Gernandt was employed at the SIU on a short-term contract as an independent contractor from 17 October 2016 up to 15 July 2018 before he was appointed on a permanent basis after a standard recruitment process and having been interviewed by a panel.

FACT

Africa News 24-7 has seen a copy of Gernandt’s payslip while still “independent contractor” at the SIU in which an amount of R148.72 was deducted for Unemployment Insurance Fund(UIF). Africa News 24-7 has since been reliably informed that independent contractors do not pay UIF. And the claim that Gernandt is an independent contractor appears to be a total misrepresentation by the SIU. According to insiders, Gernandt has an employment contract which is one of personal service (that is, the employee is at the “beck and call” of the employer). Gernandt provides services mainly at the SIU premises and is subject to control or supervision of Mothibi. Sources have told Africa News 24-7 that Gernandt has been hiring employees, making strategic decisions for SIU, was entitled to leave benefits, and his performance assessment was conducted similarly to all employees within the SIU.

  1. The SIU claims Gernandt “certainly did not preside over any tender awarded to Medscheme. Any allegation in this regard is made with blatant disregard for the facts, malicious and made with the intention to misconstrue facts and to mislead any third party”.

FACT

In his own CV submitted to the SIU, Gernandt says: “I have lead a bid proposal and have successfully won a RAF outsource tender for Medschme (Pty) Ltd to process claims lodged against the RAF in 2013. I had to put up a new business unit, including the full development of a paperless claims administration system, recruiting more than 50 resources, setting up a business plan and operational policies and procedures, within a few months. The project is ongoing currently and I have headed the unit up until April 2016.”

Click here to see part of Gernandt’s CV

 

Africa News 24-7 attempts to get a comment from the Parliamentary Portfolio Committee on Justice and Correctional Services drew a blank. However, a source within the committee said the committee had received the two memorandums and that there were attempts to shield Mothibi.