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Investigation into allegations of irregularities

within the Witness Protection Unit
TERMS OF REFERENCE
The Integrity Management Unit (IMU) of the National Prosecuting Authority (NPA) initiated an
investigation of the Witness Protection Program (WPP) in late 2005 in respect of the
misappropriation of funds designated for the protection of witnesses.

The Deputy National Director of Public Prosecutions (DNDPP), Dr Silas Ramaite,
subsequently referred this matter to the Special Investigating Unit (SIU) in November 2006,
requesting the SIU to confirm or otherwise certain of the findings outlined in the IMU report
and to investigate those allegations omitted from the initial report.

The Office for Witness Protection (the Office) was established in terms of section 2(1) of the
Witness Protection Act, 112 of 1998, and all branch offices of the Office are established in
terms of section 2(2)(a) of the Witness Protection Act (the Office and all its branch offices
shall collectively be called the “Offices”).

Although there are branch offices in various provinces, the Office for Witness Protection and
all its branch offices fall within the national sphere of government.

The Special Investigating Unit's terms of reference for this investigation were set out in
Proclamation R23 of 2007 (and its related schedule, attached as Annexure WPP1),
published in Government Gazette No. 30245 on 31 August 2007. This proclamation was
motivated by the request received from the DNDPP.

Specific allegations referred to in the proclamation

The following allegations were outlined in the proclamation and as such constitute our terms
of reference:

 Granting of witness protection, to persons who do not or did not qualify for protection
in terms of the Witness Protection Act
 Payment or reimbursement of allowances and/or other financial benefits or expenses
to witnesses and/or persons in contravention of, in excess of and/or without
compliance to the Witness Protection Act and/or policies, procedures, prescripts,
directives, guidelines or standing instructions of the Offices
 Use of WPU accommodation and/or use of places of safety by persons who do not or
did not qualify for such accommodation
 Payment(s) in respect of WPU accommodation and/or use of places of safety persons
in contravention of, in excess of and/or without compliance to the Witness Protection
Act and/or policies, procedures, prescripts, directives, guidelines or standing
instructions of the Offices

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 Procurement of goods, services and/or accommodation by the WPU contrary to
relevant prescripts and/or applicable supply chain management legislation
 The mismanagement of money, assets and/or resources allocated to the WPU,
including the conduct of officials of the WPU which has resulted, or may result, in a
loss of, damage to and/or a lack of control over such resources
 The failure of relevant officials of the WPU to establish, maintain and/or comply with a
fair system of recruitment and/or related labour practices in the WPU
 The failure of WPU officials to comply with and/or adhere to provisions of the Public
Finance Management Act, 1999 (Act No. 1 of 1999) and Regulations and instructions
issued there under by the Minister of Finance or National Treasury

Key focus areas for the investigation

In light of the specific allegations received, and coupled with the above terms of reference,
the Special Investigating Unit identified the following key focus areas for the investigation:

 Unlawful use/abuse of certain safe houses and properties leased by the WPU
 Irregular appointment of SAPS reservists to the WPU, and the payment of allowances
and bonuses to such reservists
 Payment of exorbitant allowances to certain witnesses on the Witness Protection
Program and the favouring of witnesses from Cape Town
 The procurement policy implemented by the WPU being contrary to supply chain
management prescripts and applicable legislation
 The irregular procurement of goods and services from Mr First Aid and PASCO Risk
Management
 Irregular payments/advances made to the National Co-ordinator of the WPU,
Mr Ronnie Borcherds (Mr Borcherds).

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ACKNOWLEDGEMENTS

The SIU wishes to thank the Witness Protection Unit for their assistance and co-operation
during the course of this investigation.

We also appreciated the assistance of the Auditor General and the National Prosecuting
Authority during our investigation.

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EXECUTIVE SUMMARY
The WPU has a mandate to provide protection and accommodation to state witnesses (and
their immediate families) who are under threat due to their co-operation in criminal
investigations.

The Integrity Management Unit (IMU) of the National Prosecuting Authority (NPA) initiated an
investigation of the Witness Protection Unit (WPU) in late 2005 following allegations that the
Head of the WPU, Mr Dawood Adam (Mr Adam), and the National Co-ordinator, Mr Ronnie
Borcherds (Mr Borcherds) had misappropriated funds designated for the protection of
witnesses and the matter was referred to the Special Investigating Unit in November 2006
and the SIU obtained a Presidential mandate to investigate certain of these allegations under
Proclamation R23 of 2007.

This is our final report to present our recommendations in respect of any irregularity,
misconduct or acts of criminality identified during the investigation, as well as any identified
irregularities or anomalies that may warrant further review. It also incorporates our internal
control and process recommendations to deal with systemic weaknesses identified during
the course of the investigation. The period covered by the investigation is 1 January 2001 to
31 August 2007. The report is organised according to the phases of the investigation:

 Phase 1: Allegations in respect of safe houses and reservists
 Phase 2: Allegations into irregularities relating to procurement and payments to
witnesses
 Phase 3: Allegations into irregular payments made to Mr Borcherds.

Initially, we assessed the veracity of the allegations in the IMU report to establish the need
for further investigation. Once this had been done, we obtained Proclamation R23 of 2007 to
enable us to conduct the investigation using the full extent of the powers envisaged by the
Special Investigation and Tribunals Act, 74 of 1996.

We conducted an investigation structured in terms of key focus areas, involving:

 Conducting interviews with relevant WPU officials and external role players some in
terms of 5(2)(b) and (c) hearings, facilitated where necessary by an independent
chairperson
 Obtaining affidavits and supporting documentation from individuals and institutions
 Reviewing relevant legislation and the WPU's financial and procurement systems,
including conducting system reviews of processes and practices
 Reviewing financial records from WPU regional offices and performing financial
profiles of relevant individuals.

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The Special Investigating Unit's investigation into allegations of misappropriation of funds at the Witness Protection Unit
(1 January 2001–31 August 2007)
Investigation Allegations / issues SIU Conclusions SIU Recommendations
under investigation
PHASE 1: SAFE HOUSES
Specific allegations Messrs Adam and Mr Adam allowed his sons to use the WPU safe house  Disciplinary action should be instituted
of irregular use of Borcherds made use of in Sea Point unlawfully. against both Mr Adam and Mr Borcherds for
WPU safe houses properties leased by the 801 Nautica was used for private purposes by misconduct pertaining to the use of
WPU for private Mr Borcherds and other WPU members, with the operational houses
purposes. knowledge and approval of Mr Borcherds.  The WPU should recover from Mr Adam the
The private and unauthorised use of WPU assets three-month rental of R58 080
created potential prejudice to the WPU.  Criminal action should be considered
against Mr Adam for his unlawful
misrepresentation regarding the use of 407
Costa Brava by his sons.
Fraud and systemic We identified a number of Accommodation costs constituted the largest The WPU should:
risks identified fraud risks as well as proportion of WPU expenditure 2004–2007.  implement usage records for all safe and
during our control and systemic The combination of luxury rentals, private usage, the operational houses
investigation issues relating to the lack of adequate records and the absence of a  evaluate usage of houses regularly
of safe houses procurement of regulated procurement process create an environment  draft a policy on personal use of
accommodation by the susceptible to fraud and error. departmental assets
WPU special operations
The rental expenditure itself may be irregular since the  maintain a comprehensive register of
division.
procurement was not performed in accordance with the interests
relevant supply chain management prescript.
PHASE 1: RESERVISTS
Specific allegations The allegations of The appointment of the “reservists” was We recommend that:
relating to the irregularity relate to the unconventional and their remuneration somewhat  legal certainty is obtained regarding the
appointment and appointment and payment “creative”, but Mr Adam and Mr Borcherds' actions did appointment of security officers
payment of of three “reservists” not amount to misconduct and there is no evidence to (protectors).

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reservists  Mr Hector suggest that any of the reservists were related to any  the vetting process of security officers (also
 Mr Le Fleur senior members of the WPU. referred to as “reservists” and protectors) is
 Mr Campher. The monthly payment as per the DPSA daily rate did significantly improved with a view to
not appear to be irregular, but we could not eliminate managing risk for the WPU.
the possibility that the payment of bonuses was
irregular.
The WPU's omission to deduct taxation from the bonus
payments is a contravention of the Income Tax Act (No
58) of 1962 (as amended).
PHASE 2: WITNESS EXPENDITURE
Excessive Excessive allowances The lack of a WPU policy for witness payments,  The WPU should institute disciplinary action
allowances paid to were paid by Messrs inadequate legislation and the guidelines currently in against Mr Adam, as his approval of
the Janodien family Adam and Borcherds to a force have resulted in witness payments being effected witness payments in excess of prescribed
witness, Mr A Janodien, on a discretionary basis and primarily by Messrs Adam tariffs is unlawful is at least unreasonable
and his family. and Borcherds. Although the witness allowances and constitutes misconduct. In addition, Mr
Mr Janodien had a close prescribed by the regulations may be outdated, Borcherds' negligence and intentional
relationship with regulation 22 continues to be the authority. evasion of the WPU’s internal controls
Mr Adam, and to Mr The argument that section 4 of the WPA provided Mr constitutes misconduct.
Borcherds, and as a Adam with discretion to approve any transaction  The WPU must draft and enact regulations
result, the family were connected with providing support services to witnesses specific to the WPP in terms of section 23
unduly favoured. and their extended families is flawed. It is not possible of the WPA and the then draft guidelines in
to have discretion on an issue that is otherwise accordance with new regulations.
regulated.  Witnesses must provide documentary proof
It was negligent and possibly irregular for to ensure and/or verify that WPU funds are
Mr Borcherds to have issued instructions to regional used in terms of the initial motivation or
heads to make payments to third parties in the request.
absence of supporting documentation, since there is  A review of the WPU financial systems for
no written delegation authorising him to do so beyond witness payments must be carried out, to
his letter of appointment. introduce a central electronic record of all
payment requests and actual payments by
We also believe Mr Borcherds intentionally overrode
the WPU.
the internal controls by instructing regional heads to
transfer WPU funds without supporting documentation.

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Specific allegations Mr Janodien and his The Janodien family received payments of  The WPU should institute disciplinary action
of irregular family were unduly R 4 367 900, all considered and approved by Mr Adam against both Mr Adam and Mr Borcherds for
expenditure relating favoured by Messrs Adam or Mr Borcherds, between May 2002 and August 2007, their unlawful approval of the payments to
to witness costs and Borcherds, who which were in excess of payments prescribed by the Janodien family in excess of the
authorised irregular and regulation 22. prescribed tariffs.
excessive payments to Not only were the excess payments unauthorised by  In the alternative to the count of
the witness and his family. the DG of Justice but we believe they also resulted in misconduct, a further count of misconduct,
fruitless and wasteful expenditure by the WPU, since based on the unreasonable nature of the
many of the items were neither necessities nor bought payments to the Janodien family, should be
with care and attention to the cost to the WPU. added, to deal with a situation where the
Mr Adam and Mr Borcherds' authorisation of these presiding officer could be convinced that
payments amounts to negligent acts that resulted in either Mr Adam or Mr Borcherds, or both,
losses to the State. However, we did confirm that no did have a wide discretion to authorise
family relationship existed between the Janodien family payments, or at least believed that they had
and Mr Adam and/or Mr Borcherds and that as the such discretion.
practice for processing witness payments was
consistently applied to all witness payments, the
Janodien family had not been unduly favoured .
Loans/advances A key focus area related The Kwazulu-Natal regional office issued loans of  The WPU should institutedisciplinary action
made by the WPU to to the allegations in R187 628 to the Janodien family between 2002 and against both Mr Adam and Mr Borcherds for
witnesses respect of payments to 2007. These loans were approved by Messrs Adam approval of loans to the Janodien family, as
witnesses and/or persons and Borcherds although issuing loans to witnesses is they were unlawful and constitute
in contravention of, in not authorised in terms of the WPA or subordinate misconduct or were at the least
excess of and/or without legislation (regulation 22), and as such requires the unreasonable and as such constitute
compliance to the WPA approval of the DG of Justice. However, the issuing of misconduct warranting disciplinary action.
and/or its policies, loans does not appear to be peculiar to the Janodien  The WPU must draft loan agreements for
procedures, prescripts, family. all current witness loans and maintain a
directives, guidelines. It is also evident that these loans could not have been central register of loans at head office.
We identified specific granted in terms of section 4 of the WPA. Although this  Loan certificates must be drawn up at the
advances/loans and, section provides Mr Adam with certain powers to end of each financial year, and signed by
given the allegation of provide support services to witnesses on the WPP, it is the witnesses as verification of the
excessive allowances not possible to have discretion on an issue that is outstanding balance and terms of the loan.
paid to the Janodien otherwise regulated, as is the case with witness  No further loans must be issued to
family, we analysed loans payments regulated by regulation 22. witnesses without the necessary authority,

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made to the Janodien However, even if Mr Adam understood his discretion to ie the approval of the DG of Justice.
family between May 2002 include issuing loans to witnesses, we believe that the
and August 2007. manner in which he exercised this discretion was
unreasonable considering the absence of loan
agreements, interest charges, repayment periods
and/or security clauses, as well as the motivation for
certain of the loans.
It is also evident that the lack of controls, policy and
documentation with respect to witness loans resulted
in loss and potential loss to the WPU.
Mr Borcherds has no delegation in respect of
payments to witnesses and/or issuing of loans, and
thus he could not have authorised these payments
even if the discretion allowed for in section 4 was
applicable.
We believe that Mr Adam and Mr Borcherds were at
best negligent for failing to obtain proof of the security
from Janodien family before agreeing to defer the
repayment of the loans totalling R69 000 against the
supposed rewards due to the family from the SAPS.
PHASE 2: PROCUREMENT INVESTIGATION
Review of the WPU The initial focus was to The WPU’s contention that the National Treasury  The WPU should review its current
procurement policy identify and understand granted them a “special dispensation” in respect of expenditure and procurement policy and
relevant procurement goods procured for operational purposes, up to and effect the relevant amendments to ensure
prescripts and supply including R500 000 appears to be a misrepresentation compliance with applicable legislation and
chain management of the increase in the emergency delegation granted to prescripts.
legislation, as well as the WPU. At no stage was a “blanket authority” to  Disciplinary action should be instituted
establish the context and dispense with normal prescribed procurement policies against Mr Adam and Mr Theron for the
applicability of any related and applicable legislation granted to the WPU by the unlawful misrepresentation of the
exemptions allegedly State Tender Board. emergency delegation granted to them by
received by the WPU The WPU procurement policy does not reflect the the National Treasury.
legal obligations required in terms of section 217 of the  Disciplinary action should also be instituted
Constitution of the Republic of South Africa, Act 108 of against Mr Adam for failure to implement

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1996, namely fairness, equity, transparency, policies consistent with supply chain
competitiveness and cost effectiveness, nor does it management prescripts, thereby resulting in
conform to the similar requirements of the PMFA. irregular expenditure being incurred by the
regional WPU offices and the WPU being
exposed to potential prejudice.
Allegation in respect Mr Theron facilitated the There was no evidence to confirm that Mr Theron’s  Disciplinary action should be instituted
of procurement procurement of medical father-in-law is linked to Mr First Aid. against both Mr Adam and Mr Theron for
transactions with the kits for the WPU, totalling The procurement of the medical kits from Mr First Aid manipulating the National Treasury
supplier Mr First Aid R200 000, from a was irregular and did not comply with the prescribed emergency delegation to circumvent supply
company allegedly owned supply chain management prescripts and applicable chain management prescripts and
by his father-in-law. legislation. applicable legislation.
Mr First Aid was The increase in the emergency delegation received
irregularly appointed and from the National Treasury was manipulated to
Mr Theron purposely circumvent prescribed supply chain management
circumvented the normal prescripts and applicable legislation, as there is no
three-quotation system evidence that the medical kits were procured due to an
emergency.
The competitive cost analysis indicated that the prices
charged by Mr First Aid were substantially higher than
market value, resulting in financial loss to the WPU.
Allegations in Mr Adam and Mr There was no evidence to confirm that either  Disciplinary action should be instituted
respect of Borcherds are Mr Borcherds or Mr Adam have a business interest in against Mr Adam and Mr Theron for the
procurement shareholders in PASCO PASCO. manipulation of the National Treasury
transactions with the Risk Management 7 video cameras were purchased for the WPU through emergency delegation to circumvent supply
supplier PASCO Consultants. PASCO for R43 084.02, not R500 000 and the chain management prescripts and
The WPU purchased payment was part of the existing service agreement applicable legislation
cameras through PASCO between PASCO and the WPU.  A legal opinion should be sought regarding
for R500 000 and normal No formal tender process was followed for the service the possible recovery of the handling fees
procurement policies and agreement, meaning that the contract itself may be charged by PASCO.
procedures were irregular.
circumvented.
PASCO charged a handling fee for goods procured for
This investigation formed the WPU although the service agreement makes no
part of the broader provision for a handling fee and thus the handling fee

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investigation into possible may be irregular.
procurement irregularities There was no evidence that any goods were procured
at the WPU. through PASCO because of an emergency, and many
payments to PASCO were effected through regional
offices to justify the expenditure as "operational"
thereby allowing for the dispensing of supply chain
management prescripts in terms of WPU policies.
PHASE 3: IRREGULAR PAYMENTS TO MR BORCHERDS AND FINANCIAL ANALYSIS OF MESSRS ADAM AND BORCHERDS
Payments made to Two irregular payments Mr Borcherds instructed regional staff members to  Disciplinary action should be taken against
Mr Borcherds for R45 000 each were advance him R13 500, recorded as subsistence Mr Borcherds for misconduct, for
issued by the WPU to advances in the advance registers, during 2003 and authorising irregular advances totalling R13
Mr Borcherds from the 2004 and provided no reason other than that he was 500 payable to his own account.
Gauteng regional office. entitled to them as head of operations of the WPU.  All regions shouldconduct an audit of their
Other payments to However, we are unable to establish with certainty that cashbooks to quantify all cash payments to
Mr Borcherds were the R13 500 constitutes all advances made to Mr Mr Borcherds.
identified thereby Borcherds by the WPU.  A complete audit of Mr Borcherds'
extending the original Mr Borcherds failed to repay R9 500 for almost four subsistence and travel claims should be
scope of the investigation. years citing insufficient funds (although he did have undertaken to confirm possible fraud
sufficient funds), thus resulting in financial loss to the perpetrated by Mr Borcherds.
WPU, and thus constituting gross misconduct.  The WPU should review its internal control
Mr Borcherds repaid the advances between March and systems relating to S&T claims.
July 2007 following the submission of a subsistence  Disciplinary action should be instituted
and travel claim (S&T) for the period of 20 December against Mr Borcherds for misconduct, for
2006 to 4 January 2007. This period included at least authorising payments of R1 750 to
three public holidays and it was supposedly for a Fahieka Sieed.
covert operation in the Eastern Cape (no such  Criminal action should be instituted against
operation recorded), making it possible that the S&T Mr Borcherds for unlawfully and
claims of R20 122.62 were fictitious claims. intentionally misrepresenting to the WPU
that Fahieka Sieed was entitled to the
Mr Borcherds requested payments of R1 750 to
Fahieka Sieed, without providing supporting payments as a witness on the WPP,
causing actual prejudice to the WPU of R1
documentation and such payments are not authorised
by the WPA and subordinate legislation, therefore 750.
making this payment irregular.  Further information about the unknown
cash deposits in Mr Borcherds' bank

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accounts should be obtained.
Mr Borcherds' We compiled a financial We did not identify any assets inconsistent with Mr  A more extensive investigation of Mr
Financial Profile profile of Mr Borcherds to Borcherds' salary-related income and possibly Borcherds' affairs should be conducted
identify any payments indicative of irregular sources of income. both to quantify all advances/payments by
and/or assets indicative of However, the analysis of his bank accounts revealed Mr Borcherds from the WPU and to identify
possibly corrupt, cash deposits and other non-salary related deposits possibly corrupt/irregular payments.
fraudulent or irregular totalling R807 007.14 and a further R300 000 that are
activities. potentially suspicious, given that they are large
amounts and round numbers.
We were unable to quantify the advances paid to
Mr Borcherds by the WPU regional offices and thus
these other deposits (especially the cash deposits)
may relate to advances not identified during the
investigation.
Mr Adam's financial We compiled a financial Non-salary related deposits totalling R799 794 were  No further work is warranted in respect of
profile profile of Mr Adam to reflected in Mr Adam’s bank account during the period Mr Adam’s financial affairs.
evaluate the possibility of 25 December 2000 to 24 September 2007. A number
irregular payments, given of these ‘other deposits’ have descriptions which
the general allegations suggest that they relate to investments, travel and
concerning irregular payments from BASJPA.
procurement by the WPU Our asset reconciliation in comparison with the surplus
and the key position funds available to Mr Adam suggests that we did not
Mr Adam played in identify all assets owned by Mr Adam.
authorising procurement
No specific allegations regarding irregular payments
for the WPU.
were made in respect of Mr Adam and during our
investigation we identified no evidence to suggest that
Mr Adam benefited from corrupt/irregular payments.

Our findings, conclusions and recommendations relating to each of the phases and focus areas are summarised in the table above.

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TABLE OF CONTENTS
Page

1 INTRODUCTION ................................................................................................ 1

2 METHOD OF APPROACH ................................................................................ 3
2.1.1 Pre-investigation actions 3
2.1.2 The investigation methodology 3

3 PHASE 1: SAFE HOUSES ................................................................................ 5
3.1 Investigation of specific allegations in respect of irregular
use of safe houses rented by the WPU 5
3.1.1 Introduction 5
3.1.2 Methodology and procedure 5
3.1.3 Investigation findings 6
3.1.4 Conclusions 17
3.1.5 Recommendations 19
3.2 Fraud and systemic risks identified during our investigation of
safe houses 19
3.2.1 Introduction 19
3.2.2 Methodology and procedure 19
3.2.3 Investigation findings 20
3.2.4 Conclusions 24
3.2.5 Recommendations 24

4 PHASE 1: RESERVISTS ................................................................................. 25
4.1 Investigation of specific allegations relating to appointment
and payment of reservists 25
4.1.1 Methodology and procedure 26
4.1.2 Investigation findings 27
4.1.3 Conclusions 30
4.1.4 Recommendations 31

5 PHASE 2: WITNESS EXPENDITURE ............................................................. 31
5.1 Investigation into exorbitant allowances paid to the Janodien
family 31
5.1.1 Methodology and procedure 31
5.1.2 Investigation findings 33
5.2 Investigation into specific allegations relating to irregular
expenditure incurred in respect of witness costs 47
5.2.1 Methodology and procedure 47
5.2.2 Investigation findings 49
5.2.3 Conclusions relating to witness payments in general 63
5.2.4 Recommendations regarding witness payments in general 66

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5.2.5 Conclusions with respect to payments to the Janodien family 67
5.2.6 Recommendations with respect to payments to the Janodien family 71
5.3 Loans/advances made by the WPU to witnesses 72
5.3.1 Methodology and procedure 72
5.3.2 Investigation findings 73
5.3.3 Conclusions 77
5.3.4 Recommendations 78

6 PHASE 2: PROCUREMENT INVESTIGATION ............................................... 80
6.1 Review of the WPU procurement policy 80
6.1.1 Methodology and procedure 80
6.1.2 Investigation findings 82
6.1.3 Conclusions 90
6.1.4 Recommendations 93
6.2 Allegation in respect of procurement transactions with the
supplier Mr First Aid 93
6.2.1 Methodology and procedure 93
6.2.2 Investigation findings 94
6.2.3 Conclusions 98
6.2.4 Recommendation 99
6.3 Allegations in respect of procurement transactions with the
supplier PASCO 99
6.3.1 Methodology and procedure 100
6.3.2 Investigation findings 100
6.3.3 Conclusions 108
6.3.4 Recommendations 109

7 PHASE 3: IRREGULAR PAYMENTS TO MR BORCHERDS AND FINANCIAL
ANALYSIS OF MESSRS ADAM AND BORCHERDS .................................. 110
7.1 Payments made to Mr Borcherds 110
7.1.1 Methodology and procedure 110
7.1.2 Investigation findings 111
7.1.3 Conclusions 121
7.1.4 Recommendations 123
7.2 Mr Borcherds' Financial Profile 124
7.2.1 Methodology and procedure 124
7.2.2 Investigation findings 125
7.2.3 Conclusions 129
7.2.4 Recommendation 130
7.3 Mr Adam's financial profile 130
7.3.1 Methodology and procedure 130
7.3.2 Investigation findings 131
7.3.3 Conclusions 133

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7.3.4 Recommendation 133

8 CONCLUSION ............................................................................................... 134
8.1 Phase 1: Safe houses 135
8.2 Phase 1: Reservists 137
8.3 Phase 2: Witness Expenditure 139
8.3.1 Conclusions relating to witness payments 139
8.3.2 Conclusions with respect to payments made to the Janodien
family 142
8.3.3 Loans/advances made by the WPU to witnesses 143
8.4 Phase 2: Procurement Investigation 145
8.5 Phase 3: Irregular payments to Mr Borcherds and financial
analysis of Messrs Adam and Borcherds 150
8.5.1 Mr Borcherds' Financial Profile 153
8.5.2 Mr Adam's financial profile 154

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LIST OF ILLUSTRATIONS
Page

List of Tables
Table 1: WPU witness expenditure 2005–7 ........................................................................45

Table 2: Payments to Janodien family 2002–7 ...................................................................49

Table 3: Clothing for Janodien family – Gauteng ................................................................53

Table 4: Clothing for Janodien family – Kwazulu Natal .......................................................53

Table 5: Requests for additional clothing made by Janodien family ....................................54

Table 6: "Other" payments made to Janodien family 2002–2007 .......................................61

Table 7: Schedule of outstanding loans (deferred loans) issued to the Janodien family
by the WPU office in KZN .....................................................................................76

Table 8: Price comparison against Mr First Aid medical kits ...............................................96

Table 9: Analysis of payments to PASCO by the WPU June 2006–July 2007 ..................105

Table 10: Payments to Mr Borcherds from KZN WPU regional office .................................112

Table 11: Advances to Mr Borcherds from Western Cape regional office ...........................114

Table 12: Advances to Mr Borcherds from Gauteng WPU regional office ...........................115

Table 13: Schedule of S&T claims submitted by Mr Borcherds in July 2007 ......................117

Table 14: Schedule of diesel slips in respect of bakkie used by Mr Borcherds ...................119

Table 15: Schedule of cash deposits identified in Mr Borcherds' bank accounts ................126

Table 16: Schedule of non-salary deposits identified in Mr Borcherds' bank accounts .......128

Table 17: Schedule of additional movements currently under investigation ........................129

Table 18: Schedule of deposits identified in Mr Adam’s bank account(s) ...........................132

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List of Figures

Page

Figure 1: Schedule of rental payments for 407 Costa Brava ................................................. 9

Figure 2: Schedule of rental payments for Nautica 801 .......................................................14

Figure 3: Comparison of average rentals for safe houses and operational houses ..............21

Figure 4: Analysis of expenditure at regional offices for 2004/2005 .....................................23

Figure 5: Value of payments compared to witness numbers per region ...............................46

Figure 6: Schedule of medical costs paid for the Janodien family – Kwazulu Natal .............60

Figure 7: Schedule of loans issued to the Janodien family by the WPU office in KZN .........74

Figure 8: Comparative cost analysis of medical kits ............................................................96

Figure 9: Analysis of payments made by the regional offices 2005/2006 ...........................107

LIST OF ABBREVIATIONS

SIU Special Investigating Unit

WPU Witness Protection Unit

WPP Witness Protection Program

WPA Witness Protection Act

NPA National Prosecuting Authority

IMU Integrity Management Unit

DNDPP Deputy National Director of Public Prosecutions

SAPS South African Police Service

DG Director General

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LIST OF ROLE PLAYERS

NAME POSITION

Mr Dawood Adam Head of the WPU
Mr Ronnie Borcherds National Co-ordinator of the WPU
Dr Silas Ramaite Deputy National Director of Public Prosecutions
Mr Etienne Theron Chief Financial Officer of WPU
Ms Mvelase Head of IMU at the NPA
Mr Selman Owner of 407 Costa Brava
Ms Katrina Brown Cleaning domestic for 407 Costa Brava
Abu-Bakir and Bilal Adam Mr Adam’s sons
Mr Gerhard Van Rooyen Head of WPU Special Operations Team
Mr Henk Loots Deputy Head of WPU Special Operations Team
Ms Lynette Rodwell Regional Head of the WPU for the Western Cape
Mr Faizel Steyn Informant that Mr Adam and his family were in danger from PAGAD
Mr Rhoode Head of Security and Risk Management Service Centre at NPA
Mr Trevor Fredericks Regional Head of Security and Risk Management in the Western Cape
Ms Marion Sparg CEO of the NPA
Dr Y Minnaar-Smit Owner of Nautica 801
Ms Maria Gertruida Barnard Caretaker of
Ms Desserrie Fredericks Regular cleaner of 801 Nautica
Mr John Welch Acting Head of the WPU
Mr Lynch Jordaan Owner of a WPU safe house – 46 Tulips, Moreleta Park, Pretoria
Mr Fouche Owner/agent for a number of properties rented by WPU
Mr BW Hector “Reservist” working for the WPU
Mr Le Fleur “Reservist” working for the WPU
Mr Campher “Reservist” working for the WPU
Ms Ludik Regional Head of WPU Gauteng
Mr Kora Former regional head of WPU for Eastern Cape
Mr Lennit Max SAPS Commissioner
Mr Nsengani HR manager at WPU
Mr A Janodien and family Witnesses on the WPP
Mr Mokotedi IMU officer at NPA
Ms Venter Acting regional head of the Kwazulu Natal WPU office
Mr Cornelius Venter Mr Theron's father-in-law (Mr First Aid)

xiii
Ms Catherine Goldin Director of Mr First Aid (Pty) Ltd
Mr Jan Breytenbach National Treasury – expert on government procurement processes
Mr David Groenewald National Treasury – expert on government procurement processes
Mr Matthew Lee Nicholls Managing Director of PASCO
Mr L Jordaan PASCO employees
Mr W Morris PASCO employees
Fahieka Sieed Recipient of R1 000, on 8 February 2003, from Mr Borcherds
Inspector Dean Patton WPU

xiv
1 INTRODUCTION

1.1 Subject of report
The Integrity Management Unit (IMU) of the National Prosecuting Authority (NPA)
initiated an investigation of the Witness Protection Unit (WPU) in late 2005 following
allegations that the Head of the WPU, Mr Dawood Adam (Mr Adam), and the
National Co-ordinator, Mr Ronnie Borcherds (Mr Borcherds) had misappropriated
funds designated for the protection of witnesses.

The Deputy National Director of Public Prosecutions (DNDPP), Dr Silas Ramaite
subsequently referred this matter to the Special Investigating Unit (SIU) in
November 2006, requesting the SIU to confirm or negate the findings outlined in the
IMPU report and to investigate those allegations omitted from this initial report.

This report constitutes our final report in respect of this matter, providing a final
summary of the evidence collected during the SIU investigation and setting out our
conclusions and recommendations regarding acts of criminality and/or negligence
as well as systemic issues.

1.2 Background to report
The WPU is a business unit currently housed within the NPA, with a mandate to
provide protection and accommodation to state witnesses (and their immediate
families) who are under threat due to their co-operation in criminal investigations.

The IMU received an anonymous facsimile on 1 August 2005, alleging 15 different
instances where Messrs Adam and/or Borcherds had misappropriated witness
funding. Following the initial IMU investigation and subsequent NPA request, the
SIU obtained a Presidential mandate to investigate certain of these allegations1.

1.3 Objectives of report
The objective of this report is to present to the National Director of Public
Prosecutions, Advocate M Mpshe, an outline of how the investigation was
conducted, what evidence was obtained and the possible criminal, civil or systemic
action(s) that may be available and/or warranted.

1
R23 of 2007 published in Government Gazette No. 30245 on 31 August 2007, attached as Annexure WPP1

1
The specific objectives of this report are to provide:

 a summary of the evidence
 recommendations in respect of any irregularity, misconduct or acts of criminality
identified by us during the investigation
 identified irregularities or anomalies that may warrant further review
 systemic weaknesses identified during the course of the investigation, together
with internal control and process recommendations.

1.4 Scope and limitations
The scope of an SIU investigation is determined by the terms of reference at the
beginning of the report.

The Schedule to Proclamation R23 of 2007 does not include all fifteen allegations
originally provided to the IMU, as it omits allegations which were found to be false or
were sufficiently dealt with during the initial IMU investigation.

The scope of the SIU investigation was limited to the key focus areas outlined below
the terms of reference.

The period covered by the investigation was 1 January 2001 to 31 August 2007.

1.5 Plan of development
The key focus areas were dealt with in terms of the following investigation phases:

 Phase 1: Allegations in respect of safe houses and reservists (focus area 1 and
2)
 Phase 2: Allegations in respect of irregularities relating to procurement and
payment(s) to witnesses
 Phase 3: Allegations in respect of irregular payment(s) made to Mr Borcherds

The report deals with each phase of the investigation in turn, with each of the
separate investigations being dealt with individually before overall conclusions are
drawn.

2
2 METHOD OF APPROACH

The Special Investigating Unit conducted the investigation using a multi-disciplinary
team consisting of investigators, lawyers and forensic accountants.

The key focus areas were dealt with in the following investigation phases:

 Phase 1: Allegations in respect of safe houses and reservists (focus area 1 and
2)
 Phase 2: Allegations in respect of irregularities relating to procurement and
payment(s) to witnesses
 Phase 3: Allegations in respect of irregular payment(s) made to Mr Borcherds

Our methodology for the investigation was as follows:

2.1.1 Pre-investigation actions
The Special Investigating Unit initially assessed the veracity of the allegations set
out in the IMU report, with a view to assessing the need for further investigation.
Once this had been completed and the need for further investigation established the
Special Investigating Unit obtained Proclamation R23 of 2007 to enable it to conduct
the investigation using the full extent of the powers envisaged by the Special
Investigating Unit and Special Tribunals Act, 74 of 1996.

2.1.2 The investigation methodology
The Special Investigating Unit conducted an investigation structured in terms of key
focus areas and the investigative methods employed by us were as follows:

 Conducting interviews with WPU officials from head office and various regional
offices, as well as external role players identified
 Obtaining affidavits, and supporting documentation from the above individuals
where necessary
 Subpoenaing documentation from various institutions (such as banks and
suppliers as well as from the WPU), and from the WPU officials concerned,
namely Mr Adam, Mr Borcherds and Mr Theron (Chief Financial Officer of
WPU) in terms of section 5(2)(b) of the SIU Act
 Conducting interviews in terms of 5(2)(b) and (c) of the SIU Act, facilitated
where necessary by an independent chairperson
 Reviewing the relevant legislation applicable to the WPU in the context of the
allegations

3
 Reviewing the WPU's financial and procurement systems, including conducting
system reviews (ie walkthroughs) of processes and practices
 Reviewing financial records obtained from WPU regional offices
 Compiling spreadsheets and databases for trend analysis and analytical
purposes
 Performing financial profiling on individuals implicated in the investigation

Further detail relating to the methodology followed for each allegation or focus area
is outlined within the report.

4
3 PHASE 1: SAFE HOUSES

Our findings as set out below are presented in the chronology of the following
phases and focus areas:

 Phase 1: Allegations in respect of safe houses and reservists (focus area 1 and
2)
 Phase 2: Allegations in respect of irregularities relating to procurement and
payment(s) to witnesses
 Phase 3: Allegations in respect of irregular payment(s) made to Mr Borcherds

3.1 Investigation of specific allegations in respect of irregular use of
safe houses rented by the WPU

3.1.1 Introduction
It was alleged that Messrs Adam and Borcherds had made use of properties leased
by the WPU for private purposes.

Mr Adam

In the case of Mr Adam, it was alleged that his two sons had unlawfully occupied a
state house located at 407 Costa Brava, 299 Beach Road, Sea Point, Cape Town.
This state house was allegedly leased by the WPU as a safe house for witnesses on
the Witness Protection Program (WPP).

Mr Borcherds

Mr Borcherds was alleged to have used a penthouse leased by the WPU for private
purposes. The IMU verified that the penthouse in question was located at 85 Arum
Road, Table View (Nautica 801), Blouberg strand. The penthouse was allegedly
used by the WPU to provide accommodation relating to WPU operations.

3.1.2 Methodology and procedure

Confirmation of ownership, and terms and conditions of lease

To confirm ownership, terms and conditions of the lease and to establish the
manner in which the property was used, we obtained the following documentation:

5
 Lease agreement in respect of 407 Costa Brava, 299 Beach Road, Sea Point,
Cape Town2
 Internal Memorandum dated 16 March 2005 from Mr Adam, Mr Borcherds and
Mr Theron to Dr S Ramaite (DNDPP) and Ms Mvelase (Head of IMU)
constituting their response to the allegations received by the IMU (referred to as
“the response”3)

Interviews and statements

To confirm ownership and usage of the property, we conducted a number of
interviews, obtaining statements from:

 Mr Selman, the owner of 407 Costa Brava
 Ms Katrina Brown, the cleaning domestic for 407 Costa Brava, regarding the
usage of the flat by the sons of Mr Adam as well as general usage
 Abu-Bakir and Bilal Adam (Mr Adam’s sons) regarding their occupation of the
safe house 407 Costa Brava
 Ms Desserrie Fredericks, the domestic cleaner of Nautica 801, Bloubergstrand
 Ms Maria Getruida Barnard, the caretaker of Nautica 801, Bloubergstrand

Identification of rental payments

To identify all rental payments as required in terms of the lease for these two
properties, we scrutinised the cash book of the WPU regional office in the Western
Cape from February 2003 to March 2007.

3.1.3 Investigation findings

Classification of houses leased by the WPU and the lease process

During the course of our investigation, we established that the WPU leased two
categories of properties:

 safe houses
 operational houses.

Safe houses provide primarily long-term accommodation for witnesses admitted
onto the Witness Protection Program (WPP).

2
Lease agreement attached as Annexure WPP2
3
Internal Memorandum dated 16 March 2006 attached as Annexure WPP3

6
Operational houses are used by all WPU staff and operational staff that are in
transit. These houses are also used during the court protection phases, for example,
for operational staff staying with witnesses and in certain instances, for short-term
stays by witnesses.4

A special operations team was officially established in January/February 2003 with
Mr Gerhard Van Rooyen (Mr Van Rooyen) as its Head and Mr Henk Loots
(Mr Loots) as Deputy Head. Mr Borcherds remained the Head of operations
nationally. Mr van Rooyen explained that he was instructed by Mr Borcherds to
establish a Special Operations team to deal with the operational needs of high
profile cases.5

Mr van Rooyen explained that he was specially tasked by Mr Borcherds to acquire a
core set of properties, which were to serve as safe houses for operational purposes
in the Western Cape (ie operational houses). The regional head of the WPU for the
Western Cape, Lynette Rodwell (Ms Rodwell), remained responsible for the
provision of long-term witness accommodation (ie safe houses), whereas van
Rooyen was only responsible for acquiring safe houses for the operations division.

Apart from the operational usage of the properties, Mr van Rooyen stated that he
would also receive requests from Mr Adam and/or Mr Borcherds to use an
operational house from time to time. He would then arrange for the key to be
dropped off with them and they would return it in due course. The Scorpions and
Police Intelligence also requested the use of an operational house from time to time.
These requests were, however, always referred to Mr Borcherds for prior approval.

Unlawful use and abuse of official WPU safe house by Mr Adam – 407 Costa
Brava Sea Point Cape Town

Ownership of 407 Costa Brava and terms of the lease agreement

Although the allegations did not refer to irregularities relating to ownership and/or
payment(s), we performed a limited investigation in this regard for completeness
and to provide underlying context to the allegation.

 No irregularities or issues specific to the ownership of the property were
identified during our investigation. We were unable to identify any relationships

4
Paragraph 3.1 of “the response”, page 13 attached as Annexure WPP3
5
Affidavit from Mr van Rooyen on 26 October 2007, attached as Annexure WPP4

7
or connections between the owner, Mr Selman,6 and any of the WPU officials
referenced in this investigation.
 We also failed to detect any irregularities in respect of the payments made by
the WPU in terms of this agreement.

We established that a Mr Selman was the owner of 407 Costa Brava, Sea Point,
Cape Town – a luxury apartment that is situated in an up-market area and could be
defined as beach-front property. The lease agreement, signed on 21 July 2003,
shows:

 NPA as the lessee
 Mr Selman as the lessor
 Cluttons Estate Agents as the agent.

The parties agreed to a lease term of one year from 01 August 2003 to 31 July
2004, renewable every year thereafter.

Due to the focus of the allegation we did not establish whether rental payments were
market-related. No irregularities were identified by us in our analysis, with payments
recorded in the financial records being consistent with the underlying lease
agreement(s).

The total expenditure incurred by the WPU for renting Costa Brava 407 between
February 2003 and March 2007 was R 831 072.7

Payments made by the WPU in respect of this lease ranged between R16 500 in
February 2003 to R21 961.50 in August 2006, representing a consistent annual
escalation of 10%. In terms of the lease agreement, no payments other than the
rental were required with the exception of a R33 000 deposit and R300 leasing fee
in September 2003.

6
Mr Selman’s affidavit attached as Annexure WPP5, and Ms Brown’s affidavit attached as Annexure WPP6. Ms Brown cleaned
the flats 407 and 410, Costa Brava, both owned by Mr Selman.
7
This quantification of rentals is based on a schedule of rentals obtained from the lease agreements being confirmed in the
cash book as opposed to a complete quantification of rental payments from the cash books or from a third party confirmation.
We did not consider the issue of inflated payments to warrant further work as no potentially corrupt relationships were identified
and the allegations were focused on the misuse of the property as opposed to irregular payments.

8
Rental costs 407 Costa Brava

25,000

20,000

15,000
R

10,000

5,000

-
MARCH 2007 NOVEMBER JULY 2006 MARCH 2006 NOVEMBER JULY 2005 MARCH 2005 NOVEMBER JULY 2004 MARCH 2004 NOVEMBER
2006 2005 2004 2003

Months

Figure 1: Schedule of rental payments for 407 Costa Brava

Use and occupants of 407 Costa Brava

Mr Adam’s sons, Abu-Bakir and Bilal Adam confirmed that they had occupied 407
Costa Brava Sea Point, Cape Town from late May/early June 2005 to August 2005.8

Abu-Bakir and Bilal Adam stated that they had been studying in Cape Town from
2004 and were forced to move between the homes of family and friends, as they did
not have suitable accommodation available. Their father (Mr Adam) apparently knew
that they were unhappy with this arrangement and suggested that they move into a
flat in Sea Point, which he claimed belonged to his friend.

During late May/early June 2005, an official from WPU, Mr BW Hector, collected
them and took them to the Sea Point flat. This official informed them not to tell
anyone where they stayed. However, during Mr Hector’s section 5(2)(c) interview,
he vehemently denied this allegation. Mr Adam’s sons further indicated that their
mother stayed with them for approximately one month soon after they moved into
the premises and that their father stayed with them in the flat on a few occasions
when he was in Cape Town for business. 9

8 Affidavits of Mr Adam’s sons are attached as Annexure WPP7 & WPP8. Mr Adam’s 5(2)(c) transcript is attached as Annexure
WPP9

9
According to Mr van Rooyen, Mr Borcherds contacted him in the middle of 2005 and
requested him to make arrangements for Mr Adam to collect the key for 407 Costa
Brava as he (Mr Adam) wanted to use the property. Mr van Rooyen was not given
any information regarding the purpose for which Mr Adam intended to use the flat.
He further recalled that Mr Adam kept the key for a few months without returning it.
Mr van Rooyen also recalled that he was later contacted by Mr Borcherds, who
instructed him to collect the key to the property from one of Mr Adam’s sons at a
filling station in Wynberg.

Ms Brown, the cleaner, explained that during 2005, Mr Adam came to the flat and
informed her that his two sons, Abu-Bakir and Bilal, would be staying in the flat. He
told her that his sons were studying in Cape Town and that he was struggling to find
proper accommodation for them. The two boys moved into 407 Costa Brava on the
same day, at which point Mr Adam introduced them to her.

After the two sons had moved in, she started to clean the flat every day and
interacted with them on a daily basis. Ms Brown confirmed that Mr Adam and the
boys’ grandmother visited them from time to time.

Abu-Bakir and Bilal Adam moved out of the flat in August 2005, after being
confronted by members of the IMU and being advised that the property was in fact
WPU property.9 Shortly after his sons vacated 407 Costa Brava, Mr Adam gave
notice to the tenants occupying their family residence in Rylands. The sons moved
into this property as soon as it became available.

Ms Brown stated that 407 Costa Brava, a fully furnished flat, was used by the lessee
(WPU) on very few occasions. It would stand empty for up to three months at a time.
When the flat was used, it was normally used for a very short period. She recalled
the following people as having made use of the premises:

 Mr Borcherds
 Mr Adam
 Henk (she did not know his surname)

Mr Adam alleges that he placed his sons in the operational house 407 Costa Brava
as a measure to deal with a threat from PAGAD. He also made reference to other

9
Ms Brown’s affidavit attached as Annexure WPP6, and refer to Mr Adam’s sons’ statement, Annexure WPP7 & WPP8

10
members in the NPA who had also been threatened as a result of their involvement
in the investigation into PAGAD cases.10

During his 5(2)(c) hearing, Mr Adam specifically stated that:

 it was ultimately his decision to place his sons in the Sea Point safe house
 he did not inform Mr Borcherds or Mr van Rooyen of his decision
 he did not inform Mr Borcherds or Mr van Rooyen of the duration of his sons’
occupancy of the safe house
 he did not inform his superiors of the threat
 he did not consult with the Security and Risk Management Division of the NPA
 he placed his sons with a friend after IMU had become aware of their presence
at 407 Costa Brava, and thereafter placed his sons back in his Rylands
residence, having given notice to the tenants
 he did not place his sons on the WPP, as they could not be regarded as
witnesses.

Mr van Rooyen alleges that he was unaware that Mr Adam’s sons stayed at the flat.
He was also unaware of any threats to Mr Adam or to his immediate family. When
questioned further, he also admitted that if the special operations team had required
the use of the property whilst Mr Adam’s sons had occupied the premises, it could
have seriously compromised the operations of the WPU.11

During the course of a 5(2)(c) hearing on 3 October 2007, Mr Borcherds claimed
that he had received information from a Faizel Steyn that Mr Adam and his family
were in danger from PAGAD. He apparently informed Mr Adam of the threat and
suggested the use of the Sea Point flat as a possibility. He, however, left it up to Mr
Adam to make the final decision. Mr Borcherds also claims that he assumed that Mr
Adam discussed the matter with Security and Risk Management. He is aware of
what Security and Risk Management’s mandate is, but claims that they are
ineffective.

Mr Borcherds added that he was not aware that Mr Adam’s sons had occupied the
premises. Despite the fact that he notified Mr Adam of the threat, he never again
discussed it with him, nor did he question Mr Adam about the safety of his sons. He
also took no further steps to address the threat against Mr Adam or his sons.

10
Internal Memorandum dated 16 March 2006 from Mr Adam, Mr Borcherds and Mr Theron , attached as Annexure WPP3
11
Affidavit of Mr van Rooyen, attached as Annexure WPP4

11
Mr Borcherds also confirmed that the sons were never officially admitted to the
WPP. He indicated that the WPU had assisted with the protection of Commissioner
Petros, but explained that this had been an entirely different process to a normal
witness being admitted to the Program.12

The SIU interviewed DNDPP Dr Ramaite from the National Prosecuting Authority,
on 8 February 2007 regarding the alleged threat to Mr Adam and his family. Dr
Ramaite stated that Mr Adam had not informed him of the alleged threat to his family
prior to placing his sons in the safe house. In addition, he was apparently neither
informed nor consulted regarding the decision to place Mr Adam’s sons in the safe
house for any period whatsoever.

As Mr Adam's direct superior, Dr Ramaite stated that he would have expected
Mr Adam to have informed him of the threat to his family. However, this only
occurred subsequent to the investigation conducted by the IMU through a
memorandum to Advocate V Pikoli.

Dr Ramaite stated that had he been aware of any threat to Mr Adam and/or his
family members, he would have advised Mr Adam to use the services of the Risk
Management Division of the NPA, headed by Mr Wally Rhoode. The Risk
Management division apparently has an employee safety program, which is capable
of assisting NPA staff in need of such assistance.13

Finally, according to Dr Ramaite, the placement of Mr Adam’s sons on the WPP
conflicts with the mandate of the WPU, as they were not witnesses in a criminal
matter under investigation. In addition, Ms Rodwell’s14 explanation of the procedure
and documentation required to place a person on the witness protection program
clearly indicates that Mr Adam’s sons were never officially placed on the program as
none of the prescribed forms were completed and submitted for approval. As a
result, no person at the witness protection unit would have been aware of Mr
Adam’s sons using the safe house in question.15

Mr Rhoode, Head of the Security and Risk Management Service Centre at the NPA,
confirmed that his duties include the provision of security services to NPA
employees who may be threatened because of the execution of their professional
responsibilities. Security services may also be provided in the case of threats to their

12
Interview conducted with R S Borcherds, transcript attached as Annexure WPP58
13
Affidavit of Deputy National Director of Public Prosecutions, Dr Ramaite, 8 February 2007 attached as Annexure WPP10
14
Regional head of the Western Cape division of the WPU
15
Affidavit of Ms Rodwell attached as Annexure WPP11

12
immediate families as well. However, to the best of his knowledge, no staff member
of the NPA had received temporary protection or accommodation from the WPU.

Mr Rhoode further explained that Mr Adam never informed him of any threat to his
own personal security or to that of his family. Ms Marion Sparg, the CEO of the
NPA, was the first person to bring the alleged threats to his attention, this occurred
after the IMU investigation. He explained to Ms Sparg that he was not aware of such
a threat, but undertook to investigate the allegations.

The Regional Head of Security and Risk Management in the Western Cape,
Mr Trevor Fredericks, was instructed by Mr Rhoode to investigate the threat but
when Mr Fredericks approached Mr Adam’s sons, they refused to co-operate. It was
therefore not possible to confirm if there was indeed a threat to the safety of
Mr Adam’s sons.16

Unlawful use / abuse of official WPU safe house by Mr Borcherds – Nautica
801 Cape Town

Ownership of Nautica 801, Nautica Penthouse Apartments, 85 Arum Road, Table
View, Bloubergstrand

Although the allegations did not refer to irregularities relating to ownership and/or
payment(s), we performed a limited investigation for completeness and to provide
underlying context to the allegation.

No irregularities or issues specific to the ownership of the property were identified
during our investigation. We were unable to identify any relationships, connections
between the owner, Dr Y Minnaar-Smit, and any of the WPU officials referenced by
this investigation.

We also failed to detect any irregularities in respect of the payments made by the
WPU in terms of this agreement.

We established that a Dr Y Minnaar-Smit was the owner of the penthouse Nautica
801. The lease agreement shows:

 Department of Justice, NPA as the lessee
 Dr Y Minnaar-Smit as the lessor.

The parties agreed to a lease term of one year commencing on 1 August 2003.

16
Affidavit Of Mr W Rhoode Head Of Security and Risk Management for NPA attached as Annexure WPP12

13
Mr van Rooyen confirmed that he had drafted the motivation to lease 801 Nautica,
Bloubergrand and forwarded it to Mr Borcherds for approval. He referred to the
property as a "general operations house" from which operations were conducted,
and thus that it was used primarily for operational purposes, emergencies, standby
operations and training.

Due to the focus of the allegation, we did not establish whether the rental payments
were market-related. No irregularities were identified by our analysis, with payments
reflected in the underlying financial records as consistent with the lease agreement.

The total expenditure incurred by the WPU for leasing Nautica 801 between August
2003 and August 2007 was R1 113 000, excluding other payments for cleaning,
telephone and DSTV which totalled R 78 752. The annual rental payments were
between R200 000 and R300 000 during 2003 and 2007.

The rental payments increased from R 18 000 in August 2003 to R 26 886 in August
2007, representing an annual escalation of 10%.

Rental costs Nautica 801

30,000

10%
25,000
10%

12%
20,000
10%

R 15,000

10,000

5,000

-
AUGUST AUGUST SEPTEMBER FEBRUARY DECEMBER JULY 2005 FEBRUARY SEPTEMBER APRIL 2004 NOVEMBER
2007 2006 2006 2007 2005 2005 2004 2003
MONTHS

Figure 2: Schedule of rental payments for Nautica 801

Use/occupants of Nautica 801

We established that this penthouse, located in Cape Town, was not generally used
to accommodate witnesses and/or staff connected to the Western Cape WPU
regional office.

14
Captain Pfeiffer, the regional co-ordinator of the Western Cape WPU regional office,
was responsible for co-ordinating the protection of witnesses on the WPP during the
period in question. As such, he would have been aware of all operational plans in
the Western Cape and any related witness accommodation requirements. Captain
Pfeiffer confirmed that several properties were leased in the Western Cape by the
special operations team. However, he confirmed that at no stage did the special
operations team make Nautica 801 or 407 Costa Brava available to him to use for
witness accommodation. He was also unaware of the day-to-day usage of both
properties, as they were always under the control of the special operations team.17

Instances of private use of 801 Nautica

801 Nautica appears to have been used for social and/or private purposes with the
knowledge and approval of Mr Borcherds.

Mr Van Rooyen also indicated that 801 Nautica was used for social gatherings on
certain occasions and that this was done with the full knowledge of Mr Borcherds
and himself. In one instance, the property was used for private purposes by a WPU
member from the Free State, with the full authority of Mr Borcherds, so that he and
his wife could work through their marital problems.

The caretaker of 801 Nautica, Maria Gertruida Barnard (Ms Barnard), referred to
certain incidents that had occurred at 801 Nautica that provided further
corroboration regarding the private use of this penthouse.

Ms Barnard stated that from time to time Miss Fredericks, the cleaner of 801
Nautica, mentioned that big parties were held at the flat. Ms Barnard claimed that
she was once invited to attend a braai at the premises. However, when she noticed
that a number of people were consuming alcohol, she declined the invitation18.

Ms Barnard also referred to an incident in the early part of December 2005, when
she was contacted by the people occupying the penthouse and asked to clean the
premises. On her arrival, she observed that a family (three children and parents)
were residing at the penthouse and her impression, whilst cleaning, was that the
apartment was being used for holiday purposes.

We were able to corroborate the pattern of private usage of 801 Nautica through
statements made to us by the regular cleaner of the penthouse, one Desserrie

17
Affidavit obtained from Captain Pfeiffer, attached as Annexure WPP13
18
Affidavit of Ms Barnard attached as Annexure WPP14

15
Fredericks (Ms Fredericks).19 Ms Fredericks was under the impression that Nautica
801 was rented by the Scorpions. From her observations, it appeared that Nautica
801 was used for work purposes (due to the presence of a fax machine and general
office equipment), however, members also brought their families to the premises.

Ms Fredericks further recalled instances when Messrs Borcherds and Hector and
several other males and females visited the flat and had parties. Whilst cleaning she
would find empty alcohol bottles, chips and peanut packets, cigarette butts and used
condoms. These incidents were all reported to Ms Barnard, her supervisor.

During the course of the interview, Ms Fredericks was able to recall a number of
persons who frequented the premises from time to time for a personal visit, and
whom we have identified as staff members of the WPU. These visits included:

 Mr Borcherds who frequently used the flat during December with his wife and
two children. This happened on more than one occasion and the family stayed
approximately two weeks at a time. Mr Borcherds introduced her to his wife and
two children as “Poplap”. Ms Frederick’s description of Mr Borcherds’ children
(number, age and gender) was consistent with the records of the Department of
Home Affairs and more specifically the respective identity numbers. Mr van
Rooyen also stated that Mr Borcherds frequently requested the use of 801
Nautica. Van Rooyen claimed that he seldom knew the exact nature of Mr
Borcherds’ visits to Cape Town as he only met with him at 801 Nautica on rare
occasions
 Mr van Rooyen who reportedly used the penthouse with his wife and two
children, normally during the June holidays
 Mr Loots who reportedly used the flat during the September holidays with his
wife and two sons. Mr Loots and his family usually occupied the premises for a
week at a time. Mr Henk Loots was the second in command to Mr Van Rooyen
in the Special Operations team
 A person known only as Jakes who reportedly used the premises on a
weekend during 2007 with two of his friends whilst participating in Argus Cycling
Tour. They brought their bicycles with them and left them at the premises for
approximately two months.

19
Ms Fredericks statement attached as Annexure WPP15

16
 An unknown elderly coloured/Muslim male who also stayed at the flat with
his wife and two children. She could not, however, recall the names of this
individual or his family members.

Investigation of other specific rental agreements

During the course of our analysis of rental payments made in respect of safe
houses, the Acting Head of the WPU, Mr John Welch, referred a rental agreement
for a WPU safe house leased from Mr Lynch Jordaan (46 Tulips, Moreleta Park,
Pretoria) to us for further investigation.

The concern expressed by Mr Welch was that Mr Jordaan was a senior official
employed by a WPU service provider, Pasco Risk Services, and that the leasing of
the property in question from him may represent a serious conflict of interest. In
addition, a number of discrepancies had been identified with the actual lease
agreement.

Our investigations confirmed that Mr Jordaan is a PASCO employee working closely
with senior management of the WPU. We further confirmed that Mr Jordaan is the
owner of the above property and that it has been leased by the WPU since February
2004 at a market-related rental.

We conducted a thorough investigation into the circumstances surrounding the
rental of the property from Mr Jordaan. Although the leasing of property from
employees of service providers, in their private capacity, is considered an
undesirable practice, we could not find serious acts of impropriety linked to the
leasing of the above property.

3.1.4 Conclusions

Unlawful use of official WPU property / safe house by Mr Adam

The investigation into the allegations against Mr Adam has uncovered evidence of
impropriety pertaining to the unlawful use of the operational house at 407 Costa
Brava.

The evidence secured to date clearly supports the allegation against Mr Adam that
he allowed his sons to use the WPU safe house in Sea Point for approximately three
months. His sons vacated the premises after being questioned by the IMU. The
potential prejudice may have been significantly more had their occupation not been
detected by the IMU following the receipt of the allegations.

17
Mr Adam admits to placing his sons in an official WPU safe house, but maintains
that his decision to do so was based on his belief that they were under threat from
PAGAD. However, this appears to be irreconcilable with the fact that he placed them
back in the so-called danger area, in Rylands, shortly after they had vacated the
Sea Point safe house. Mr Adam’s failure to discuss this threat with any of his
superiors, his sons or the NPA’s Security and Risk Management Division also raises
serious questions about the substance and severity of these alleged threats.

It is clear that whilst Mr Adam’s sons occupied the safe house, the WPU would not
have been able to derive the intended usage and benefit from the property.
Conversely, Mr Adam derived an undue benefit to the value of R58 080 by placing
his sons in the safe house for what was, in effect, private use of the property.

Unlawful use of official WPU property / safe house by Mr Borcherds

Evidence was obtained during the course of the investigation that supports the
allegation that Mr Borcherds, as well as other members of the WPU, used the
properties in question for private purposes. The evidence indicates that 801 Nautica
was regularly used for parties and social gatherings, and as a vacation home for
senior members of the WPU and their families. The evidence of the caretaker and
cleaner clearly indicates that this property was abused by Mr Borcherds and other
WPU members, subject to the knowledge and approval of Mr Borcherds.

Given the lack of usage records for this property, we were unable to quantify the
private usage by Mr Borcherds and/or other WPU members. However, the private
and unauthorised use of WPU assets clearly created potential prejudice to the WPU.

The investigation revealed that the properties allegedly abused by Messrs Adam
and Borcherds were properties leased for the Special Operations team. Both
properties were procured outside of normal long-term witness accommodation
requirements. In addition, it appears that a lack of proper control is exercised over
these properties, demonstrated in part by the fact that Mr Adam’s sons were able to
occupy the safe house for three months without a single member of the WPU ever
being aware of it, which implies that no inspections of the premises were conducted
over this period. The lack of control is further supported by the fact that no accurate
records of usage are kept for any properties used by the special operations team.

18
3.1.5 Recommendations

Institute disciplinary action against Mr Adam and Mr Borcherds

We recommend that disciplinary action is instituted against both Mr Adam and
Mr Borcherds for misconduct pertaining to the use of operational houses, and that
the three month rental totalling R58 080 is recovered from Mr Adam.

Consider criminal action against Mr Adam

We also recommend that criminal action is considered against Messrs Adam and
Borcherds for their unlawful misrepresentation regarding the use of 407 Costa Brava
and Nautica 801, Bloubergstrand.

3.2 Fraud and systemic risks identified during our investigation of
safe houses

3.2.1 Introduction
During the investigation, we identified a number of fraud risks as well as control and
systemic issues in respect of the procurement of accommodation by the special
operations division of the WPU.

3.2.2 Methodology and procedure
We interviewed Mr Theron and the heads of five of the regional offices20, namely
Gauteng, Western Cape, Kwazulu-Natal, Free-State and Eastern Cape, with a view
to obtaining an understanding of their respective financial systems and related
controls.

In order to obtain an overview of the type of expenditure incurred by the regional
offices, and to perform a limited high-level expenditure analysis, we obtained
expenditure summary reports from Mr Theron. These reports are compiled by the
regions based on the information contained in the manual cashbooks.

We performed an analysis and review of the underlying cashbooks to establish the
reliability of the financial records and to gain an understanding of the quality of the
supporting documentation and other systems.

20
The WPU has 9 regional offices

19
We created a database of all rental agreements for these regions, based on the
rental listings provided by Mr Theron, to assist our analysis of safe houses and
operational rentals. We obtained some assurance for the database by reconciling it
to the underlying cashbooks.

3.2.3 Investigation findings
The fraud risks identified by us with respect to accommodation costs, specifically
relating to safe and operational houses, included:

 Differences in procedures and controls relating to safe houses and
operational houses
During the course of our system review/walkthrough with Mr Theron, and the
heads of the five regional offices, we established that the process and controls
relating to operational houses (used by the Special Operations team) was
significantly different to that for safe houses.

 We established that although safe houses have some record of use (in
terms of documentation in the respective operational plans) no control or
records were identified in respect of monitoring the usage of the operational
houses.
 Given the private use of accommodation identified to date in this
investigation, it is evident that the lack of adequate usage records for rental
properties of the WPU constitutes a significant fraud risk.
 In addition, the lack of usage records also potentially results in wasteful and
fruitless expenditure given that assets are not optimally used (as indicated
by the reference to Costa Brava remaining empty for three months).

 Luxury apartment rentals being higher than rentals for safe houses
Luxury apartments were leased at rentals which were significantly more than
the rentals associated with safe houses. This is clearly demonstrated in
Figure 3, which details comparative average rentals for operational houses
versus safe houses between 1998 and 2007.

20
Average Rents for Safe Houses vs Operational Houses

16,000

14,000

12,000

10,000

R 8,000

6,000

4,000

2,000

0
Average SAFE Average

EC FS GAU KZN LIM MPU NC NW WC

Figure 3: Comparison of average rentals for safe houses and operational houses

Rentals for all accommodation (for both safe and operational houses) were paid
from the regional WPU bank accounts and allocated to the WPU budget line item
“protective custody of witnesses”, which is a line item for all funds transferred by the
NPA to the WPU regional offices. This classification is relevant as the WPU did not
apply any procurement processes/principles (in terms of the regulations of the State
Tender Board, the PMFA, the principles of government procurement set out in the
Constitution or otherwise) to payments allocated to the “protective custody of
witnesses” line item (ie paid from the region’s bank accounts). The procurement
process itself (generally and in respect of safe houses/accommodation) is dealt with
in more detail in section 6 of this report. This lack of adequate process and policy
implementation in the area of accommodation procurement further exacerbates the
fraud risk.

 We also identified family relationships between Mr van Rooyen (formerly
involved in motivating and procuring operational houses) and the agents for
certain properties rented by the WPU in the Cape
 We identified a close friendship between Mr van Rooyen and a Mr Fouche, an
owner and/or agent for a significant number of properties rented by the WPU.

A significant portion of the WPU budget for all regions is used to provide
accommodation, including temporary accommodation, safe houses and houses
dedicated to operations.

21
Given the materiality of the accommodation expenditure incurred by the WPU, the
fraud and other risks identified above relating to accommodation expenditure (and
specifically safe and operational houses) can result in significant actual or potential
loss to the WPU.

A graph of the expenditure incurred by all of the regional offices of WPU for the
financial year 2004/2005 clearly indicates that accommodation costs constitute not
just a significant proportion but also usually the largest proportion of total WPU
expenditure. Similar trends were identified in the expenditure graphs for the
2005/2006 and 2006/2007 financial years.

22
EXPENSES PER REGION 2004/2005

Other Total accommodation costs Total allowances paid Total clothing costs Total medical costs Total schooling costs Total transport costs

4,000,000

54 protected 279 Witnesses
3,500,000
174 protected individuals
individuals 587 Witnesses and family

3,000,000

47 protected
2,500,000 PASCO individuals

R
2,000,000

1,500,000 41 protected 56 protected
86 protected individuals individuals
individuals
70 protection
individuals
1,000,000

43 protected
individuals 17 protected
500,000
individuals

0
EC FS GAU KZN1 LIM MPU NC NW WC
REGIONS

Figure 4: Analysis of expenditure at regional offices for 2004/2005

23
3.2.4 Conclusions
The combination of the nature of the apartments (luxury apartments), the
relatively high rentals, the evidence of private usage, the lack of adequate
usage records and the absence of a regulated procurement process creates an
environment that is highly susceptible to fraud and error. This is further
exacerbated by the need for cash payments and limited audit trails arising from
the covert nature of the WPU business.

In addition, it is possible that the rental expenditure may be irregular given that
the procurement was not performed in accordance with the relevant supply
chain management prescript, an issue which is dealt with in more detail in
section 6.

3.2.5 Recommendations
In order to upgrade the systems and processes related to accommodation
expenditure in the WPU, we recommend the following:

Implement usage records for all safe and operational houses

The WPU must implement usage records for all safe houses and operational
houses. Although we understand the need for confidentiality, we believe that a
suitably vetted person could be responsible for this process.

Evaluate usage of houses regularly

Usage of the houses must be evaluated on a periodic basis to ensure that
fruitless and wasteful expenditure is avoided.

Draft a policy on personal use of departmental assets

The WPU must draft a robust policy on personal use of departmental assets,
and ensure that this is communicated and agreed to by all employees.

Maintain a register of interests

A register of interests must be maintained in which all employees must record
any relationships they may have with witnesses, suppliers or other parties
where conflict of interest could create risk.

24
4 PHASE 1: RESERVISTS

4.1 Investigation of specific allegations relating to appointment
and payment of reservists
Appointment

The allegations of irregularity, made by the whistleblower, relate to the
appointment of three “reservists”, namely Mr Hector, Mr Le Fleur and Mr
Campher and the allegations specifically involved the following issues:

 The three reservists were presumed to be appointed as “security officers” in
terms of Section 6 of the Witness Protection Act. This pre-supposes a
proper secondment from the SAPS, but it was alleged that there was no
secondment agreement with the SAPS
 At least one of the “reservists” (Hector) was said to have resigned as a
reservist
 The SAPS system was said not to allow for the secondment of reservists
 The “reservists” were said to have been appointed due to favouritism and a
further allegation suggested they were related to senior members of the
WPU, and specifically to Mr Borcherds
 The “reservists” were alleged to have been paid what could be regarded as
a full-time subsistence and travelling allowance, but somehow also
received a so-called thirteenth cheque.

The three reservists were alleged to be from Cape Town, and Mr Hector is
alleged to be related to Mr Borcherds.

Payments to reservists

It was further alleged that these reservists were paid a non-taxable salary of
R6 000 per month.

25
4.1.1 Methodology and procedure

Appointment

Analysis of relevant documentation

We analysed the relevant section of the Witness Protection Act relating to
appointment of employees and security officers.

We also investigated the secondment arrangements with the SAPS in order to
establish whether reservists can be seconded from SAPS to the WPU.

Affidavits and interviews

We obtained a number of affidavits relating to the circumstances surrounding
the appointment of the said reservists. In addition, we interviewed Mr Hector’s
mother to identify any prior relationship with Mr Borcherds.

We interviewed Mr Theron, Mr Rodwell, Ms Ludick (regional head of WPU
Gauteng) and Mr Kora (former regional head of WPU for Eastern Cape) with a
view to establishing and documenting the reservist payment process.

Payments to reservists

5(2)(c) hearings

We conducted 5(2)(c) hearings for all three reservists, Mr Borcherds and
Mr Adam during which this allegation and surrounding circumstances was
discussed.

Financial analysis

We obtained the bank statements in respect of Messrs Hector, Le Fleur and
Campher and performed a financial analysis of the transactions with a view to
identifying deposits indicative of irregular payments by the WPU.

26
4.1.2 Investigation findings

Appointment

Messrs Hector, Le Fleur and Campher could not be employed formally by the
WPU, as Section 6 of the Witness Protection Act (relating to the recruitment of
security officers ie protectors) is and was not in operation.

The three “reservists” were not seconded to the WPU in terms of a proper
secondment agreement. The SAPS confirmed that their approach does not
allow for the secondment of reservists to entities such as the WPU, nor does it
allow reservists to be “loaned” by the SAPS, as co-operation with the SAPS and
budgetary support for the appointment of staff remains a problem.
Consequently, the WPU has a problem appointing sufficient “protectors” for
their needs.

It is therefore evident that Messrs Hector, Le Fleur and Campher could not be
formally employed by the WPU or seconded to the WPU by the SAPS.

Given the urgency to appoint protectors because the WPU is short-staffed, Mr
Adam appointed the three reservists in terms of Section 3(5)(a)(vi) of the
Witness Protection Act. This subsection empowers the Director to obtain the
services of “any other person”.

It may have been incorrect to refer to the three “protectors” as “reservists” as
they did not operate as reservists seconded from the SAPS. The three
protectors’ history as reservists resulted in them being identified as suitable
persons to act as “protectors” and gave rise to them being appointed as
envisaged by Section 3(5)(a)(vi) of the Witness Protection Act.

In its pursuit of finding suitable candidates to appoint as protectors, the WPU
approached the SAPS to help identify suitable individuals. This contributed to
the identification of these three “reservists” as possible “protectors.” Mr Adam
echoed the explanation of Mr Borcherds in that the SAPS made the reservists
available to the WPU and he was very grateful for the extra capacity. According
to Mr Adam, this was the culmination of much negotiation with the SAPS
Commissioner Lennit Max.

27
As far as the vetting process was concerned, it appears that the WPU relied on
the fact that the SAPS had already conducted a vetting process on the
individuals in question and did not discuss these appointments with
Mr Nsengani (the HR manager) or the IMU. Both Mr Borcherds and Mr Adam
claimed that they were not aware that one of the reservists in question,
Mr Le Fleur, had a previous conviction for theft.

Relationship(s) between reservists and Messrs Adam and Borcherds

During the 5(2)(c) hearings conducted with the three reservists, their
relationships with Mr Borcherds and any other member of the WPU were
discussed.

 All three categorically denied any family or personal relationships with
Mr Borcherds or with any other members of the WPU.
 All three reservists claimed to have met Mr Borcherds subsequent to being
appointed the WPU.
 Messrs Borcherds and Adams also denied any prior relationships.21
 Mrs Hector confirmed that no relationship existed between Mr Borcherds
and Mr Hector prior to his appointment to the WPU.

Payments to reservists

The reservists received monthly payments equal to the monthly equivalent of
the maximum daily subsistence and travelling allowance determined by the
Department of Public Service and Administration (DPSA).

There appears to be some confusion as to the nature of these payments,
whether they represented a subsistence allowance or a salary.

During the course of their respective (5)(2)(c) hearings both Mr Adam and
Mr Borcherds were adamant that their remuneration did not constitute
subsistence and travelling allowances, but was a salary calculated to be equal
to such an allowance.22 This also resulted in them being paid a “performance
bonus” or thirteenth cheque. Mr Adam maintained that he paid the reservists an

21
During the course of their respective 5(2)(c) hearing
22
In terms of the respective 5 (2)(c) hearing of Messrs Borcherds and Adam

28
annual performance bonus for their good work and not a thirteenth cheque. He
claims this was also in line with the DPSA daily rate.

The reservists described their monthly payments as subsistence allowances
during their respective (5)(2)(c) hearings. This appears to be in direct
contradiction to Mr Adam's statement regarding the nature of these payments
provided in his (5)(2)(c) hearing.

Bonus payments

Mr Theron confirmed that the three reservists had been paid an annual bonus
on the instruction of Mr Borcherds for each year from 2003 to 2006, and that
these bonuses were calculated on the basis of the DPSA daily rates. Mr Theron
also confirmed that no taxation was deducted other than R300 in 2003.
Mr Theron stated that the tax deduction in 2003 prompted Mr Borcherds to
question the deduction and to instruct Mr Theron not to deduct taxation from the
reservists’ monthly payments given that they were in fact subsistence and travel
allowances and thus were not subject to income tax.

As a result of reviewing the payment vouchers and IRP5 certificates issues in
respect of the three reservists for the tax year 2005, we established that the
payments made to the reservists were reflected as subsistence allowances.
Mr Theron confirmed in his affidavit that IRP5 certificates had not been issued
to the three reservists in respect of previous tax years. Mr Theron confirmed
that he did not deduct income tax from payments made to the three reservists.

We performed an analysis of the bank statements in respect of Messrs Hector,
Le Fleur and Campher for the period 2004 to 2007 to identify any irregular
payments. The identified deposits relating to the monthly WPU payments were
consistent with the financial information obtained from our review of the WPU
records. No irregular payments were identified in the respective bank accounts,
with exception of the bonus payments outlined above.

We established that two of the three reservists are currently still attached to the
WPU as Protectors, namely Mr Le Fleur and Mr Hector. Mr Campher left the
employ of WPU in 2007.

29
4.1.3 Conclusions

Appointment

Even though the appointment of the “reservists” can be regarded as
unconventional and their remuneration can be viewed as somewhat “creative”,
it cannot be said that the conduct of Mr Adam or Mr Borcherds in this regard,
amounted to misconduct because their actions were directed at ensuring the
continuation of WPP operations given the shortage of personnel.

Relationship(s) between reservists and Messrs Adam and Borcherds

There is no evidence whatsoever suggesting that any of the reservists were
related to any senior members of the Witness Protection Unit. In fact, the
reservists were unknown to Mr Adam or Mr. Borcherds until their involvement
with the Witness Protection Unit.

Payments to reservists

As indicated the monthly payment as per the DPSA daily rate did not appear to
be irregular. However, given the lack of clarity around the contractual
agreement between the WPU and these three reservists, we could not eliminate
the possibility that the payment of bonuses may be irregular. These bonuses
amounted to approximately R 66 986.90 over the four year period (2003 to
2006).

The omission by the WPU to deduct taxation from the bonus payments made to
the reservists constitutes a contravention of the Income Tax Act (No 58) of 1962
(as amended). The manner in which taxation is levied on the monthly payments
made to the reservists is determined by whether these payments are classified
as subsistence allowance or salary. Given that this issue was outside of our
mandate, we are not in a position to conclude in respect of the payment
classification. However, it is evident that regardless of the classification, the
WPU appear to have under-deducted income tax.

30
4.1.4 Recommendations

Obtain legal certainty with respect to appointment

We recommend that legal certainty is obtained with respect to the appointment
of security officers (protectors).

Improve vetting process of security officers

We recommend that the vetting process of security officers (also referred to as
“reservists” and protectors) is significantly improved with a view to managing
risk for the WPU. Given the mandate of the WPU it is highly desirable that
witness protectors be persons of high integrity.

5 PHASE 2: WITNESS EXPENDITURE

5.1 Investigation into exorbitant allowances paid to the Janodien
family
It was alleged that exorbitant allowances were paid by Messrs Adam and
Borcherds to a witness and his dependents, Mr A Janodien and his family (the
Janodien family). It was also alleged that Mr Janodien had a close relationship
with Mr Adam, and to a lesser extent Mr Borcherds and that as a result this
witness and his family were unduly favoured by Messrs Adam and Borcherds,
who authorised irregular payments to the witness and his family.

We have outlined below our findings in respect to witness payments in general,
and have subsequently addressed the allegations specific to the Janodien
family.

5.1.1 Methodology and procedure
We have highlighted below some of the main procedures we followed whilst
investigating witness payments.

31
Analysis of applicable documentation

We obtained and analysed applicable legislation and/or policies relating to
witness payments in order to identify any irregularities in respect of payments
made to the Janodien family.

Interviews and statements

We obtained a statement from Mr Theron detailing the financial systems and
controls used for witness payments.

We interviewed the regional heads for the Western Cape, the Eastern Cape,
Gauteng, Kwazulu-Natal and the Free State in order to document the regional
systems and controls, including those specific to witness payments.

We met the Auditor General (AG) to understand their audit process and to
identify any issues that could inform the investigation. We reviewed the AG
management letters for the years 2003/2004 to 2006/2007.

We performed an analysis of payments in the five selected regions from 2004 to
2007, with a view to identifying suspicious and/or possibly irregular payments.
We focused on these regions (5 of the 9 regional offices of the WPU) because
these offices had the largest volume and value of procurement transactions and
payments.

Given that a significant proportion of the payments to the Janodien family were
made by the Kwazulu-Natal regional office, we obtained a statement from
Ms Venter, Acting Regional Head Kwazulu Natal WPU office, covering these
payments. As a basis for comparison, we also obtained a statement from Ms
Rodwell in respect of the process, policies and procedures followed for witness
payments.

We obtained the monthly expenditure reports submitted by all of the WPU
regional offices detailing the total witness payments effected by the regions for
2004 to 2007. These reports were analysed to identify anomalies and/or trends
in witness payments between the regions, and to indicate witness payments
warranting further investigation.

32
5.1.2 Investigation findings

Review of legislation and policies

Section 23 of the Witness Protection Act, No. 112 of 1998 (WPA), provides for
the Minister to make regulations in respect of certain matters.

Section 24(1) of the WPA repeals section 185A of the Criminal Procedure Act,
1977 (Act No. 51 of 1977), although section 24(2)c(i) states that any regulation
made in terms of section 185A will remain in force until regulations are passed
in terms of section 23 of the WPU.23

Regulation 2224, as embodied in the subordinate legislation in respect of the
WPA, prescribes the nature and value of payments in respect of allowances to
protected persons. It is clear that these allowances were initially intended for
witnesses in protective custody.

Regulation 22, as embodied in the subordinate legislation in respect of the
WPA, is outlined below.

Loss of income

In terms of the regulations, a witness may receive R10 a day, provided he or
she does not receive any income as a result of being in protective custody. The
Director General of Justice may allow up to R400 per day for loss of income as
a direct result of the protective custody and can even authorise that this amount
is exceeded if a motivated application shows financial hardship.

Clothing

Regulation 22(4) allows for the purchase of clothing to a maximum of R400,
with the proviso that the Director General may give authorisation to exceed that
amount. The regulation makes reference to a person on the WPP (a witness or
family member) being provided with clothing to the value of R400 if he/she has
unserviceable clothing or no clothing and is unable to purchase suitable clothing

23
Regulations under section 185A of the Criminal Procedure Act, 1977 Act No. 51 of 1977 (CPA) were published in
Government Gazette No. 14196 in Government Notice No. R.2204 of 31 July 1992
24 Attached as Annexure WPP16

33
from his/her own funds, including other allowances and/or salary/income
replacements.

Other expenses

In terms of regulation 22(5), any expenditure incurred by the State for clothing
or for medical care of a protected person may be taken into account before any
allowance is paid to the protected person in terms of this regulation.

Policies/ procedures/practices in relation to the witness payments

The WPU does not have a written policy governing witness payments. There is
a single guideline entitled "calculation of allowances to witnesses" for salary
replacement payments. This guideline was compiled by the previous director of
the WPU), and it is based on the regulations outlined above.25 The regional
head of Cape Town, Ms Rodwell, was unaware of any comprehensive policy
document dealing with allowances payable to witnesses other than the
regulations and the guide referred to above.

Mr Adam provided these regulations and guidelines to Mr Mokotedi of the IMU
on 26 June 2006 under a handwritten covering note. This serves as acceptance
that these are the guidelines and the regulations from which the tariffs for
compensation were derived.

Mr Adam stated in his correspondence with the SIU on 20 August 2007, that the
director and/or delegated officials have discretion in terms of the WPU Act to
approve payments for protection, support and related services and related
incidental matters, to ensure effective and efficient management of witnesses
and related persons. He further stated that these payments were extensively
audited by the Auditor General, with no payments being reported as irregular or
as wasteful expenditure. Mr Adam confirmed that each witness request for
funding was dealt with on its own merits.

The Auditor General (AG) listed the absence of a formal policy in respect of
witness payments as a material finding in the 2003/2004 audit year. The AG

25
Affidavits of Mr Theron, Ms Rodwell, Ms Venter (Annexure WPP17, WPP18 and WPP19 respectively)

34
reported that the WPU funded witness expenditure in excess of the pre-
determined allowances outlined in the regulations. In particular, the AG referred
to school fees, medical costs, bus tickets and other ad hoc requests by
witnesses. The audit report described the payment process requiring a
motivation from the witness for additional monies and for this motivations to be
approved by Mr Adam or Mr Borcherds.

The WPU (namely Messrs Theron, Adam and Borcherds) responded to the AG
comments as follows:

Paragraph 8 of the Protection Agreement ( in terms of section 11(a) of the
WPA states that “the Department of Justice will pay any expense for
which provision is made in terms of the Regulations and in respect of
which the witness makes a specific application.”

The WPU is responsible for providing support services to witnesses and
their extended families. In terms of section 4 of the WPA (which sets out
the powers, functions and duties of the head of the WPU) the head
(Mr Adam) is granted certain powers with a view to providing a support
service to witnesses on the WPP. The head of WPU, therefore, has the
final discretion in deciding on the nature of the support provided to the
witness, the implication being that the head is able to authorise whatever
transaction is required in rendering said support.26

This audit query was not raised by the AG in subsequent years.

The senior management of the WPU, Messrs Adam, Borcherds and Theron, in
their correspondence with the SIU indicated that witness payments were
effected in terms of the Witness Protection Act, the Constitution, the Bill of
Rights, the NCPS, the Victim Charter and Batho Pele. These officials explained
that all witnesses and related persons on the Program receive special treatment
in terms of these principles.

26
Response to the AG dated 13 July 2004, attached as Annexure WPP20

35
Allowances are paid to witnesses who are unemployed on admission into the
WPP, or who are employed but unable to furnish proof of income27 and
consequently do not qualify for a salary replacement payment. As indicated
above, the regulations provide for specific allowances:

 a clothing allowance
 a daily allowance.

The regulations allow for a daily allowance where the witness does not qualify
for a salary replacement. A clothing allowance appears to be payable
irrespective of whether a salary replacement payment is made, although the
replacement payment may be adjusted to take into account the clothing
allowance.

Clothing allowances

The WPU pays a clothing allowance to witnesses in accordance with regulation
22(4) of the Regulations made under section 185A of the Criminal Procedure
Act, No. 51 of 1977. Although there appears to be a well established process
for paying clothing allowances, there is no WPU policy in this regard.

Clothing allowances are paid in cash to the protector who subsequently hands
the cash to the witness whilst obtaining a signed acknowledgement of receipt.
The WPU does not in general require receipts from the witnesses to verify that
these monies were used to buy clothing, although certain regional offices (such
as Cape Town) requested and retained such supporting documentation.

Mr Theron interpreted this regulation to allow for an annual payment of R800
per person (R400 for summer and R400 for winter), as well as increased
payments (in the region of R600 to R800) for new born babies, depending on
the circumstances of the particular case. Mr Theron stated that in cases where
he had sole discretion, he would not consider paying a clothing allowance of
more than R800 per witness/dependent per year. This is consistent with the
process explained to us by Ms Rodwell and Ms Venter.

27
Mr Theron’s affidavit (Annexure WPP17), Ms Venter’s affidavit (Annexure WPP19), and Ms Rodwell’s affidavit
(Annexure WPP18)

36
Witness payments, including clothing allowances, were based to a large degree
on the judgment of the respective official. Ms Rodwell explained she would
consider the request of a witness in the context of the particular witness’s
circumstances; as such, witnesses were not automatically entitled to a clothing
allowance. For example, where the salary replacement of a witness was high, it
was less likely that a clothing allowance in addition to the replacement payment
would be granted.28

During the course of reviewing payments made by the regional offices, we
identified supporting documentation setting out the respective allowance
calculations as determined by Mr Theron, with the relevant signatories being
primarily Messrs Theron and Borcherds. It also appeared as if income tax was
not deducted from the allowances, and that the underlying receipts were not
requested from the witnesses.

Medical Expenditure

The WPU has no written policy regarding the payment of medical expenses for
witnesses and their family/dependents, with each case/request being assessed
on the particular circumstances and on its own merits.

The WPU pays for the normal medical expenses of witnesses/dependents,
which include visits to doctors/specialists and dentists, as well as for
hospitalisation. Theron stated that as a rule, the WPU require a
witness/dependent to settle all non-prescription items.29

Each request for funds relating to medical expenditure is assessed on its own
merits, especially given the absence of a general medical payment policy, and
supporting documentation is usually obtained for medical payments. There
does not appear to be a limit to the medical payments made in respect of
witnesses/dependants on the WPU, and we did not observe any reduction in
allowances and replacement payments in months that a witness' medical care
had been paid for by the WPU.

28
Ms Rodwell’s affidavit attached as Annexure WPP18
29
Mr Theron’s affidavit attached as Annexure WPP17

37
Salary replacements

The WPU also pays witnesses in respect of salary replacements; the purpose
of the salary replacement payment is to enable a witness to pay for his/her
normal monthly expenses. Ms Venter confirmed that the salary replacement
allowance is intended to cover all general day-to-day living expenses of the
witness and his/her family members. Items such as fishing equipment, printer
cartridges, food and other incidental items would ordinarily have to be covered
by salary replacement allowances.

Mr Theron is responsible for assessing each application for salary replacement
income, as well as for determining the value of the salary replacement.
Mr Theron cited regulation 22 as well as the WPU guideline entitled “calculation
of allowances to witnesses” as the basis upon which these payments were
made.

The calculation of salary replacements30 is primarily focused on verifying the
value of income forfeited by the witness due to being on the WPP. This focus is
consistent with the requirements of the regulation.

The amount of the salary replacement is dependant on two components,

 the income/salary earned by the witness prior to entering the Program
 the monthly living costs that witness incurred prior to his/her admission onto
the Program, such as the cost of rental and electricity.

Given that the WPU provides the witness with accommodation (including water
and electricity), fuel/ transport allowances, clothing allowances and food
allowances, the salary replacement should be reduced by living costs
previously financed from the witness’s salary and now being provided by the
WPU.

In terms of the regulations, the salary replacement is subject to a maximum
daily allowance of R400, resulting in a monthly payment R12 400. Our payment
analysis indicated that salary replacement payments to witnesses/dependents
were subject to income tax, although we did not confirm whether these

30
Statements from Mr Theron and Ms Rodwell attached as Annexure WPP17 and WPP18

38
deductions were correctly made, paid across to the South African Revenue
Service and/or if the respective witnesses were issued with related IRP5
certificates.

When a witness obtains gainful employment whilst in the WPP, his financial
circumstances are re-evaluated and, if appropriate, the salary replacement
allowance is withdrawn. All witnesses are encouraged to seek gainful
employment, as it assists their integration back into society once they are
released from the Program.31

Mr Theron stated that the current WPU processes and procedures would not
detect changes in a witness'/dependant’s financial status, with the WPU being
largely dependent on the witness to declare any additional income.

The WPU also loans monies to the witnesses where their respective salary
replacement is insufficient, although this is a matter of practice rather than
policy. There is no regulation that provides for loans to witnesses – these
payments are dealt with in more detail in section 5.

Fuel and transport allowances

Although the WPU has no written policy governing fuel and transport
allowances, it is WPU practice to pay fuel and/or transport allowances to
witnesses/dependants to allow them to take their children to school. In
instances where the school provides transport, the WPU will pay for such
transport. These expenses are paid over and above the normal salary
replacement payments made to witnesses.

Mr Theron explained that each case is dealt with on its own merits, and that
ad hoc decisions regarding payment of fuel/transport allowances were made by
Messrs Adam and Borcherds. Regulation 22, however, does not allow for the
payment of fuel and transport allowances to witnesses, and we were not
advised of any authorisation received from the DG of Justice in this regard.

31
Ms Venter’s affidavit attached as Annexure WPP19

39
Other witness payments

The WPU also made witness payments classified as “other”, which were
inconsistent with the regulations. Our findings with respect to the analysis of
such payments are outlined in 5.2 below. Such payments included:32

 loans/advances paid to witnesses
 purchase of fishing equipment
 fuel allowance or transport
 school fees, expenditure in terms of school outings and school stationery
 further studies
 non-prescription medicine
 significant relocation allowances
 salary replacements issued with insufficient proof of verification of income
and/or on-going monitoring of the witness’s income status,
 repairs to personal motor vehicles
 furniture removal costs
 purchase of birds
 purchase of a computer.
 annual bonuses paid to witnesses and their family/dependents.

General process for making witness payments

Witness payments are effected from the regional bank accounts, which receive
funds from the NPA bank account on a monthly basis following a cash flow
report and a funding request. Payments made from the regional bank accounts
can be categorised into two classes:

 witness payments
 operational costs (being payments associated with the running of the WPU
business/office, such as cleaning material, office furniture, and reservist
allowances).

32
We conducted a payment analysis for 5 of the regions, the detailed methodology set out in paragraph 8.1.3

40
All payments made by the regions (both witness payments and operational
payments) are recorded or booked to the expenditure line item "protective
custody of witnesses". Operational payments are effected by the WPU head
office, directly from the NPA bank account.

We established that witness payments are made using a different procurement
process to that applied for operational costs. Although the WPU’s procurement
policies are dealt with in detail in section 6, it is still worth noting here that no
procurement process was/is applied in respect of witness payments:

 quotes are not obtained
 a supplier database is not used
 there is no rotation of suppliers.

Mr Theron distributed an internal memorandum on 3 September 2002 dealing
with the process related to expenditure vouchers and supporting
documentation, after significant weaknesses in this regard were identified by
the AG in the 2001/2002 financial statements. The process outlined by
Mr Theron specifically outlined the requirements for:

 a three quotation system
 approval by the national financial management
 confirmation of delivery
 the need to record payments in a cash book
 a monthly review of the cash book by the regional head.

Witness payments, however, were specifically excluded from this process, as
set out in the memorandum.

Regional heads have a delegation from the head of the WPU to authorise
payments up to R25 00033.These delegations exclude expenditure relating to
operational plans, witness resettlement agreements, rental agreements,
replenishment of petty cash, and determination of witness allowances and
salary replacements. Ms Venter and Ms Rodwell stated that all requests from
witnesses for payments outside of the normal allowance and salary

33
The payment delegation to regional heads for R25 000 was from Mr Adam.

41
replacement structure were forwarded to the WPU head office and signed by
Messrs Borcherds and Adam. In some cases, the witnesses contacted
Mr Adam and Mr Borcherds directly, who would then verbally instruct the
regional heads to effect payment. During our review of specific witness
payments (detailed in paragraph 5.2), we noted that payments were authorised
by the regional head and/or Messrs Adam and Borcherds.

We confirmed that Mr Theron and Mr Borcherds were not in possession of any
written delegation(s) to authorise payments, the only formal document relating
to the performance of their duties being their employment contracts34. It also
appears from a legal opinion provided to us by Mr Adam that the DG of Justice
may be the accounting officer for the WPU. The issue in question however was
whether the DG of Justice or the head of the NPA performed the role of
accounting officer of the WPU.

The majority of witness payments were made in cash (due to the covert nature
of WPU operations). In some instances, we identified payments where the
regional head was simply instructed by Mr Borcherds to make the payments
without any explanation provided, such as the payments referred to in
paragraph 5.2.

In the witness payments we reviewed, we noted that the supporting
documentation usually included acknowledgements of receipt of the monies by
respective witnesses. However, in a number of instances, we were unable to
find quotes and invoices in the supporting documentation that verified how the
money was spent. This missing documentation was particularly evident in
respect of payments classified as "clothing" and "other".35

Issued raised by the AG in respect of witness payments

Mr Adam referred to the fact that the WPU had received a “clean audit report”
from the AG in a number of his submissions to the SIU. For this reason, and to
ensure that we were aware of all of the relevant issues, we met with the AG to

34
Confirmed in a telephonic discussion between SIU and Mr Theron
35
For acknowledgements of receipt we agreed the witness signature to the official specimen signature retained by the
regional head

42
obtain their understanding of any issues and we reviewed management letters
and certain work papers. Our findings from this process are set out below.

The AG performs a regularity audit of the WPU as part of the audit of the NPA.
The WPU audit is considered in the context of the overall NPA audit process, as
the WPU is a sub-program of the NPA and its financial results are consolidated
into the "goods and services" expenditure line in the NPA financial statements.

The AG’s audit was focused on a sample of the nine WPU regional offices
selected each year, three offices were selected in 2004/2005, four in 2005/2006
and two offices in 2006/2007. The offices not selected in a specific year were
not subject to audit. The AG performed limited audit work on the financial
records of the WPU, as the Unit’s financial performance has little impact on the
NPA’s financial statements as a whole given its relative size.

The scope of the AG audit included looking at:

 expenditure
 asset management
 the admission of witnesses
 reviewing various witnesses to confirm payments and process.

A cursory review of the AG audit files confirmed that the AG conducted the
audit on a sample basis, consistent with accepted audit methodologies. The
samples are relatively small (approximately 20–40 payments for the year, per
regional office, depending on the total number of transactions). Although the
audit work was conducted in accordance with accepted audit methodology,
given the scope and focus of the audit, it is not possible to interpret an
unqualified audit report as an indication that the financial records of the regional
offices (and the WPU) are free of fraud and error.

Issues highlighted by the AG in the 2006/2007 management report include
issuing loans to witnesses and incomplete witness files. Previous findings
include inadequate monthly safe house inspections increasing the risk relating

43
to asset control (2004/2005), and rentals paid by WPU for safe houses owned
by witnesses36

5.1.3 General overview and analysis of witness payments

Total payments of R97 305 929 (witness and operational payments) were made
by the WPU regional offices during three financial years, 2005 to 2007. The
total payments per year were: 37

2004/2005 R 22 146 465
2005/2006 R 36 371 838
2006/2007 R 38 787 626

These payments were classified in the regional cashbooks as being for
accommodation, allowances, clothing, medical, schooling, transport, other costs
and petty cash. The majority of the payments relate to witness payments, with a
limited number of operational payments being reflected as "other".38

The payments made by the nine regional offices (R97 305 930) over three
financial years (2005 to 2007) were in respect of the following items of
expenditure: 39

36
Summary of audit findings in the letter from the AG to the SIU dated 16 October 2007
37
Obtained from regional expenditure schedules provided to us by WPU for all 9 regions
38
SIU interview with Mr Theron regarding the financial systems and processes
39
We confirmed the classification of payments in the cashbook and the expenditure summary schedules as being
materially correct. We identified some misclassification but do not believe it to be so pervasive as to render
the findings above inaccurate

44
Table 1: Analysis of total payments made by WPU
regional offices 2005–7
Type of expense %
Other costs – primarily for WPU operational 32.98%
expenses as well as witness payments in
excess of the prescribed allowances and
salary replacements
Accommodation costs – rental payments for 47.39%
safe and operational houses as well as the
more ad hoc rentals
Witness allowances 14.37%
Clothing allowances 0.35%
Medical expenditure 2.26%
Schooling costs, school clothes, school 1.43%
stationery, and school outings and trips
Transport costs 1.22%

The payments categorised as “other costs” included reservist’s allowances,
office expenditure, witness relocation costs and unusual witness payments
(such as babies clothing, fishing rods, a loan for the purchase of birds, witness
loans, monies to purchase a car, general loans and advances to witnesses).40
Loans and advances to Mr Borcherds were also classified as “other” costs

The regions with the highest payments between 2005–7 were the Free State
(due to a specific PASCO payment referred to below), the Western Cape, the
Eastern Cape, Kwazulu-Natal and Gauteng. The classification of payments
made by the WPU regional offices during 2006/2007 is reflected in figure 5
below.

40
In 2004/2005, 70% of “other” expenditure for the Eastern Cape regional office related to witness relocation payments

45
The classification of payments made by all nine regions in 2007 is set out in Figure 5 below.

EXPENSES PER REGION 2006/2007

Other allowances paid medical costs clothing costs schooling costs transport costs accommodation costs

7,000,000

40 protected
6,000,000 individuals
491 Witnesses and families
PASCO 25 protected
5,000,000
individuals

4,000,000
105 protected 54 protected
R individuals individuals
121 protected
3,000,000 individuals
61 protected
40 protected
individuals
individuals
2,000,000

31 protected
individuals 15 protected
1,000,000 individuals

0
EC FS GP KZN LM MP NC NW WC

REGIONS

Figure 5: Value of payments compared to witness numbers per region

46
The three main categories of payments made by the regional offices during
2007 were:

 accommodation costs for witnesses (predominately leases for safe houses
and operational houses)
 witness allowances
 other.

The payments to PASCO made on behalf of head office are also reflected in
2007. The Western Cape has the largest accommodation cost, brought about to
some extent by the large number of operational houses and the relatively high
average rental for operational houses in the Western Cape (Gauteng and the
Western Cape being the highest). The expenditure follows a similar trend in the
2005 and 2006 financial years.

5.2 Investigation into specific allegations relating to irregular
expenditure incurred in respect of witness costs
It was contended that a witness, known as Source X (aka Mr Adam and
Mr Janodien)41 and his family were unduly favoured by Messrs Adam and
Borcherds, who authorised irregular payments to the witness and his family.
These irregularities included the payment of exorbitant allowances.

5.2.1 Methodology and procedure
Our objective was to identify and quantify payments made both to the Janodien
family and to other witnesses, as this information would allow us to assess
whether payments made to the Janodien family were unreasonable in nature
and/or whether the family had been unduly favoured.

However, we were unable to quantify payments made to the Janodien family
and/or other witnesses given the financial systems of the regional WPU offices.
Such an exercise would have required a complete audit of cashbooks and
related documentation for all nine regions. We therefore requested a schedule
of payments made to the Janodien family from Mr Theron and Ms Venter, which

41
WPU Reference KZN 35/02

47
we reconciled to the cashbook in order to provide some indication that the
schedule was indeed based on the underlying financial records.42 This schedule
provided us with sufficient evidence to reasonably conclude on the type of
payments made to the Janodien family.43

We reviewed the Janodien witness file in order to corroborate the information
provided to us by Mr Theron, thereby also confirming the nature and value of
payments made to the Janodien family. Our objectives were to:

 assess compliance with regulation 22
 identify unlawful payment(s)
 identify any official(s) responsible for authorising unlawful payments.

We reviewed the incident reports kept by the WPU regional office in Kwazulu-
Natal, setting out all interactions with the Janodien family, with the objective of
identifying unusual witness payments warranting further investigation.

We obtained statements from Ms Venter (the acting regional head of the
Kwazulu Natal WPU office), as well as Mr Theron in respect of the payments
made to the Janodien family.

We were unable to perform a detailed comparison between payments made to
the Janodien family and to other witnesses, given the absence of specific
policies with respect to witness payments and the limited financial systems. This
limitation affected our ability to accumulate sufficient conclusive evidence with
respect to the allegation of favouritism. The allegations of favouritism and the
existence of relationships with the Janodien family were also addressed in the
of Messrs Adam's and Borcherd's 5(2)(c) hearings, in which they vehemently
denied the allegation.

42 Schedule of payments to the Janodien family for Kwazulu-Natal, attached as Annexure WPP21
43 We reconciled a sample of items on the payments schedule to the underlying cash book to provide some assurance
that the schedule provided to us by Mr Theron was prepared on the basis of the underlying financial records

48
5.2.2 Investigation findings
The Janodien family (Mr Janodien and eleven family members) were accepted
onto the WPP on 6 December 2001. The family increased by five members
from 2002 to 2007. The family was initially located in Johannesburg and
transferred shortly afterwards to Kwazulu-Natal in 2002.

Based on information provided by Mr Theron, we established that payments
totalling R 4 550 029.37 (after tax) were made to the Janodien family by the
WPU during the 5 ½ year period (approximately R800 000 per calendar year).

Payments made by the Kwazulu Natal regional office to the Janodien family,
between May 2002 and September 2007 amounted to R 4 367 900 and the
payments were classified as follows:

Table 2: Payments to Janodien family 2002–7
Item Amount
Salary replacement R 941 440
Transport and relocation costs R 78 321
Medical expenditure R 685 680
School fees R 223 147
Clothing R 48 320
Accommodation R 2 105 005
Other expenditure R 285 985

Payments made from the Gauteng regional office to the Janodien family
between February 2002 and April 2002 amounted to R182 129.37. These
payments were allegedly all in respect of clothing allowances. We are not aware
of payments made to the Janodien family from any other region in this period.

The majority of payments requested by the Janodien family were approved by
Mr Adam, with some payments being authorised by Mr Borcherds. There was
no supporting documentation for a number of these payments, such as the
invoices related to the amounts paid to the family for clothing.

Our review of documentation contained in the Janodien witness file, held in
Kwazulu-Natal, confirmed that a number of payments were made to the family

49
in respect of clothing, school fees, transport and relocation costs and other
expenditure. Further detail regarding this expenditure is set out below.

In order to establish whether exorbitant allowances had been paid to the
Janodien family, we reviewed the payment schedule provided by Mr Theron,
together with supporting documentation. Our findings are detailed below for
each allowance/payment category.

Salary replacements

The WPU Kwazulu Natal regional office paid R941 440 to the Janodien family
between May 2002 and September 2007, for salary replacements and fuel
allowances. The total monthly net salary replacement paid to the Janodien
family appears to have varied between R8 200 and R12 200 per month, with a
bonus or 13th cheque paid out in September/October each year. Ms Venter
confirmed that the Janodien family (currently standing at 17 members) received,
as at 5 March 2008, a salary replacement allowance of R13 457.68 (for the
entire family).

The estimate of the salary allowance above may be understated given that the
prescribed allowances were reduced to cover instalments owing by the family
on interest-free loans issued by the WPU (discussed in detail in section 5.3 of
this report). We estimate that loan repayments of R86 654 were deducted from
salary payments to the Janodien family between 2002 and 2007.

In terms of the daily salary replacement of R400 per day prescribed by the
regulation, a witness could receive a monthly payment of R12 400 before tax.
The salary replacement paid to the Janodien family therefore appears to be in
excess of the amounts prescribed by the regulations

The amount of the salary replacement is dependant on two components:

 the income/salary earned by the witness prior to entering the programme
 the monthly living costs that witness incurred prior to his/her admission onto
the programme, such as the cost of rental and electricity.44

44 Mr Theron’s affidavit attached as annexure WPP17

50
Mr Borcherds calculated the salary replacement for the Janodien family.45 We
were unable to verify the accuracy of this calculation, as we were unable to find
any proof of the family’s income prior to joining the WPP. Mr Theron was also
unable to explain on what basis Mr Borcherds determined the value of the
monthly salary replacement.

The Janodien family also received bonus payments that were not authorised in
terms of the regulations, although Mr Theron stated that he had been instructed
by Messrs Adam and Borcherds to pay annual bonuses to all witnesses. The
salary replacements detailed above include annual bonuses totalling R85 645
between 2002 and 2007. These bonuses were authorised by Messrs Adam and
Borcherds, but not authorised in terms of the applicable regulation and/or any
written WPU policy, and thus were entirely at the discretion of the head and
national co-ordinator.

Mr Theron confirmed that the WPU does not have a written policy in respect of
the payment of annual bonuses to witnesses, stating that in September 2002
(when he commenced employment), he had been instructed by Mr Borcherds
and Mr Adam to pay annual bonuses to each witness family. We established
that the annual bonuses are equal to one month’s income/salary replacement,
and they are usually paid to coincide with religious festivities such as Eid or
Christmas.

In terms of the regulations, the income for each witness family has to be
monitored so that the salary replacement can be withdrawn at the point the
family becomes financially independent. Ms Venter stated that Mr Janodien has
his own business in the computer industry, and is required to submit regular
bank statements of the business in order for the WPU to assess his financial
status. According to Ms Venter, the financial circumstances of the business
have not yet reached a sufficiently profitable stage and as such, the WPU has
decided not to withdraw the salary replacement allowance. The WPU is
apparently reliant on the information and bank statements provided by the
witness; his circumstances and that of the family are evaluated on this basis.

45
Mr Theron’s statement attached as Annexure WPP17

51
A salary replacement is intended to cover all general day to day living expenses
of the witness and his/her family members.46 Ms Venter referred to items such
as fishing equipment, printer cartridges, food and other incidental items
ordinarily being covered by the salary replacement allowances.

Ms Venter stated that in the case of the Janodien family, numerous requests
were received for the purchase of items or goods that strictly speaking should
have been covered by their salary replacement allowance. These requests were
submitted to the National Office and paid after approval by Mr Adam and/or
Mr Borcherds.

We also identified payments to witnesses other than the Janodien family
relating to excess items (over and above the allowances outlined by the
regulations) that were approved by Messrs Adam and Borcherds. As such, we
could not conclude whether this treatment was specific to the Janodien family
without conducting a full analysis of all witness calculations and payments for all
regions. We concluded that this type of exercise would be ineffective given that
the quantification of all witness payments would necessitate recompiling the
WPU accounting records from the source documentation for the period 2001 to
2007 for all regions.

Fuel allowance

A fuel allowance was included in the monthly salary replacement payment.
Ms Venter confirmed that the Janodien family (currently standing at 17
members) received a fuel allowance, which, as at 5 March 2008, was valued at
R2 800 per month.

Mr Theron stated that requests for fuel allowances were evaluated and
authorised by Messrs Adam and Borcherds. He confirmed that the Janodien
family received a fuel/transport allowance in addition to the normal monthly
salary replacements.

The fuel allowance is also not authorised in terms of the regulations and thus is
a payment made in terms of the WPU’s informal policy. In terms of our
estimates, the fuel allowance paid to the Janodien family could at most be

46
Regulation 22, affidavits of Mr Theron and Ms Venter (Annexure WPP 17 and WPP 19)

52
approximately R182 000 (65 months at R2 800). In addition, authorisation from
the DG of Justice was not obtained for these excess payments, as required in
terms of the regulations.

Clothing Allowance

Mr Theron provided us with a record of clothing allowances paid to the Janodien
family whilst located in Gauteng (2002) and Kwazulu-Natal (May 2002 to August
2007), as set out in tables 3 and 4 below.47

Table 3: Clothing for Janodien family – Gauteng
Date Amount Paid
14 February 2002 R 33 000.00
9 April 2002 R 70 000.00
10 April 2002 R 79 129.37
Total R182 129.37

Table 4: Clothing for Janodien family – Kwazulu Natal
Date Amount Paid
October 2002 R 420.90
August 2003 R 23 500.00
June 2004 R 5 200.00
November 2004 R 5000
May 2005 R 2 400.00
October 2005 R 5 200.00
August 2006 R 3 000.00
July 2007 R 3 600.00
Total R 48 320.90

47
Set out in Mr Theron’s affidavit attached as Annexure WPP17 and confirmed in Ms Venter’s affidavit attached as
Annexure WPP19

53
Mr Theron stated that he had not participated in evaluating and/or authorising
the Janodien family’s request for additional clothing. He confirmed that Messrs
Adam and Borcherds had evaluated and approved all payments to the family for
additional clothing. Mr Theron also stated that he would not pay more than
R800 per family member for clothing requests. Mr Theron was also unable to
explain the basis for the decisions taken by Messrs Adam and Borcherds in
respect of the payments for additional clothing made to the Janodien family.

Ms Venter confirmed that the generally accepted WPU practice relating to
clothing was a maximum of R800 per member per year, and she identified
Messrs Adam and Borcherds as responsible for authorising requests for
additional clothing. She explained that all applications for additional clothing
were submitted to head office for approval, including those made by the
Janodien family. Ms Venter also recalled that on one occasion, the Janodien
family was paid their clothing allowance a year in advance.

All clothing allowances are paid to witnesses in the form of cash and the WPU
does not request any receipts as proof of clothing purchases. Our review of the
supporting documentation confirmed that no invoices were available for the
clothing purchases allegedly made by the Janodien family. The supporting
documentation provided by Mr Theron consisted of quotations totalling
R188 137 from clothing retailers (such as Edgars), dated within the relevant
period. The documentation also included proof of receipt of the monies by the
Janodien family.

Our analysis of the respective itemised clothing quotations established that this
initial request for additional clothing included the following items:

Table 5: Requests for additional clothing made by Janodien family
Family member Clothing request
Bakar  6 pairs of jeans (namely 4 Levis jeans and 2 Diesel jeans)
 3 pairs of cargo pants
 1 leather jacket
 10 t-shirts and 5 long sleeve shirts
 3 track suits
 2 jackets
 4 pullovers and 2 round neck jerseys
 2 pairs of takkies (Nike and Reebok) and 2 pairs of shoes
(Diesel and Bronx)

54
Fazlin  4 track suits
 6 dresses
 5 pairs of jeans
 1 leather jacket and 2 fleecy jackets
 8 sweaters, 5 polo-neck sweaters and 4 jerseys,
 1 sports blazer
 4 skirt and blouse suits
 4 pants and jacket suits
 4 pairs of shoes and 3 pairs of takkies
 2 handbags
Baby Fatima  12 tracksuits
 12 shorts and sweaters
 6 fleecy jackets
 3 pairs of shoes
 7 dresses
 7 jerseys and 4 polo neck jerseys
 8 skirts with a blouse
 8 long pants
 12 dozen nappies
Zain  8 base ball caps
 5 pairs of jeans (3 Levis and 2 Diesel)
 4 pairs of formal pants and 2 pairs of cargo pants
 2 tracksuits
 7 shirts
 1 sports blazer and 1 bomber jacket
 1 leather jacket and 1 full leather jacket
 1 three piece suit
 4 pairs of takkies (Diesel, Reebok, Nike and Buffalo)
 2 pairs of shoes
Kader  2 suits
 1 sports jacket and 1 mohair jacket
 2 Levis jeans
 2 tracksuits
 1 leather jacket
 4 jerseys and 8 sweaters
 5 long sleeve shirts
 3 pairs of shoes and 2 pairs of takkies (Nike and Reebok)
Hajiera  4 HP huggers
 5 pairs of jeans and 3 pairs of cargo pants
 6 track suits
 4 casual trousers
 2 denim jackets and 2 leather jackets
 2 wind breakers and 4 fleecy jackets
 2 rain coats
 9 jersey/polo-necks
 8 pants suits

55
 6 dress suits
 8 skirts and tops
 3 long skirts and blouses
 8 sweaters
 4 pairs of takkies
 3 pairs of shoes and 2 pairs of boots

A similar trend is evident in the requests of the remaining family members for
additional clothing. Some specific requests that have not been mentioned above
include six evening dresses for Gouwa and eight long evening dresses, two
evening gowns and four evening bags for Fatima.

We also believe that certain of these purchases constituted fruitless and
wasteful expenditure by the WPU given that:

 multiple pairs of the same clothing item were purchased, for example one
family member bought 5–6 pairs of jeans as well as three pairs of takkies
 luxury, high end brands were selected, contrary to the principle of
“necessary clothing” outlined in the regulation. The brands included Levis,
Bronx, Reebok, Nike
 a number of luxury coats were purchased by individual family members
resulting in one case in a family member having two leather coats, a sports
jacket and a variety of fleece jackets
 Multiple formal pants and shirts, including three piece suits, were
purchased even though the family is alleged to be unemployed and
therefore receiving a salary replacement
 luxury clothing items such as gowns and long dresses were purchased
despite the family having insufficient funds to finance living costs, such as
school stationery, food when visiting Cape Town and repairs to motor
vehicles.

These clothing requests were funded by the WPU who paid R182 129.37 to the
family in three separate instalments based on the clothing quotations detailed
above. These payments were authorised by Messrs Adam and Borcherds.

We were informed by both Mr Theron and Ms Venter that the family was
required to leave home urgently and without notice, resulting in their
possessions being left at the house. We could not, however, establish why it

56
was not possible for the protectors or other law enforcement agencies to
retrieve the family’s possessions, including clothing, at a later stage.

The Janodien family continued to receive clothing allowances subsequent to
this initial request for additional clothing at the time the family first entered the
program. However, subsequent payments appear to be more consistent with a
clothing allowance, other than the payment of R23 500 made on
19 August 2003. Ms Venter confirmed that this amount does not reconcile with
the prescribed rate of R400 per family member, but that the payment had been
approved by Mr Borcherds after a meeting between Mr Borcherds and Mr Adam
to discuss an application submitted by the Janodien family. An internal memo,
dated 18 August 2003, indicates that Messrs Borcherds and Adam approved
the amount “for growth purposes and as the family have several dependants.”48

In terms of regulation 22, a family of 17 members could at most (assuming the
policy of R400 per member twice a year) receive a clothing allowance of
R 13 600 per year. In terms of this assumption, the most that a witness family of
17 members could expect to receive over a period of 5.5 years is R70 720. As
payments of R230 449 were made to the family between 2002 and 2007, it
would appear that at least R159 729 required authorisation by the DG of
Justice.

Transport and relocation cost

Payments totalling R78 321 were made to the Janodien family between
May 2002 and December 2007 for transport and relocation costs49.

Our analysis indicated that a large percentage of the transport payments made
to the Janodien family were for airfares and train tickets to Cape Town. The
majority of the requests were authorised by Messrs Adam and Borcherds.
Certain payments had incomplete supporting documentation, with a number of
acknowledgements of receipt of the monies by the witness and certain invoices
were absent from the file.

48
This internal memorandum is attached as Annexure WPP22
49
On the basis of the schedule of payments made to the Janodien family provided to us by Mr Theron, attached as
Annexure WPP21

57
As transport costs are not specifically allowed for in the regulation, the DG of
Justice is required to authorise such payments.

School fees

Payments totalling R 223 147 were reflected on the WPU schedule as school
fee(s) paid to the Janodien family between May 2002 and December 2007.
These payments were for school fees, school outings, school clothing,
stationery and bags for school. A number of these payments had incomplete
supporting documentation, especially with respect to invoices and other proof
as to how the money was used. These payments were authorised either by
Mr Adam or Mr Borcherds.

As school fees are not specifically allowed for in the regulation, the DG of
Justice is required to authorise such payments

Medical expenses

Payments totalling R685 680 were made to the Janodien family for medical
expenses over the 5.5 year period. The expenditure incurred by these 17
members (approximately 3% of the average total number of protected
individuals) represents approximately 31% of all medical expenditure incurred
between 2005 and 2007.

Medical payments were authorised by Mr Theron, Mr Borcherds, Mr Adam and
in some cases Mr David Kora, the previous regional head of KZN. Mr Kora is
the current regional head of the Eastern Cape. 50

It is WPU’s practice to pay for prescription medicine for witnesses and their
dependents. In the case of the Janodien family, these prescription drugs were
purchased at a chemist (mostly Medisport Pharmacy) and the WPU settled the
Janodien family’s chemist account. However, as the family purchased other
items on the account, for example honey, Gaviscon, peppermint drops,
Corenza C, Voltaren, Panado, cod-liver oil, toothpaste and shampoo, the WPU
consequently paid for items other than prescription medicine.

50
Established by our review of the medical section of the witness file held at Kwazulu-Natal

58
There are complaints on the witness file from Mr Adam asking the protector to
control the medical usage by the family, referring specifically to wastage and to
abuse of the pharmacy account (these letters occur during 2005). Mr Adam, for
example, raised concern about the necessity of the doctor’s consultations given
occasions where six family members consulted the doctor on the same day.
Mr Adam also requested that doctors outside the Umhlanga area should be
used as this area was particularly expensive. Despite these requests, there was
no significant decrease in monthly medical expenditure after 2005. Figure 6
below confirms that the medical costs paid to the Janodien family peaked in
May of each year and continued to escalate over the period, despite the
concerns regarding the management of these medical costs.

Regulation 22(5) allows any expenditure incurred by the State for medical care
of a protected person to be taken into account before any allowance is paid to
the protected person in terms of this regulation. The other allowances paid to
the Janodien family were not reduced as a result of the medical payments made
during the respective year.

59
Medical Costs Janodien Family

80,000

70,000

60,000

50,000

R
40,000

30,000

20,000

10,000

0
May 02 Aug 02 Nov 02 Feb 03 May 03 Aug 03 Nov 03 Feb 04 May 04 Aug 04 Nov 04 Feb 05 May 05 Aug 05 Nov 05 Feb 06 May 06 Aug 06 Nov 06 Feb 07 May 07 Aug 07

Month

Figure 6: Schedule of medical costs paid for the Janodien family – Kwazulu Natal

60
Other payments

Payments totalling R285 985 were made in respect of “other costs” to the
Janodien family between May 2002 and August 2007. The main portion (65%)
of these “other costs” relate to interest free loans given to the Janodien family
during this period, totalling R187 628 (discussed in 5.3 below). The remaining
R98 357 in payments classified as “other” were for items such as repairs to
vehicles, computer repairs, tyres and fishing equipment to name a few.

We identified the following payments in our review of “other payments” recorded
in the regional cashbooks and witness files:

Table 6: "Other" payments made to Janodien family 2002–2007
Item Payment
Computer repairs R2 000
Printer cartridges R630
Tyres for Mr Janodien’s vehicle R3 900
Tyres for father’s vehicle R630
Service of motor vehicle R3 500
Fishing equipment R2 975 (no invoice supplied)
Repairs to Mr Janodien’s R7 500 (no invoice supplied)
vehicle (BMW 320)
Repairs to Mr Janodien’s R6 932 (no invoice supplied)
vehicle (Toyota Corolla)
Loan to Mr K Janodien (a Loan of R10 000
dependent of Mr Janodien) for No loan agreement signed and
the purchase of birds. payment authorised by Mr Borcherds
Purchase of six bicycles for the R 5 399
family

Ms Venter stated that these items should probably have been purchased by the
family themselves, using the salary replacement they received from the WPU.
In all of the above cases, a written application was received from the family for
the purchase of the items or services. These applications were all forwarded to
the National Office, which then approved the expenditure for the items or
services in question. Mr Adam in particular would advise the acting regional

61
head, Ms Venter, that he approved many of the applications on humanitarian
grounds and that the personal circumstances of the witnesses should always be
taken into account. He also added that the WPU had to take the rising cost of
living into account given that the salary replacement allowance had remained at
the same level since the family entered the program.

We also identified payments by WPU in respect of a computer course at INTEC
for Mr Janodien as well as the settlement of a traffic fine given to Mr Janodien
for driving without a licence and with a faulty handbrake. Other types of
payments included in this category were allowances for food whilst the family
was visiting relatives in Cape Town and further clothing allowances.

The payments outlined above, and classified as "other items" in the cashbooks,
were not authorised in terms of regulation 22 and no approval was obtained
from the DG of Justice to make payments in excess of the prescribed rates.

Alleged favouritism of the Janodien family by Messrs Adam and
Borcherds

Our findings with regard to the allegation that the Janodien family were unduly
favoured are set out below.

We failed to identify any relationships between the Janodien family and
Messrs Adam and Borcherds or any corroborative evidence with respect to this
allegation during our investigation.

We established that there was no consistent policy applied in respect of witness
payments, as each motivation for funding was evaluated by Messrs Adam and
Borcherds on a case by case basis. In the absence of benchmarks provided by
an underlying policy, any conclusions regarding favouritism are difficult to
corroborate without re-assessing the basis of the decisions taken for each
case/payment.

Ms Venter also stated that in her opinion, the Janodien family had not been
unduly favoured and that the practice for processing witness payments was
consistently applied. She explained that the Janodien family made more
requests than other witnesses, but that each request was assessed using the

62
same process. During our review of payments and other supporting
documentation, we identified witnesses other than the Janodien family receiving
payments such as fuel allowances, school fees and other payments in excess
of the prescribed rates in regulation 22.

Our analysis was not sufficient to draw any conclusions regarding the quantum
of payments made to the Janodien family in relation to payments made to other
witnesses. In light of the above, we could not conclude that these types of
payments were peculiar to the Janodien family and/or that the family had been
unduly favoured.

5.2.3 Conclusions relating to witness payments in general
The regulations for the WPA have not yet been published (approximately nine
years after the promulgation of the WPA), and this has resulted in the continued
application of the regulations of the Criminal Procedure Act 51 of 1977 (CPA)
for calculating and determining witness payments. Given that these regulations
were not only drafted a number of years ago, but also were drafted specifically
for the protective custody environment (which is significantly different to that of
the WPP), there is a significant variance between the type of witness payments
currently effected by the WPU and that allowed for in terms of the regulations.
The lack of a WPU policy with respect to witness payments, as well as
inadequate legislation and guidelines currently in force, has resulted in witness
payments being effected on a discretionary basis and exercised primarily by
Messrs Adam and Borcherds.

However, although the witness allowances prescribed by the regulations may
be outdated, regulation 22 continues to be the authority with respect to types
and amounts of payment that may be made to witnesses. In addition, the
regulations prescribe the process to be followed in cases where the rates are
considered to be inadequate, with the DG of Justice being required to approve
any additional expenditure.

These regulations were also embodied in the WPU guidelines, referred to
above and provided by Mr Adam to Mr Mokotedi of the IMU on 26 June 2006,
under a handwritten covering note, which serves as acceptance that Mr Adam

63
understood that the guidelines and the regulations were the source of the tariffs
for witness compensation.

We believe that the argument that section 4 of the WPA (dealing with the
powers, function and duties of directors) provided Mr Adam with a discretion to
approve any transaction connected with providing support services to witnesses
and their extended family is flawed. It is not possible to have discretion on an
issue that is otherwise regulated, as is the case with witness payments.

However, even if Mr Adam had understood himself to have unfettered discretion
with respect to witness support, we believe that an analysis of the totality of
evidential material shows the manner in which he exercised this discretion to be
unreasonable. For example:

 The prescripts refer to the purchase of necessary clothing for witnesses
whereas our analysis identified that designer labels were purchased by
WPU for certain witnesses (refer to paragraph 5.2 for further details
regarding the nature of clothing purchased by the witnesses).
 Salary replacements continued to be paid by the WPU in spite of a witness
having a business and the WPU failed to obtain proper confirmation of
income.
 Funding was provided to witnesses by the WPU for items that could not be
considered to be part of necessary living expenditure and which, in terms of
the regulations, would be required to have been financed by the witness
from their respective salary replacement income – for example, designer
clothing, loans in respect of the purchase of birds, school day trips, repairs
to motor vehicles, general loans/advances, fishing equipment, transport to
school and transport in general.
 Loans were provided to witnesses without an underlying agreement and
subsequent loans were advanced despite the previous loan not having
been repaid; further to this, interest was not charged on the loans issued.
 In one case, as many as 13 individuals related to the same witness were
accepted onto the WPP. All family members received the same benefits as
paid to other witnesses. This family is dealt with specifically in paragraph
5.2

64
 Annual bonuses equal to one month’s income/salary replacement were
paid to witnesses, usually coinciding with religious festivities such as Eid or
Christmas. The regulations do not make provision for this type of payment.
 In most instances of witness payments exceeding the amount prescribed
by the regulations, no supporting documentation was obtained from the
witnesses to establish whether the WPU monies were used in a manner
consistent with the motivated and approved request.
 There appeared to be no instance where a witness’s respective salary
replacement was reduced in light of other funding requests made, as
envisaged by regulation 22(5).

In light of the above, we believe that payments made to the witnesses in excess
of the prescribed rates, as set out in the regulations, were irregular and
unauthorised.

We are also of the opinion that Mr Borcherds intentionally overrode the internal
controls created through the segregation of duties when he instructed WPU
regional heads to transfer WPU monies in the absence of supporting
documentation or sufficient background information to assess the risks and
appropriateness of such payments.51

This circumvention of WPU internal control(s) increased the risk of fraud and/or
irregularities potentially resulting in loss for WPU.

A deputy head, as a person in a senior management position, is responsible for
implementing internal controls and promoting governance. As such, we
consider it negligent for him to have issued instructions, on more than one
occasion, to regional heads to make payments to third parties (including
witnesses and himself) in the absence of supporting documentation or the
background information necessary for the regional head to assess the risks
associated with the payment. Mr Borcherds was, in our opinion, negligent
notwithstanding the covert nature of operations, as the regional heads were of
sufficient seniority in the organisation to share in any covert or confidential
information.

51
An example of this behaviour is set out in section 10

65
A number of the witness payments were authorised by Mr Borcherds (who
performs the role of National Co-ordinator and second in charge at the WPU).52
We established from Mr Theron that there is no written delegation authorising
Mr Borcherds to perform functions such as exercising discretion with respect to
witness payments in excess of the regulations and/or authorising payments and
specifically witness payments. The only written authority in respect of
Mr Borcherds powers and duties is his letter of appointment provided by the
WPU. We believe that Mr Borcherds was not authorised to approve witness
payments and/or use discretion in making payments outside of the regulated
rates. The witness payments authorised by Mr Borcherds are therefore
irregular.

5.2.4 Recommendations regarding witness payments in general

Institute disciplinary action against Mr Adam

For the reasons outlined, we believe that Mr Adam’s approval of witness
payments in excess of prescribed tariffs is unlawful and constitutes misconduct.
We therefore recommend that the WPU institutes disciplinary action against
Mr Adam. In the alternative, even if Mr Adam understood his discretion to
extend to authorising all transactions in the WPU, including any witness
payments, the way in which he exercised this discretion was unreasonable and
as such constituted misconduct warranting disciplinary action.

Institute disciplinary action against Mr Borcherds

We believe that Mr Borcherds' approval of witness payments in excess of
prescribed tariffs is unlawful and constitutes misconduct. In addition, we believe
that Mr Borcherds' negligence and intentional evasion of the WPU’s internal
controls constitutes misconduct. We therefore recommend that the WPU
institutes disciplinary action against Mr Borcherds.

52
Mr Borcherds confirmed in his 5(2)( c) hearing that he was the Deputy Head of the WPU, Annexure WPP58

66
Formulate regulations in terms of section 23 of the WPA

We recommend that regulations specific to the WPP should be formulated and
enacted in terms of section 23 of the WPA. This will provide the WPU with tariffs
and guidelines that are developed specifically for the business model of the
WPU. Such subordinate legislation will reduce the risk of irregular witness
payments by providing a relevant, appropriate and consistent basis of
assessment for all witness requests.

Draft specific WPU guidelines in accordance with new regulations

We recommend that the WPU draft guidelines to assist with the application of
the new regulations, thereby ensuring that each payment request is considered
in accordance with a common set of underlying principles.

Insist on documentary proof verifying use of WPU funds

Further, we recommend that witnesses provide documentary proof of
purchase/delivery to ensure and/or verify that WPU funds are used in terms of
the initial motivation/request.

Review WPU financial systems for witness payments

Finally, we recommend a review of the WPU financial systems for witness
payments, with a view to introducing a central electronic record of all payment
requests made by a respective witness together with a record of all payments
made by the WPU. This will allow comparisons to be made between witnesses
thereby allowing more effective identification of any fraud/error.

5.2.5 Conclusions with respect to payments to the Janodien family
The Janodien family received payments of R 4 367 900 between May 2002 and
August 2007. The payments prescribed by regulation 22 are limited to a salary
replacement of R400 per day, a clothing allowance of R400 per family member
per year for necessary clothing as well as medical expenditure. The state is
also entitled to adjust allowances for any payments made in respect of clothing
or medical expenses. All witness payments in excess of these prescribed
payments are required to be authorised by the DG of Justice.

67
It appears that payments totalling R 1 018 827 were made to the Janodien
family in excess of the payment types and values prescribed in the regulations.
These excessive and therefore irregular payments consist of:

 Clothing allowance of R159 729
 Bonus payments included in the salary replacements of R85 645
 Fuel allowance included in monthly salary payments of R186 000 (this is an
estimate of R2 800 based on Ms Venter affidavit and would need to be
verified to the supporting documentation)
 Transport and relocation costs of R 78 321
 School fees of R 223 147
 Interest free loans of R187 638 (included in other payments and dealt with
in more detail in 5.3 below)
 Other expenditure of R 98 347

This estimate of irregular expenditure does not include the possible excess
payments made in respect of salary replacements, given the issues detailed
above with regard to quantification.

With reference to all of the witness payments outlined above, we believe that
even if Messrs Adam and Borcherds understood their discretion/mandate to
extend to authorising all witness payments in the WPU, the evidence indicates
that they exercised this discretion/mandate in an unreasonable manner. Our
conclusions in respect of these various categories of payments are discussed in
detail below.

Clothing allowances

Clothing allowances paid to the Janodien family in 2002 totalling R159 729
appear to be irregular to the extent that the excess expenditure was not
approved by the DG of Justice.

Certain purchases appear to possibly constitute fruitless and wasteful
expenditure, such as much of expenditure on clothing, since:

 the family’s clothing was not collected by a suitable agency from their home
at any point after their admission to the WPP, requiring the WPU to finance
the purchase of entirely new wardrobes for all family members. This

68
conclusion would however require further interrogation of any underlying
circumstances which prevented subsequent collection of the family’s
possessions.

 the nature (luxury brands) and quantity (multiple purchases of the same
luxury item) of the purchases could be described as excessive.

The authorisation of these payments by Mr Adam and Mr Borcherds, without
verifying the purchase of the clothing and considering the amounts involved, in
our view amounts to negligent acts that resulted in losses to the State.

Salary replacement

Payments totalling R855 795 (excluding bonuses) were made to the Janodien
family for salary replacement between May 2002 and August 2007. We are
unable to definitively conclude as to the accuracy of these payments without
performing an audit of all salary replacement payments made to the Janodien
family. The following areas of concern were highlighted during our analysis:

 Salary payments do not appear to have been reduced by living costs paid
to the Janodien family (accommodation, clothing, fuel, school fees and
medical),

 The initial calculation of the salary replacement is not documented and
therefore could not be reviewed,

 The salary payments made to the family appear to exceed the prescribed
rate for salary replacement; and

 There was possibly an inadequate revision of the salary replacement
payments given the inadequate on-going assessment of the family’s
financial position.

We also are not aware of any approval from the DG of Justice in respect of
salary payments in excess of the prescribed rate. An extended audit of these
payments is required in order to quantify the value of salary replacement
payments that may possibly be irregular.

Annual bonuses totalling R 85 645 were paid to the Janodien family between
May 2002 and August 2007. These payments, approved by Messrs Adam and

69
Borcherds, were not authorised in terms of the applicable regulation and/or any
written WPU policy, and thus were entirely at the discretion of the head and
national co-ordinator. The bonus payments therefore appear to be irregular.

Fuel allowance

The monthly fuel allowance paid to the Janodien family (R2 800 in March 2008)
and approved by Messrs Adam and Borcherds, was not authorised in terms of
the applicable regulation and/or any written WPU policy, and thus was entirely
at the discretion of the head and national co-ordinator.

In addition, authorisation from the DG of Justice was not obtained for these
excess payments, as required in terms of the regulations. As such, and in the
absence of any specific WPU policy, these payments are irregular as they were
made without the necessary authority.

Other payments

Payments to the Janodien family totalling R 587 453 were also made in excess
of the regulations:

 Transport and relocation costs of R 78 321
 School fees of R 223 147
 Other expenditure of R 285 985 (this includes the interest free loans)

Authorisation from the DG of Justice was not obtained for these excess
payments, as required in terms of the regulations. As such, and in the absence
of any specific WPU policy, these payments are irregular as they were made
without the necessary authority.

Alleged favouritism

We were unable to identify any evidence to support the allegation that the
Janodien family was unduly favoured by Mr Adam and/or Borcherds and/or
were related to Mr Adam.

70
5.2.6 Recommendations with respect to payments to the Janodien family

Institute disciplinary action against Mr Adam

For the reasons outlined, we believe that Mr Adam’s approval of the payments
to the Janodien family in excess of the prescribed tariffs is irregular and
unauthorised and constitutes misconduct. This was evident with respect to the
payment of clothing allowances, bonuses, fuel allowances and payments
classified as “other”. We therefore recommend that the WPU institutes
disciplinary action against Mr Adam.

At such disciplinary proceedings, we suggest that in the alternative to the count
of misconduct, a further count of misconduct, based on the unreasonable nature
of the payments to the Janodien family, must be added. The purpose would be
to deal with a situation where the presiding officer could be convinced that
Mr Adam did have a wide discretion to authorise payments, or at least believed
that he had such discretion.

Institute disciplinary action against Mr Borcherds

We believe that Mr Borcherds' approval of payments to the Janodien family in
excess of the prescribed tariffs is unlawful and constitutes misconduct. This was
evident with respect to the payment of clothing allowances, bonuses, fuel
allowances and payments classified as “other”. We therefore recommend that
the WPU institutes disciplinary action against Mr Borcherds.

At such disciplinary proceedings, we suggest that in the alternative to the count
of misconduct, a further count of misconduct, based on the unreasonable nature
of the payments to the Janodien family, must be added. The purpose would be
to deal with a situation where the presiding officer could be convinced that
Mr Borcherds did have a wide discretion to authorise payments, or at least
believed that he had such discretion.

71
5.3 Loans/advances made by the WPU to witnesses
A key focus area of our proclamation related to the allegation(s) in respect of
the payment of financial benefits to witnesses and/or persons in contravention
of, in excess of and/or without compliance to the WPA and/or policies,
procedures, prescripts, directives, guidelines.

During our analysis of five regional cashbooks, we identified specific
advances/loans made to various witnesses and/or their dependents. Given the
allegation of excessive allowances paid to the Janodien family, we performed
an analysis of loans made to the Janodien family during the period May 2002 to
August 2007.

The value of the loans paid to the Janodien family has been included in the
quantification of irregular witness payments set out in 5.2 above. The purpose
of this section is to provide more information regarding the process of issuing
and collecting loans.

5.3.1 Methodology and procedure

Review of legislation

We reviewed the legislation and/or regulations governing issuing of loans to
witnesses. We reviewed the WPA as well as the subordinate legislation,
regulation 22.

Interviews

We interviewed Mr Theron as well as Ms Venter with respect to the WPU policy
and procedure for loans to witnesses.

Analysis of payments and relevant documentation from regional offices

During the course of our payment analysis for the five regional offices, we
selected material witness loans (ie of relatively large rand value) and agreed
these to the supporting documentation.

We reviewed the AG management reports issued from 2003/2004 to 2006/2007
in order to identify any issues raised by the AG in respect of loans made to
witnesses.

72
We obtained a schedule of loans made to the Janodien family from Mr Theron.
Together with Mr Venter, we reviewed the loans register maintained at the
KwaZulu Natal regional office, to quantify all cash flows in respect of loans
made to the Janodien family.

5.3.2 Investigation findings

Review of legislation

As previously established, witness payments are made in terms of regulation 22
of the CPA. There is no provision in these regulations for the payment of loans
to witnesses and/or their dependents. In terms of the regulation, any
expenditure required by witnesses in excess of prescribed rates is required to
be approved by the DG of Justice.

Ms Venter confirmed that there was no WPU policy in respect of issuing loans
to witnesses and/or dependents. According to Ms Venter, a WPU policy on
loans/advances to WPU members and witnesses was implemented in
May 2007, following a number of irregularities raised by the AG in the 2007
audit in respect of loans issued to witnesses. Ms Venter explained that prior to
this new policy, all loan applications were evaluated on a case by case basis
with Mr Adam and Mr Borcherds granting final approval. We established that in
certain cases Mr Theron approved loans issued to witnesses and/or their
dependents. Mr Theron stated that he only approved these payments after
receiving a telephonic instruction from Mr Borcherds.

During our review of the financial systems of the five regional offices, we
established that an advance register was maintained by these regional offices in
which all advances and/or loans were recorded. We also established from our
review that loan agreements were generally not drawn up, and formalised loans
repayment schedules were not agreed to. We identified instances where loans
were not repaid, yet further loans had been granted in spite of remaining
balances on long-outstanding loans.

Mr Theron confirmed that loans had been granted to witnesses over the years,
and that loans had been issued to the Janodien family. Mr Theron also provided

73
us with the WPU policy implemented in May 2007, in terms of which the WPU
started to charge interest on outstanding loans to witnesses from 1 June 2007.

Loans made to the Janodien family

Ms Venter confirmed that loans totalling R187 628 were issued to the Janodien
family from the Kwazulu-Natal (KZN) regional office between 2002 and 2007.
These loans were approved by Messrs Adam and Borcherds.53 Ms Venter
stated that the Janodien family most frequently liaised with Mr Adam or
Mr Borcherds, who would then instruct her to issue the loan in terms of the
normal procedure.

We have presented the loans issued to the Janodien family by the WPU, as well
as the repayments made by the family, in Figure 7 below. The analysis was
based on our review of the advances register of the KZN regional office.

WPU: Loans to Janodien Family
Total Paid Out: R187 628.46 Total Repaid: R86 654.70

Loans Granted Loan Repayments

R 25,000

R 20,000

R 15,000
Loan
Amount
R 10,000

R 5,000

R0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Total Number of Loans

Figure 7: Schedule of loans issued to the Janodien family by the WPU office in KZN

53
In terms of Mr Theron and Ms Venter’s affidavits attached as annexure WPP17 and WPP19 respectively

74
We identified in our analysis that loans totalling R100 973.76 had not been
repaid to the WPU at the time of our investigation. Of this outstanding amount,
R69 000 in loans were granted to the Janodien family on the basis that
repayment would be deferred until the family received its reward for assisting
the SAPS and other law enforcement agencies in a criminal investigation.54

Mr Theron also stated that he understood that loans issued to the Janodien
family would be repaid once these rewards had been paid to the family. He was
aware of the reward of R 6 150 000 from the SA Police Services in the Western
Cape, from information provided to him by Mr Borcherds.

Mr Theron referred to the management comments provided by the WPU to the
AG in respect of the 2006/2007 financial year.55 The note compiled by
Mr Theron, with the assistance of Mr Adam, specifically states that:

“In the case of KZN 35/02 the rewards due to the witness and related
persons as negotiated with SAPS is the sum of R6 Million. A further
reward of R150 000.00 is due to the witness for information he provided
while on the Program. As indicated to you during your audit inspection
R150 000 was paid over to the DSO by SAPS. We are negotiating for the
release of the said amount to be released to WPU.”

After issuing this management letter, Mr Theron approached Mr John Solomon
(Mr Solomon) of the DSO to establish the status of the outstanding R150 000.
Mr Solomon allegedly had no knowledge of the R150 000, either as owing to
the Janodien family and/or as having been received by the DSO. Mr Theron
also states that Commissioner Petros, the Western Cape’s Commissioner of
SAPS, had no knowledge regarding the R 6 million that would allegedly be paid
by SAPS to the Janodien family.

54 Confirmed by Ms Venter in her affidavit attached as Annexure WPP19
55
Management comments (bottom of page 162) of the Auditor General’s management letter attached as Annexure
WPP23

75
A schedule of these “deferred loans” is set out below in Table 7.

Table 7: Schedule of outstanding loans (deferred loans) issued to the
Janodien family by the WPU office in KZN
No Advance Loan Date Approved Approved By
Register No Amount
1 27/02 R 6 176 19 November 2002 Mr Borcherds
2 28/02 R15 000 12 October 2002 Mr Borcherds
3 01/03 R 20 000 17 January 2003 Mr Borcherds / Mr Theron
4 06/03 R 5 000 28 January 2003 Mr Borcherds / Mr Theron
5 08/03 R 8 824 7 February 2003 Mr Borcherds
6 15/03 R 10 000 12 May 2003 Mr Borcherds / Mr Theron
7 19/03 R 2 000 5 June 2003 Mr Borcherds /Mr Theron
8 22/03 R 2 000 30 June 2003 Mr Borcherds
Total R69 000

As is evident from Table 7 above, new loans were granted to the family before
these “deferred loans” were repaid. Loans were issued on the basis of
motivations from the family for assistance with items such as financing the
repairs of motor vehicles, the purchase of birds as well as the purchase of a
vehicle. The loans were repaid by the Janodien family through the reduction of
the monthly salary replacement payment.

Ms Venter confirmed that loan agreements were not entered into for majority of
loans granted to the Janodien family. She explained that the practice of drawing
up loan agreements had only been implemented by the WPU fairly recently.
Interest on the outstanding loans had also not been charged. However this
omission was not peculiar to the Janodien family, as the WPU only initiated the
practice of charging interest on loans to witnesses from 1 June 2007.

Ms Venter also explained that the matter of the outstanding loans owed by the
Janodien family (in respect of the “deferred loans”) was addressed with head
office on a number of occasions.56

56
Correspondence from Mr Kora to head office, attached as Annexure WPP24

76
5.3.3 Conclusions
Loans totalling R187 628 were issued to the Janodien family from the Kwazulu-
Natal (KZN) regional office between 2002 and 2007. These loans were
approved by Messrs Adam and Borcherds although the issuing of loans to
witnesses is not authorised in terms of the WPA or subordinate legislation
(namely regulation 22), and as such requires the approval of the DG of Justice.
The issuing of loans does not appear to be peculiar to the Janodien family as
we also identified loans to other witnesses during the course of our analysis.
However, our analysis is not sufficient to compare the quantum and frequency
of loans to the Janodien family to that received by other witnesses. We were
unable to obtain any evidence to support the fact that the Janodien family had
been unduly favoured in respect of the practice of issuing loans.

It is evident that loan agreements and repayment schedules were not entered
into for the majority of loans. In addition, the WPU failed to charge interest on
loans made to witnesses and dependents resulting in a loss of income to the
WPU. This was primarily a result of inadequate documentation in respect of
policies and procedures as the WPU had no formal policy relating to witness
loans and all loans were approved on the basis of the discretion exercised by
Mr Adam and/or Mr Borcherds.

Given the contents of the WPA and regulation 22 outlined above, it is evident
that Mr Adam and/or Mr Borcherds did not have sufficient authority to approve
these payments, as such authority is vested with the DG of Justice. It is also
evident that these loans could not have been granted in terms of section 4 of
the WPA, which sets out the powers, functions and duties of the head of the
WPU. Although this section provides Mr Adam with certain powers to provide
support services to witnesses on the WPP, it is not possible to have discretion
on an issue that is otherwise regulated, as in the case of witness payments
regulated by regulation 22.

However, even if Mr Adam understood his discretion to include issuing loans to
witnesses, we believe that an analysis of the totality of evidentiary material
shows the manner in which he exercised this discretion to be unreasonable.
The absence of loan agreements, interest charges, repayment periods and/or

77
security clauses, as well as the motivation for certain of the loans, supports the
conclusion that Mr Adam was unreasonable when exercising his discretion.

It is also evident that the lack of controls, policy and documentation with respect
to witness loans resulted in loss and potential loss to the WPU.

Given that Mr Borcherds has no delegation in respect of payments to witnesses
and/or issuing of loans, it is evident that Mr Borcherds could not have
authorised these payments even if the discretion allowed for in section 4 was
applicable.

It is further evident that R69 000 loaned to the Janodien family had been
outstanding for a significant period but was not subject to interest. These loans
appeared to have been approved predominantly by Mr Borcherds, although the
loans remained unpaid with the knowledge and approval of Mr Adam and
Mr Borcherds, on the basis of alleged rewards being owed to the witnesses by
the SA Police Services in the Western Cape. The rewards therefore effectively
constituted informal security for these loans. We believe that Mr Adam and
Mr Borcherds were at best negligent for failing to obtain proof of the security
provided by the Janodien family before agreeing to defer the repayment of the
loans. The failure to conduct due diligence with respect to this security could
have resulted in potential loss to the WPU, an outcome which appears
particularly likely at this point in time given that the SA Police Services in the
Western Cape have no knowledge of the alleged reward.

Mr Adam and Mr Theron also appear to have been negligent in providing the
AG with an explanation in respect of the loans that resulted in mitigation of risk
without having performed reasonable steps to verify and document the
information.

5.3.4 Recommendations

Institute disciplinary action against Mr Adam

For the reasons outlined, we believe that Mr Adam’s approval of the loans to the
Janodien family is irregular and unauthorised and constitutes misconduct. We
therefore recommend that the WPU institutes disciplinary action against Mr

78
Adam. In the alternative, even if Mr Adam understood his discretion to extend to
authorising loans to the Janodien family, the way in which he exercised this
discretion was unreasonable and as such constituted misconduct warranting
disciplinary action.

Institute disciplinary action against Mr Borcherds

We believe that Mr Borcherds' approval of loans to the Janodien family is
unlawful and constitutes misconduct. We therefore recommend that the WPU
institutes disciplinary action against Mr Borcherds. In the alternative, even if
Mr Borcherds understood his mandate to extend to authorising the loans to the
Janodien family, the way in which he exercised this mandate was unreasonable
and as such constituted misconduct warranting disciplinary action.

Draft loan agreements for all current witness loans and provide loan
certificates

We recommend that the WPU must draft loan agreements for all current
witness loans and that a central register at head office must be maintained in
respect of loans held at the respective regions. We recommend that loan
certificates are drawn up at the end of each financial year, and signed by the
witnesses as verification of the outstanding balance and terms of the loan.

Acquire proper authority for all future loans

We also recommend that no further loans are issued to witnesses without the
necessary authority, which is currently the approval of the DG of Justice.

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6 PHASE 2: PROCUREMENT INVESTIGATION

6.1 Review of the WPU procurement policy
As outlined in our terms of reference, the SIU was mandated to investigate
alleged irregularities in respect of specific procurement transactions, as well as
general concerns relating to the procurement function of the WPU.

While investigating two specific procurement transactions outlined in the
allegations, namely purchases from Mr First Aid and PASCO57, we identified
various anomalies with respect to the WPU’s application of relevant
procurement prescripts and applicable supply chain management legislation.

Our initial focus was therefore directed at identifying and understanding the
relevant procurement prescripts and relevant supply chain management
legislation applicable to the WPU, as well as establishing the context and
applicability of any related exemptions allegedly received by the WPU.

6.1.1 Methodology and procedure

Interviews and affidavits

We interviewed Mr Theron to establish the procurement policy applicable to the
WPU.58 Mr Theron detailed the general procurement practices of the WPU, and
provided us with the following procurement related documentation:

 A copy of the WPU Expenditure and Procurement policy, implemented on
1 February 2006.
 A copy of an undated letter from National Treasury relating to an
application for ex post facto approval and a special delegation granted to
the WPU by the State Tender Board for dealing with cases of emergency.

We interviewed two members of the State Tender Board in December 2007:

 Mr Jan Breytenbach (Mr Breytenbach)

57
The specific purchases from First Aid and PASCO referred to are explained in detail in paragraphs 6.2 and 6.3.
58
Mr Theron’s affidavit attached as Annexure WPP17

80
 Mr David Groenewald (Mr Groenewald)

since they met with Mr Theron and Mr Adam regarding a special delegation
related to procurement. Our interview focused on establishing the exact nature
and circumstances of the special delegation and/or any exemption granted to
the WPU in respect of supply chain management.

We obtained affidavits from both officials outlining the legal prescripts and
restrictions imposed on the WPU by the exemption.59 We further obtained the
following supporting documentation from these officials:

 Regulation 2 of State Tender Board Regulation R1237, published on 1 July
1988, which deals with the procurement of goods and services by a state
department.
 Regulation 3 of State Tender Board Regulation R1237, published on 1 July
1988 which empowered the State Tender Board to approve certain actions
of a State Department ex post facto.
 A letter dated 15 April 2003 from the WPU, signed by the National Director,
Mr Dawood Adam and Mr Etienne Theron, requesting ex post facto
approval of certain irregular financial transactions concluded by the WPU
during the 1998/1999 and 2001/2002 financial years.
 Annexure G of the State Tender Board User Manual (ST37) dealing with
emergency delegations.

The State Tender Board, as represented by Messrs Breytenbach and
Groenewald, also reviewed and commented on Mr Theron’s (and by implication
Mr Adam and Mr Borcherds) interpretation of the exemption received from State
Tender Board60, as outlined by Mr Theron in his affidavit and supporting
documentation. Messrs Breytenbach and Groenewald also commented on the
legality of the WPU’s Expenditure and Procurement policy.

59
Statements of Mr Breytenbach and David Groenewald attached as Annexure WPP25 and WPP26, together with
supporting documentation
60
As set out in Mr Theron’s affidavit attached as Annexure WPP17

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6.1.2 Investigation findings

Mr Theron’s understanding of the WPU procurement policy and related
exemption

The WPU Expenditure and Procurement policy, signed by Messrs Adam,
Borcherds and Theron, was officially implemented from 25 January 2006.
However, Mr Theron confirmed that the procurement practices outlined in the
policy document were already in existence prior to the formal adoption of the
expenditure and procurement policy in 2006.

The WPU procurement policy differentiates between:

 operational expenditure
 official expenditure.

Operational expenditure refers to payments made in respect of the core
business, namely the support and protection of witnesses (this would include
witness payments, accommodation, salary replacements, witness allowances,
witness loans).

Official expenditure relates to expenditure arising from the running of the
WPU, such as office rental, cleaning, salaries, office furniture and equipment.

All payments made by the WPU regional offices are regarded as operational
expenditure and are booked to a single expenditure line item in the budget
called "protective custody of witnesses".61 Funds are therefore transferred to the
regions based on regional cash flow requests. These monies are subsequently
appropriated from the regional bank account(s) and recorded in the manual
regional cashbooks. Mr Theron explained that regional (or operational)
procurement is governed by a special delegation received from the State
Tender Board, applicable from 2000/2001 and providing ex post facto approval
in respect of operational costs incurred in respect of 1998 to 2002.

Mr Theron also stated that official purchases are subject to normal supply chain
regulations as set out in the NPA supply chain management policies. He also
confirmed that as the regional offices incurred official expenditure on occasion,

61
Mr Theron’s affidavit attached as Annexure WPP17

82
the witness costs reported in the line item "protective custody of witnesses"
would include some official expenditure.

The WPU’s understanding of the “special delegation” (represented by Mr
Theron, Mr Adam and Mr Borcherds) is outlined in the WPU procurement
policy62.

Paragraph 6 of this policy, titled “State Tender Board Exemption”, states:

6.1 The members of the Delegated Committee of the State Tender Board
delegated an increased limit of up to R500 000 per case to deal with
cases of emergency. “Per Case” refers to “a transaction.” This
delegation relates to Operational Expenditure as disclosed on the
Weekly and Monthly Expenditure Reports submitted to Head Office. It
must be highlighted that this exemption does not require a
Regional Office to request for three (3) quotations. (Bold our
emphasis)

6.2 This delegation became applicable as from the 2000/2001 financial
year.

Given that all payments made by the regional offices (official and operational)
are included in the weekly and monthly expenditure reports, it appears as if the
“special delegation” was understood to apply to both categories of procurement
carried out by the regional WPU offices.

Mr Theron claimed that the WPU had been granted a “special dispensation”
from the State Tender Board to approve any payment related to the
procurement of goods and services, up to and including the amount of
R500 000;63 and that in terms of this “special dispensation”, the WPU is
authorised to dispense with the normal prescripts of obtaining three quotations
prior to awarding a contract to a prospective service provider. According to Mr
Theron, the WPU was consequently fully entitled to engage the services of any
supplier without adhering to relevant State Tender Board and Treasury

62
WPU Expenditure and Procurement Policy attached as Annexure WPP27
63
Refer to Mr Theron’s affidavit attached as Annexure WPP17

83
Regulations, provided that the procurement of goods or services in question did
not exceed R500 000 per transaction.

During our cashbook analysis for the five regions, we confirmed that three
quotations were not obtained for the majority of payments and that a
preferential supplier database was not maintained. Suppliers were selected by
the respective individuals procuring the goods and based on their own
information and preferences.

SIU analysis of WPU procurement policy and related exemption

In order to understand and confirm the extent of the “special delegation”
obtained from the State Tender Board, we interviewed Mr Theron and the board
officials in this regard.

As support for the WPU expenditure policy (and in particular paragraph 6 titled
“State Tender Board Exemption"), Mr Theron provided us with an undated letter
from National Treasury, titled: "Reporting and Application for Ex Post Facto
Approval: Various Periods: 1998–2002.’64

This undated letter states:

"The letter forwarded to you, dated 12 June 2003, as well as discussion
between your Etienne Theron and Mr Breytenbach of the National
Treasury have reference.

The members of the delegated committee confirmed the delegation to you
of an increased limit of up to R500 000 per case to deal with cases of
emergency.

This confirmation relates to a delegation granted to you which became
applicable as from the 2000/2001 financial year onwards."

We believe that although this letter confirms the delegation for WPU to deal with
cases of emergency up to an increased limit of R500 000 per case, the letter
contained insufficient detail to conclude that the WPU was thereby authorised to
dispense with normal tender procedures and prescripts when procuring any

64
Undated letter from National Treasury attached as Annexure WPP28 signed by Mr Breytenbach, Mr A De Beer ,Mr
Groenewald and Ms L Reddy of National Treasury

84
goods and services up to an amount of R500 000 in any situation. We also do
not believe that this letter would have been sufficient authority to conclude that
the “special delegation” related to all expenditure incurred by the regional WPU
offices.

National Treasury’s understanding of the "special delegation"

We interviewed the two officials from the National Treasury, Mr Breytenbach
and Mr Groenewald, who met with Messrs Theron and Adam regarding the
WPU procurement application and also were involved in drafting the "special
delegation" letter issued to the WPU.

Mr Breytenbach is chief director of norms and standards, a position he has held
since 1999. His duties include compiling uniform norms and standards in
respect of supply chain management for the public service and ensuring their
proper implementation. Mr Breytenbach has also been a permanent member of
the State Tender Board since 1993.

Mr Breytenbach explained that he initially received an application for ex post
facto approval for certain irregular financial transactions from the WPU in
April 2003. In terms of Regulation 2 of State Tender Board Regulations R1237,
published on 1 July 1988, the WPU was compelled to approach the State
Tender Board, as at the time, all state departments were required to procure
goods and services through the State Tender Board. In addition to Regulation 2,
the State Tender Board was further authorised in terms of Regulation 3(4) to
approve certain actions of a state department ex post facto.

The WPU’s application for ex post facto approval was submitted to the State
Tender Board on 14 April 2003, and the application was signed by Mr Adam
and Mr Theron.65 Mr Breytenbach stated that this application had requested ex
post facto approval of certain irregular financial transactions concluded by the
WPU for the 1998/1999 and 2001/2002 financial years. The application was
limited, however, to specific transactions like rental payments made relating to
the accommodation of state witnesses and the leasing of operational houses for
the WPU.

65
WPU application to State Tender Board attached as Annexure WPP29

85
Since the WPU had marked this application “Top Secret,” the State Tender
Board did not deal with the matter in the usual manner, and decided not keep
any audio recordings or minutes of their deliberations on the matter, which took
place on 12 June 2003. Prior to this Messrs Adam and Theron had attended a
meeting with the State Tender Board to deal with the WPU application.

During the course of this meeting, Mr Adam and Mr Theron made a number of
representations to the Board in which they detailed the unique circumstances
under which the WPU are required to operate, and the various situations which
require emergency procurement of witness accommodation. The possibility of
the WPU making use of the emergency delegation as contemplated in
Delegation 8.2 and 8.3 of Annexure G of the State Tender Board User Manual
(ST 37) was discussed and Mr Breytenbach recalls that the Board explained the
implications of the above delegation in detail to Messrs Adam and Theron.

The application of this delegation, as explained to Messrs Adam and Theron, is
as follows:66

Delegation 8.2 makes provision for cases of emergency to an estimated
value of R150 000 per case. It stipulates that supplies and/or services
may be procured in emergencies without compliance with supply chain
management principles where immediate action is necessary in order to
avoid a dangerous or high-risk situation, misery or want. It further states
that the principle of competition should be adhered to as far as possible.

Delegation 8.3.2 further prescribes that the reasons for the emergency
and the losses or consequences that will follow if action was not taken
must be certified by an official at the level of director or above and placed
on record for audit purposes

Delegation 8.3.3 states that in instances where only one price quotation
is received and accepted, and taking the circumstances into account, all
reasonable steps must be taken to ensure that a fair price is obtained.

Mr Bretyenbach was confident that the full implications and restrictions of the
above delegation were properly communicated to Messrs Adam and Thereon

66
As set out by Mr Breytenbach in his affidavit attached as Annexure WPP25

86
and that both individuals acknowledged that they understood the contents of the
delegation.

According to Mr Breytenbach, a further meeting was convened with Messrs
Adam and Borcherds to discuss the WPU’s application and the resolution taken
by the Committee of the State Tender Board established to deal with the WPU
application. The Committee decided to reject the application for ex post facto
approval, but authorised an increase in the limit prescribed in Delegation 8.2 to
deal with emergencies to R500 000. This decision was also formally
communicated to Mr Adam in the letter dated 12 June 2003.

Shortly thereafter, Mr Breytenbach was telephoned by Mr Theron, who
complained that the 12 June 2003 letter was too vague and requested further
clarification about the decision. Mr Breytenbach consequently drafted a second
letter in which he confirmed the increased limit subject to the emergency
exemptions. The undated letter from national treasury provided to us by Mr
Theron was identified by Mr Breytenbach as being this second letter provided
for the purpose of further elucidation. Mr Breytenbach confirmed that he created
this second letter on 4 August 2003.

Mr Breytenbach also explained that the increase in the emergency delegation
figure to R500 000 was intended to be a temporary measure. The Committee
had communicated the temporary nature of the arrangement to Messrs Adam
and Theron and had also advised them to draft a policy for the WPU to
specifically deal with cases of emergency. Mr Groenewald agreed to help the
WPU align their policy with State Tender Board Regulations. However,
Mr Theron and Mr Adam did not contact the National Treasury again to finalise
the matter.

National Treasury’s comments in respect of the WPU expenditure and
procurement policy

Mr Breytenbach stated that paragraph 6 of the WPU Expenditure and
Procurement Policy was in clear contradiction to the prescripts for emergencies.
Mr Breytenbach’s point of contention was that in terms of paragraph 6, all
operational expenditure of the WPU would be treated as expenditure incurred in
an emergency situation. Mr Breytenbach concluded that this application of the

87
“special delegation” was incorrect as the relevant prescripts require each
incident to be assessed on it own merits.

In addition, Mr Breytenbach stated that the way in which the WPU (namely
Mr Theron and Mr Adam) had interpreted the emergency delegation was
inconsistent with the agreement reached in their various meetings.

Mr Breytenbach stated that it was not possible for Mr Theron or Mr Adam or
both to have misinterpreted the delegation to the extent they did, especially
given the detailed explanations provided during their meetings and discussions.
Mr Breytenbach further found it strange that the WPU policy document did not
provide for the definition of an “emergency,” as this aspect was discussed at
some length with Messrs Adam and Theron. He also stated categorically that
neither he nor any other member of the Committee ever informed members of
the WPU that all future operational expenditure could be regarded as
emergency and thus that normal procurement prescripts could be dispensed
with.

Mr Groenewald's affidavit supports the version of events described by
Mr Breytenbach. Mr Groenewald served as a member of the State Tender
Board from 1998 until his retirement in July 2005. However, in his affidavit he
explains that during an interval at one of the meetings held with Messrs Adam
and Theron, he personally explained to Mr Adam exactly what would be
expected of the WPU if they were to apply the emergency delegation to safe
houses and witness accommodation. Mr Groenewald also confirmed that all the
representations made by Mr Adam pertained only to safe houses and witness
accommodation. No mention was made of any other operational expenses that
might be incurred by the WPU in the execution of its mandate.

Following a review of the WPU Expenditure and Procurement policy,
Mr Groenewald’s comments were similar to those of Mr Breytenbach. He
reaffirmed that it was never the intention of the State Tender Board to grant the
WPU a "blanket authority" to dispense with normal procurement prescripts. This
was a misrepresentation of the emergency delegation granted to the WPU by
the Sate Tender Board.

88
Mr Groenewald was further presented with Mr Theron's affidavit obtained by us
and he was specifically requested to comment on the paragraph in which the
“special dispensation” granted by the National Treasury was discussed. His
comments in this regard are as follows:

 The paragraph is a clear distortion of the facts communicated to Messrs
Adam and Theron by the Committee, as the State Tender Board never
gave the WPU a “special dispensation” to approve any payment up to and
including R500 000 as stated in the paragraph.
 Mr Theron’s averment that in terms of this special dispensation, the WPU
would not need to follow the normal tender process of obtaining three
quotations is incorrect. This was never communicated to WPU.
 Mr Groenewald concluded by stating that Mr Theron's interpretation, as
reflected in his affidavit, was never contemplated by the committee at any
stage and no such authority was ever granted.

During our expenditure analysis, we also identified incidents where specific
procurement had occurred at a regional office solely on the instruction of head
office. This procurement was unrelated to the regional office, with the regional
head simply being instructed to settle the invoice. Funds were transferred from
the main NPA bank account to the regional office and immediately applied to
settle this “head office” expense. In the absence of a reasonable explanation, a
fair conclusion would be that the procurement was structured in this way to
bypass normal tender/ procurement procedures and prescripts. In terms of the
policy of the WPU, all procurement in the regional offices was operational in
nature and therefore qualified for the "special delegation". It therefore follows
that had these "head office" purchases been effected at head office, as
opposed to the regional office, proper NPA procurement policies would have
had to be complied with. For example, payments were made to PASCO through
the Free State WPU regional office on the instruction of Mr Theron (refer to
paragraph 6.3 for more detail in this regard).

89
6.1.3 Conclusions
It is evident that the procurement polices and practices of the WPU are contrary
to supply chain management prescripts and applicable legislation.

At no stage was a “blanket authority” to dispense with normal prescribed
procurement policies and applicable legislation granted to the WPU by the State
Tender Board. The WPU’s own submission to the State Tender Board was
based on the need to acquire urgent safe houses in certain circumstances.
These submissions did not include the procurement of goods or services that
were of a general or operational nature. The WPU’s contention that the National
Treasury granted them a “special dispensation” in respect of goods procured for
operational purposes, up to and including R500 000 appears to be a
misrepresentation of the increase in the emergency delegation granted to the
WPU. A blanket "special dispensation" was never contemplated by the State
Tender Board and indeed never authorised as such.

Notwithstanding the above, it follows that goods or services procured in terms of
delegation 8.2 of ST 37, which pertains to specific cases of emergency, would
still need to meet the requirements of delegation 8.3.2 and delegation 8.3.3,
namely:

 The reasons for the emergency and the losses or consequences that will
follow if action was not taken must be certified at director level and placed
on record for audit purposes.
 Where only one price quotation is received and accepted, and taking the
circumstances into account, all reasonable steps must be taken to ensure
that a fair price is obtained.

During the course of performing our regional cashbook review and witness
payment analysis, we inspected a large amount of supporting documentation
contained in the regional payment files. We also interviewed the regional heads
to gain an understanding of the financial systems, one of which is the
procurement process.

90
During the course of these procedures, we established that:

 no emergency documentation is compiled and/or maintained by the
regional offices and/or head office.
 no authorisation is required by the head office for payments made outside
of the NPA procurement policy, given that in terms of the WPU
procurement policy for operational items, no procurement process is
required.

During our review, we identified very few quotations included in the payment
supporting documentation (and generally there was only one quotation where
such documentation existed). We also established that no fair or competitive
process is carried out for the majority of procurement at the regional offices,
with suppliers being selected based on the personal preference and discretion
of the specific employees involved in the purchase.

In addition, the goods/services procured in terms of paragraph 6 of the WPU
expenditure and procurement policy, to the extent that they do not qualify as an
emergency, are a contravention of applicable prescripts and legislation and
consequently must be deemed irregular. During our review of the cashbooks,
we established that the majority of expenditure paid by the regions could not
reasonably be judged to be related to an emergency situation. Most of the
payments were in respect of witnesses, where the supporting documentation
contained motivations by the witnesses and correspondence from the WPU.
This communication is not considered to be consistent with an emergency. In
addition, during our review of the cashbooks and witness payments, we did not
identify or observe any documentation consistent with an emergency, such as
that required in terms of delegation 8.3.2 and delegation 8.3.3.

It is therefore also evident, that even expenditure that may have related to an
emergency would also be considered irregular given the non-compliance with
8.3.2 and delegation 8.3.3.

In terms of the delegations, expenditure up to R25 000 was authorised by the
regional heads. As such, these regional heads could be considered guilty of
misconduct given that all regional procurement could be considered irregular on

91
the basis of the WPU procurement policy and non-compliance with the
delegations relating to emergencies.

We also confirmed that ex post facto approval for accommodation expenditure
incurred by the WPU between 1998 and 2002 which did not adhere to
appropriate supply chain management prescripts was denied, rendering this
expenditure irregular. The authorisation of the respective accommodation
procured in an unlawful manner therefore constitutes misconduct on the part of
the officials responsible for approving these payments.

However, the regional heads and those officials approving the accommodation
expenditure incurred by the WPU between 1998 and 2002, would have acted
on the basis of WPU policy (initially an informal policy implemented by Mr Adam
and Mr Theron, as well as the formal policy from 2006). As such we believe that
the responsibility for this misconduct rests with Mr Adam as the head of the
WPU responsible for the governance and operations of the WPU.

In addition, the procurement policy compiled by the WPU (approved by Messrs
Theron and Adam) does not reflect the legal obligations required in terms of
section 217 of the Constitution of the Republic of South Africa, Act 108 of 1996,
namely fairness, equity, transparency, competitiveness and cost effectiveness.
The PMFA also requires that, "the Accounting Officer of a department, trading
entity or constitutional institution must ensure that the department, trading entity
or constitutional institution has and maintains an appropriate procurement and
provisioning system that is fair, equitable, transparent, competitive and cost
effective".

Finally, the current procurement policies and practices present major risks to
the WPU in terms of the control environment and create a high susceptibility to
possible fraud and irregularities. In addition, procurement effected by the WPU
in accordance with the WPU expenditure and procurement policy will continue
to be irregular in nature, given its non-compliance with supply chain
management prescripts and incorrect application of the delegation from the
State Tender Board.

92
6.1.4 Recommendations

Review WPU Expenditure and Procurement policy

We recommend that the current WPU expenditure and procurement policy is
reviewed and the relevant amendments effected in order to ensure compliance
with applicable legislation and prescripts.

Institute disciplinary action against Mr Adam and Mr Theron

We also recommend that disciplinary action is instituted against Mr Adam and
Mr Theron in respect of the unlawful misrepresentation of the emergency
delegation granted to them by the National Treasury, which resulted in them
dispensing with normal procurement prescripts and applicable legislation and
thereby exposing the WPU to potential prejudice.

We recommend that disciplinary action is also instituted against Mr Adam for
failure to implement policies consistent with supply chain management
prescripts, thereby resulting in irregular expenditure being incurred by the
regional WPU offices and the WPU being exposed to potential prejudice.

6.2 Allegation in respect of procurement transactions with the
supplier Mr First Aid
It was alleged that Mr Etienne Theron, the WPU Financial Manager, facilitated
the procurement of medical kits for the WPU, totalling R200 000 from a
company allegedly owned by his father-in-law. It was further alleged that the
service provider, Mr First Aid, was irregularly appointed and that the normal
three-quotation system was purposely circumvented by Mr Theron.

The above allegation is one of two specific incidents requiring investigation that
pertain to the irregular procurement of goods and services by the WPU.

6.2.1 Methodology and procedure

Review of relevant documentation

We assessed the documentation obtained from the IMU in order to confirm the
existence of the alleged irregular transaction. Once we had identified the

93
transaction, a full review of the procurement process relating to this transaction
was conducted with a view to evaluating its compliance with the relevant legal
prescripts and requirements.

We investigated the relationship between the service provider and Mr Theron in
order to identify and/or eliminate any possible conflict(s) of interest. Finally, we
performed a market-related price comparison of the goods supplied to establish
whether the purchase was competitive and cost effective.

Interviews and affidavits

We interviewed the following individuals regarding this allegation:

 Mr Theron
 Mr Cornelius Venter – Mr Theron's father-in-law
 Ms Catherine Goldin – A director of Mr First Aid (Pty) Ltd
 Messrs Jan Breytenbach and David Groenewald – National Treasury

6.2.2 Investigation findings
Our review of the documentation obtained by the IMU confirmed that the WPU
had procured 80 medical kits from a service provider known as Mr First Aid, at a
total cost of R203 604, including VAT.

Mr Theron cited the procurement of the medical kits from Mr First Aid as an
example of the type of circumstance in which the WPU could engage the
services of a single service provider, up to and including an amount of
R500 000, without obtaining and evaluating quotations from other suppliers
(ie the implementation of the "special delegation" discussed in paragraph 6.1
above).67

Mr Theron stated that he had contacted Mr First Aid after a referral by a
member in the DSO and based on a WPU senior management decision to
purchase medical aid kits. Mr Theron confirmed that the medical kits were
purchased directly from Mr First Aid without entertaining competitive quotes

67
Mr Theron’s affidavit, attached as Annexure WPP17

94
from any other service providers. In his opinion, the National Treasury
exemption, as set out in paragraph 6 of the WPU expenditure and procurement
policy, entitled him to deal with a single supplier and to dispense with normal
procurement procedures.

Mr Theron categorically denied the allegation that his father-in-law,
Mr Cornelius Venter, was involved with Mr First Aid in any way or had any
shares in the company. This was further confirmed by Ms Catherine Goldin
(Ms Goldin), a director of Mr First Aid (Pty) Ltd who supplied us with an affidavit
in which she denied any knowledge of Mr Theron’s father in law, Cornelius
Venter (Mr Venter). Ms Goldin also supplied us with copies of the company’s
share certificates and details of previous directors in support of the fact that
Mr Cornelius Venter was not linked to Mr First Aid in any way. Finally, an
affidavit was obtained from Mr Venter in which he clearly indicated that he had
no links to Mr First Aid whatsoever, past or present.68

We performed a price analysis on the items included in the Mr First Aid invoice,
conducting a cost comparison of the goods with three other service providers
randomly selected by us from the Electronic Yellow Pages database. The
following three suppliers were selected:

 Kendon Medical Supplies (Pty) Ltd
 Edna Medical Distributors
 Be Safe Paramedical CC

We provided the specification sheet attached to the Mr First Aid quotation
detailing the complete list of items supplied in each of the 80 medical kits to
each of the three suppliers. We then requested a quotation from each supplier
in respect of the 80 medical bags containing precisely the same items supplied
in the Mr First Aid medical kits. Since the Mr First Aid medical kits were
procured in May 2003, we initially requested the above three suppliers to
provide quotations based on prices as at May 2003. However, this exercise
proved to be an almost impossible task, and as such we were provided with

68
Ms Goldin’s affidavit attached as Annexure WPP30, Mr Venter’s affidavit attached as Annexure WPP31

95
quotations based on prices as at October 2007, the month in which we
conducted the cost comparison.

Our findings in respect of this price comparison exercise were as follows:

Despite the fact that the quotations were obtained for goods to be supplied as at
October 2007, four years and nine months subsequent to Mr First Aid’s original
quote, both the quotations of Edna Medical Supplies and Be-Safe Paramedicals
CC proved to be significantly less than that of Mr First Aid, as illustrated in
Table 8.

Table 8: Price comparison against Mr First Aid medical kits
Company Quotation % Variance to Mr First Aid
Mr First Aid R203 604.00
Edna Medical Supplies R164 065.45 19.4% less
Be-Safe Paramedical R154 251.10 24% less
Kendon Medical Supplies (Pty) Ltd Unable to supply all goods and so quotation
discarded

The results of the cost comparison are further illustrated in Figure 8 set out
below.

Comparative Analysis: WPP Medical Kits

R 200,000 R 175,892
R 180,000 R 158,717
R 160,000 R 135,307
R 140,000
R 120,000
Total Costs R 100,000
R 80,000
R 60,000
R 40,000
R 20,000
R0
Edna Medical Be Safe Mister First Aid (May
Disributors Paramedicals CC 2003)

Medical Supplier

Edna Medical Disributors Be Safe Paramedicals CC Mister First Aid (May 2003)

Figure 8: Comparative cost analysis of medical kits

96
Ms Catherine Goldin, a director at Mr First Aid, stated that the cost escalation
for the supply of the same medical kits between May 2003 and October 2007
would be in the region of at least 10%. Therefore, given the conservative 10%
price increase over the period, the comparative quotes obtained show that the
current price is even more than 19% and 24% less than that charged by Mr First
Aid in 2003.

The cost comparison clearly demonstrates the inherent risks involved in
implementing a procurement system that does not include elements of
competitiveness and cost effectiveness. The fundamental principle of procuring
quality products at reasonable and competitive prices is negated when a
department does not ensure that it receives a fair market price. In this case the
implementation of a procurement system that does not facilitate
competitiveness and cost effectiveness clearly resulted in financial loss /
prejudice to the WPU.

Messrs Breytenbach and Groenewald, in their capacity as experts on
government procurement processes and prescripts, reviewed the WPU
procurement process in respect of these medical kits from Mr First Aid, as
outlined in Mr Theron’s affidavit, and commented as follows:

 The practice of obtaining only one quotation would only be permissible in
emergency situations, in which case the requirements of Delegation 8(2)
and 8(3) of ST 37, as described above, would have to have been followed.
 It is clear from Mr Theron’s letter of 5 May 200369 that no other quotations
were obtained. From the context of the letter, there is also no suggestion
that the purchase of the medical kits was regarded as emergency situation.
 In the absence of proof that the prescripts of Delegation 8.2 and 8.3 of
ST 37 were adhered to, the transactions would be considered irregular and
in contravention of State Tender Board Regulations.

Payment to Mr First Aid was effected from the Gauteng regional office of the
WPU on the instruction of Mr Theron, although the kits were purchased for the

69
Mr Theron’s letter to Mr First Aid is attached as Annexure WPP32

97
WPU as a whole.70 Mr Theron confirms in the request to Ms Ludik that the
medical kits were to be financed from the Gauteng region’s budget. Given that
this procurement was effected by a regional office, it was classified as
operational expenditure in terms of the WPU policy and interpretation of the
"special delegation" and deemed not to be subject to normal supply chain
management prescripts.

Mr Theron advised Mr Adam of the use of the Gauteng budget, stating that if
deemed necessary, the amount would be reimbursed if there was a shortage of
funds in that office.71 It was therefore evident that these payments were being
intentionally allocated to the Gauteng regional office. The payment request was
recommended by Mr Borcherds and approved by Mr Adam.

6.2.3 Conclusions
We were unable to find any evidence to confirm the allegation that Mr Theron’s
father-in-law is linked to Mr First Aid in any way.

The procurement of the medical kits from Mr First Aid was irregular and did not
comply with the prescribed supply chain management prescripts and applicable
legislation. It is clear that the WPU placed reliance on the fact that when
procuring goods for operational purposes to the amount of R500 000, they were
exempted from adhering to normal supply chain management prescripts and
legislation.

It is further evident that the increase in the emergency delegation received from
the National Treasury was manipulated to circumvent prescribed supply chain
management prescripts and applicable legislation.

We could find no evidence that the above goods were procured through
Mr First Aid due to an emergency as contemplated by the supply chain
management prescripts.

70
Interoffice Memorandum dated 30 April 2003 from Mr Theron to the Gauteng Regional Head, Ms Rochelle Ludik,
attached as Annexure WPP33
71 Internal office Memorandum advising Mr Adam of the method of payment for the medical kits, attached as Annexure
WPP34

98
Our competitive cost analysis indicated that the prices charged by Mr First Aid
were substantially higher than market value, resulting in financial loss to the
WPU. This state of affairs was the direct result of the inappropriate application
of the "special delegation" by Messrs Adam and Theron, as well as what
appears to be intentional manipulation of the procurement system to allow for
exemption from any competitive procurement process (such as more than one
quote).

The inherent risks of a procurement policy that excludes the principles of
competitive bidding and cost effectiveness are clearly demonstrated by this
particular transaction. As such, we believe that this particular purchase
demonstrates the prejudice experienced by the WPU as a result of Messrs
Adam and Theron’s application of the WPU procurement policy.

6.2.4 Recommendation

Institute disciplinary action against Mr Adam and Mr Theron

Consistent with our recommendation regarding the manipulation of the National
Treasury emergency delegation to circumvent supply chain management
prescripts and applicable legislation, we recommend that disciplinary action be
instituted against Mr Adam and Mr Theron.

6.3 Allegations in respect of procurement transactions with the
supplier PASCO
It was alleged that both Mr Adam and Mr Borcherds are shareholders in a
security consulting company, PASCO Risk Management Consultants (PASCO).
It has been further alleged that the WPU purchased cameras through PASCO
to the amount of R500 000 and that normal procurement policies and
procedures were circumvented in the process.

During the course of investigating this allegation, we reviewed a number of
other transactions with PASCO. Our investigation of this allegation also formed
part of the broader investigation into possible procurement irregularities at the
WPU.

99
6.3.1 Methodology and procedure

Review of relevant documentation

We initially investigated the veracity of the claims that Messrs Adam and
Borcherds were/are shareholders of PASCO. We approached PASCO for
information regarding their directors and shareholders and we also examined
the relationship between PASCO and the WPU, reviewed applicable service
level agreements entered into and analysed the types of goods or services
supplied by PASCO to the WPU.

Interviews

We further interviewed Mr Theron regarding the alleged irregular procurement
of the cameras from PASCO to the value of R500 000.

Review of transactions between PASCO and WPU

We reviewed a number of additional transactions in which certain goods and
services were procured through PASCO with a view to identifying trends or
anomalies.

6.3.2 Investigation findings

Purchase of seven cameras from PASCO

We conducted an interview with Mr Mathew Lee Nicholls (Mr Nicholls), the
Managing Director of PASCO and obtained an affidavit72 listing the shareholders
of the company as Mr Nicholls, L Jordaan, W Morris, PASCO employees' share
trust and Pedal Trading. Mr Nicholls also confirmed that Messrs Adam and
Borcherds are not, nor ever have been shareholders in PASCO, a fact
confirmed by our review of the PASCO shareholders register.

Mr Nicholls confirmed that PASCO supplied video cameras to the WPU in
August 2005. However, the total cost of the cameras amounted to R43 084.02,
which included a handling fee of R500 per camera, and not R500 000 as
alleged. The payment of R490 511.01 included other services supplied to the

72
Statement of Mr Nicholls attached as Annexure WPP35

100
WPU, besides the seven cameras, in terms of an existing five year supply
agreement. The cameras, therefore, only made up a small portion of the
payment in question.

Mr Theron corroborated Mr Nicholls’ explanation73, stating that the seven
cameras were purchased from PASCO for a total amount of R43 084.02. This
amount included a handling fee of R3 500 (R500 per camera). The remainder of
the R490 511.01 invoice issued by PASCO was in lieu of other services and
consulting work undertaken.

During the course of our analysis of the supporting documentation, we
established that PASCO had purchased the seven cameras from "Makro", a
large chain store open to the public, and immediately on-sold them to the WPU
with a mark-up of approximately 9% (R500 per camera) in the form of a
handling fee reflected on the face of the invoice. Mr Theron was unable to
explain exactly why the cameras had to be procured through PASCO and why
the WPU could not purchase the items directly from the supplier, thereby saving
the WPU R3 500 in handling fees.

However, as mentioned above, the cameras were purchased from PASCO as
part of a five year agreement with the WPU that commenced in 2004. In terms
of this agreement, apart from management and consulting services, PASCO are
also required from time to time to provide certain goods and equipment to the
WPU as part of the skills transfer and capacity building requirements of the
agreement.74 The procurement process for the cameras therefore has to be
considered within the context of the procurement process relating to the five-
year agreement, which is discussed below.

Five year service agreement between WPU and PASCO

A service agreement between WPU and PASCO was signed by Messrs Theron,
Borcherds and Adam on 11 December 2003, as well as by a representative
from PASCO, Mr Nicholls.

73
Mr Theron’s affidavit attached as Annexure WPP17
74
As set out in Mr Nicholls statement attached as Annexure WPP35

101
Mr Nicholls stated that Mr Lynch Jordaan (Mr Jordaan) had been the organiser
of the service agreement between WPU and PASCO. Mr Jordaan began
working for PASCO early in 2003 and officially left its employ the end of
February 2008.

Mr Jordaan confirmed that he had been extensively involved in the conclusion
of the service agreement with WPU and stated that the agreement was
concluded through a negotiation process as opposed to a formal tender or
bidding process. Once the agreement was signed, Mr Jordaan began working
with the WPU on a full-time basis.

Mr Jordaan indicated that in 2003 PASCO had an existing agreement with the
NPA to provide risk management services. Whilst working with the NPA, he
regularly interacted with Messrs Adam and Borcherds, who later approached
him with a view to procuring the services of PASCO specifically for the WPU.
This then culminated in the agreement signed by both parties on 11 December
200375.

Mr Theron also supplied us with a copy of the PASCO agreement entered into
with the WPU. This service agreement supplied to us comprises one page with
an opening paragraph indicating the following:

Agreement has been reached between the Witness Protection Unit
(WPU) and Pasco Risk Consultants (Pty) Limited (Pasco), whereby
Pasco will provide a pool of equipment under the direction of the WPU to
be utilised at their discretion, together with the appropriate resources to
maintain and service the equipment.

The agreement also refers to a schedule of costs that have been agreed upon
and will remain in force for an initial period of five years, from the inception date
of 1 January 2004. However, the schedule attached to the agreement, as
provided by Mr Theron, only extends as far as December 2006. PASCO
equipment costs are reflected as a fixed cost of R15 217.39 per month for the
entire period. No provision is made in the agreement for a handling fee to be
charged by PASCO for the procurement of any goods. The agreement further

75
Affidavit of Lynch Jordaan attached as Annexure WPP36

102
does not define or describe the "equipment" PASCO is required to supply to the
WPU. It is also unclear whether this refers to the procurement of equipment for
the WPU or the rental of equipment to the WPU.

A document referred to as the "Project Papillon Charter" was developed by
Mr Jordaan in order to give effect to the agreement between PASCO and the
WPU. Although the service agreement was initially in respect of management
and consulting services, PASCO are also required from time to time to provide
certain goods and equipment to the WPU as part of the skills transfer and
capacity building requirements of the agreement.

However, Mr Jordaan explained that as Project Papillion progressed, the WPU
requested PASCO to procure equipment on its behalf for operational purposes.
An example was the seven digital cameras referred to above, which were
specifically requested by Mr Borcherds. Mr Jordaan further confirmed that he
did not supply any quotes to the WPU to review and that the 5% handling fee
was implemented as a result of a verbal agreement between him and
Mr Borcherds. However, both Mr Adam and Mr Theron were aware of the
arrangement. Further items that were procured for the WPU include a power
generator, bullet proof jackets, projectors, laptop computers and printers76.

Mr Jordaan also indicated that he was not informed of any written policy that
had to be complied with when procuring goods or equipment. He was further
never requested to submit quotes or prove that cost comparisons were done
prior to invoicing the WPU. He added that he would usually receive the requests
to purchase goods or equipment telephonically, or via e-mail.

During the course of the interviews conducted with Messrs Breytenbach and
Groenewald of the National Treasury, documents pertaining to the procurement
of the seven cameras were presented to them for comment. Mr Breytenbach in
particular stated in his affidavit he could find no direct evidence that the
purchase of the seven cameras had been regarded as an emergency. If it was
indeed an emergency, the prescripts of Delegation 8(2) and 8(3) of Regulation
ST37 would have had to have been complied with.

76
Affidavit of Lynch Jordaan attached as Annexure WPP36

103
Mr Breytenbach further indicated that the mere fact that seven cameras had
been procured through a third party did not preclude the WPU from having to
following proper procurement procedures and on the face of the evidence
reviewed, he was of the opinion that the transaction was irregular.

Analysis of other transactions with PASCO

On the basis of the above findings, we extended the review of payments made
to PASCO, looking at those payments made between June 2006 and July 2007.
The purpose of this wider review was to identify further trends and anomalies
related to goods procured through PASCO. Our analysis is based on supporting
documentation provided to us by the WPU. In addition to the seven cameras,
we identified a further 24 transactions in which specific items were procured
through PASCO and for which a handling fee was charged. These transactions
are summarised in Table 9.

104
Table 9: Analysis of payments to PASCO by the WPU June 2006–July 2007

No Invoice No Date Item Description Price Handling Fee % Total
1 INV0690 9 July 07 71 x Garmin Nuvi 610 GPS R376 300.00 R18 815.00 5% R395 115.00
2 INV0678 26 June 07 Archos and travel kits R20 388.85 R1 019.44 10% R21 408.29
3 INV0528 28 September 2006 Network Hardware R7 147.77 R357.39 5% R7 505.16
4 INV0528 28 September 2006 HP Tricolour Ink R224.57 R11.23 5% R235.80
5 INV0528 28 September 2006 Projector carry case R3 420.00 R171.00 5% R3 591.00
6 INV0528 28 September 2006 LG JT90 Projector R96 900.00 R4 845.00 5% R101 745.00
7 INV0528 28 September 2006 Bullet-proof jackets R139 873.44 R6 993.67 5% R146 867.11
8 INV0505 28 August 2006 Emergency cell phone charger R9 747.00 R487.35 5% R10 234.35
9 INV0505 28 August 2006 Laptop and carry case R73 438.80 R3 671.94 5% R77 110.74
10 INV0485 24 July 2006 Printers R35 910.00 R1 795.50 5% R37 705.50
11 INV0485 24 July 2006 Laptops R152,737.20 R7 636.86 5% R160 374.06
12 INV0485 24 July 2006 Adaptors R43 605.00 R2 180.25 5% R45 785.25
13 INV0485 24 July 2006 Digital recorders R13 666.32 R683.32 5% R14 349.64
14 INV0485 24 July 2006 Safe R3 170.50 R158.53 5% R3 329.03
15 INV0485 24 July 2006 Trunking rental R35 197.50 R1 759.88 5% R36 957.38
16 INV0485 24 July 2006 Trunking rental R35 197.50 R1 759.88 5% R36 957.38
17 INV0485 24 July 2006 Trunking rental R34 473.81 R1 723.69 5% R36 197.50
18 INV0485 24 July 2006 Extra Radio R3 705.00 R185.25 5% R3 890.25
19 INV0485 24 July 2006 Trunking Radio R69 027.00 R3 451.35 5% R72 478.35
20 INV0485 24 July 2006 Intel PC R4 444.86 R222.24 5% R4 667.10
21 INV0466 26 June 2006 Radio R2 952.00 R147.60 5% R3 099.60
22 INV0466 26 June 2006 Filing cabinets R4 833.60 R241.68 5% R5 075.28
23 INV0466 26 June 2006 80GB hard drive R375.06 R18.75 5% R393.81
24 INV0466 26 June 2006 Cell phone Chargers R4 250.00 R212.50 5% R4 462.50
TOTAL R1 170 985.79 R58 549.29 R 1 229 535.08

105
As is evident from Table 9, a range of items were procured through PASCO
during the period under review. However, in none of the above instances were
we able to find evidence that price quotations from other potential suppliers had
been obtained or considered either by PASCO or by the WPU. We could also
find no evidence to suggest that any of these items were procured as a result of
an emergency. Handling fees totalling R58 549 (approximately 5% of the total
purchase value) were also invoiced by PASCO during this period. According to
Mr Jordaan, this handling fee was agreed to verbally by Mr Borcherds.

In addition to the above goods and equipment that were procured through
PASCO, we also noted instances on certain invoices where PASCO claimed
payment for flights undertaken by Mr Borcherds. Mr Jordaan confirmed that
these flights were indeed paid for by PASCO after Mr Borcherds requested
them to do so in order to better co-ordinate travel plans when members from the
WPU and PASCO flew to the same destination77. This practice was, however,
later stopped by Mr Adam.

Payments made to PASCO were effected from the bank account of the Free
State regional office. Funds were transferred from the NPA bank account to the
regional office’s bank account and thereafter immediately transferred out to
settle the PASCO invoice. It is therefore evident that the Free State regional
office’s bank account was used merely as a conduit for funds transferred by
head office. The regional head of the Free State was unaware of the reason for
these payments, but effected such payments on the instruction of Mr Theron.
These payments were regarded as operational expenditure by virtue of the fact
that they were effected by the regional office as opposed to head office and
therefore qualified in terms of the WPU expenditure and procurement policy for
the application of the "special delegation", ie no procurement prescripts were
followed. An analysis of all of the payments affected by the regions for
2005/2006 is set out in Figure 9 below. The relative significance of the PASCO
payments is clearly indicated.

77
Copies of PASCO invoices reflecting air travel for Mr Borcherds, attached as Annexure WPP37

106
EXPENSES PER REGION 2005/2006

Other Total accommodation costs Total allowances paid Total clothing costs Total medical costs Total schooling costs Total transport costs

8,000,000

7,000,000
40 protected
individuals 459 Witnesses and families
6,000,000
PASCO

5,000,000

30 protected
4,000,000 individuals
128 protected
inividuals

3,000,000 74 protected
individuals 41 protected
individuals

2,000,000 51 protected
individuals
47 protected
individuals
35 protected
1,000,000 individuals
12 protected
indviduals

0
EC FS GAU KZN1 LIM MPU NC NW WC

REGIONS

Figure 9: Analysis of payments made by the regional offices 2005/2006

107
6.3.3 Conclusions
We could find no evidence to confirm that either Mr Borcherds or Mr Adam have
a business interest in PASCO.

We further confirmed that seven video cameras were purchased for the WPU
through PASCO. However, the total amount involved was R43 084.02 and not
R500 000, as originally alleged.

A service agreement between the WPU and PASCO was entered into for the
supply and maintenance of equipment. However, it appears that no formal
tender process was followed and that the agreement was merely the result of
negotiations between the two parties involved. Entering into the contract may
therefore be irregular.

We identified a number of instances in which PASCO charged a handling fee
for goods procured for the WPU. The service agreement between the two
parties makes no provision for a handling fee and the handling fee may
therefore be irregular.

It is clear that the WPU placed reliance on the fact that when procuring goods
for operational purposes to the amount of R500 000, they were exempted from
adhering to normal supply chain management prescripts and legislation.

It is further evident that the increase in the emergency delegation received from
the National Treasury has been manipulated to circumvent prescribed supply
chain management policies and procedures.

We could find no evidence that any goods were procured through PASCO as a
result of an emergency situation as contemplated by the supply chain
management prescripts.

In many instances, payments to PASCO were effected from various regional
offices in order to justify the expenditure as operational in nature, which would
allow for the dispensing of supply chain management prescripts in terms of
WPU policies.

108
6.3.4 Recommendations

Institute disciplinary action against Mr Adam and Mr Theron

Consistent with our recommendation regarding the manipulation of the National
Treasury emergency delegation to circumvent supply chain management
prescripts and applicable legislation, we recommend that disciplinary action is
instituted against Mr Adam and Mr Theron.

Seek legal opinion regarding recovery of handling fees

We also recommend that a legal opinion is sought regarding the possible
recovery of the handling fees charged by PASCO for goods procured for the
WPU.

109
7 PHASE 3: IRREGULAR PAYMENTS TO MR BORCHERDS AND
FINANCIAL ANALYSIS OF MESSRS ADAM AND BORCHERDS

7.1 Payments made to Mr Borcherds
It was alleged that irregular payments/advances were made by the WPU to
Mr Borcherds, the National Co-ordinator. The anonymous facsimile referred to
two cheques in the amount of R45 000, each being issued to Mr Borcherds from
the Gauteng regional office. We identified other payments to Mr Borcherds
during our cashbook analysis in the Western Cape regional office and this
extended the scope of our investigation beyond the two cheques initially
referenced by the whistleblower.

7.1.1 Methodology and procedure
Our investigation into possible irregular payments to Mr Borcherds by the WPU
was initially limited due to the vagueness of the allegation and the manual
accounting records of the regional offices, which prevented us performing a
comprehensive analysis of payments made by the WPU without conducting a
full forensic audit.

During the course of our analysis of payments made by the Western Cape
regional office, as well as during our review of their systems, we identified some
payments to Mr Borcherds that warranted further investigation. When we asked
Ms Rodwell if she had concerns about any of the payments made from the
regional office’s bank account, she referred to one specific payment. The
payment described to us by Ms Rodwell was an advance made to
Mr Borcherds. Having identified this advance, we then reviewed the advance
register maintained by the regional office to identify and quantify all
advances/payments made to Mr Borcherds. The Western Cape is the only
regional office to maintain its cashbook in an electronic form that captures all
transactions in an Access database. This software package allows for queries
to be requested, such as all payments to a specific person and so we requested
all payments made to Mr Borcherds. However, the schedule of payments is
dependent on how the operator classified the payments. On most occasions it is

110
classified as “other”, with no further detail provided as to the recipient of the
monies.

We obtained affidavits from various WPU staff members, Mr Theron, Ms Venter
and Ms Rodwell, regarding payments made to Mr Borcherds. We also
performed a cashbook analysis of the five regions for the period January 2001
to August 2007. Payments denoted as being in respect of Mr Borcherds were
selected for further investigation.

We reviewed Mr Borcherds’ personal file for any correspondence in respect of
advances and/or other payments.

7.1.2 Investigation findings

Review of legislation/policy and WPU practice in respect of loans and
advances to staff members

We established that there was no specific WPU policy in respect of loans and
advances made to WPU staff members prior to May 2007 and thus Ms Venter
confirmed that no such policy was in place when advances were paid to
Mr Borcherds.

The AG identified irregularities in respect of the payment of advances to WPU
members in the 2006/2007 AG report, noting the absence of a WPU policy with
respect to advances.

According to Ms Venter, advances were only paid to WPU members (and SAPS
members attached to the WPU) in respect of subsistence. These advances,
recorded in the advance register, were repaid as soon as the relevant
subsistence claims were paid out to the members in question.

Advances made to Mr Borcherds

During our interview with Ms Rodwell, we established that an advance of
R3 000 was paid to Mr Borcherds in June 2004. After receiving this information,
we interviewed Mr Theron, who stated that Mr Borcherds had drawn advances
from the regional offices in Gauteng, the Western Cape and Kwazulu Natal

111
during 2003 and 2004.78 He explained that Mr Borcherds telephoned him on
various occasions during 2003 and 2004, requesting him to instruct the relevant
regional heads of the WPU to advance certain monies to him, and to record
these payments as “operational duties” in the books of the regional offices.
Mr Theron further explained that after giving these telephonic instructions, he
would usually follow up the request to the regional head with a written
instruction.

Mr Theron stated that he had questioned Mr Borcherds as to the purpose of
these advances and Mr Borcherds justified the payments on the basis that as
head of operations for the WPU he was entitled to the advances. Mr Theron
could not explain to us what the reason was for these advances.

Advances/payments to Mr Borcherds from the KZN regional office

Ms Venter, who is responsible for all administration and finance at the KZN
regional office, confirmed that advances of R7 000 were paid to Mr Borcherds
by the WPU during 2003.79 These payments are listed in Table 10 below.80

Table 10: Payments to Mr Borcherds from KZN WPU regional office
DATE AMOUNT Official Repaid
29 March 2003 R 1 000 Mr Kora on the instruction of Mr 26 April 2003
Theron
30 June 2003 R 3 000 Mr Kora on the instruction of Mr 25 July 2003
Theron
3 October 2003 R 3 000 Mr Kora on the instruction of Mr 27 July 2007
Theron
Total R 7 000

Ms Venter stated that she was not informed of the reasons for these advances
and was instructed by the regional head at the time, Mr Kora, to effect the
payments. No supporting documentation was provided to Ms Venter before or
after making these payments. Further, Ms Venter explained that she had

78
Mr Theron’s affidavit attached as Annexure WPP 17
79
Ms Venter’s affidavit attached as Annexure WPP19
80
Supporting documentation in respect of the two advances to Mr Borcherds attached as Annexure WPP38

112
considered these payments to be “strange” given that Mr Borcherds, being
attached to head office, usually received advances in respect of travel and
subsistence from head office so that the money could then be recovered from
the respective member’s salary payment.

We identified the three advances to Mr Borcherds during our review of the KZN
regional office advances register. These advances were described in the
register as "advances for subsistence".

Mr Theron provided us with a copy of a deposit slip, dated 3 October 2003,
indicating that the R3 000 advance was deposited into Mr Borcherds’ bank
account.81 Ms Venter stated that she did not see any documentation in support
of the subsistence claim and failed to establish the reason/purpose for the
payment.

According to the register, the advances in March and June 2003 were repaid by
Mr Borcherds in the months following the advances (ie in April 2003 and July
2003).82

Ms Venter stated that Mr Borcherds failed to repay the R 3 000 advanced to him
on 3 October 2003 within a similar time period as the previous advances. Ms
Venter stated that she had discussed the matter with Mr Kora, who took the
matter up with Mr Theron. Ms Venter also stated that she continued to deal with
this matter when she was appointed as the acting regional head in September
2005, as Mr Borcherds had still not repaid the advance of R3 000. Ms Venter
explained that she had numerous discussions with Mr Theron and Mr Adam
regarding the seriousness of the outstanding loans, especially in light of the
pending AG audit.

According to Ms Venter and Mr Theron, Mr Borcherds repaid the October 2003
loan on 27 July 2007, after a period of almost four years. Ms Venter confirmed
that no interest had been charged by the WPU on this outstanding balance.

81
Deposit slip for the R3 000 advance to Mr Borcherds provided to us by Mr Theron, attached as Annexure WPP39
82
Extracts of the KZN loans register attached as Annexure WPP40

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Advances/payments to Mr Borcherds from the Western Cape regional
office

Mr Theron provided us with a schedule of advances/payments made to
Mr Borcherds by the Western Cape WPU regional office. These payments are
set out in Table 11 below.

Table 11: Advances to Mr Borcherds from Western Cape regional office
Date Advance WPU Official Repaid
10 Sep 2003 R 500 Suzette Opperman 27 July 2007
11 June 2004 R 3000 Lynette Rodwell 27 July 2007
Total R 3 500

Mr Theron did not recall requesting Ms Opperman of the Western Cape office to
advance Mr Borcherds the R500 in September 2003, although he provided us
with documentation confirming the receipt of these monies by Mr Borcherds.83

Ms Opperman could not recall who requested and authorised this advance to
Mr Borcherds. She did however refer to having received a number of requests
from Mr Borcherds over the years for monies in respect of petrol or electricity.
The requests for petrol money usually amounted to R500 and the requests for
electricity usually varied between R400 and R600.

Mr Theron confirmed he had instructed Ms Rodwell to advance Mr Borcherds
R3 000 on 11 June 2004 (this would have been following a request from
Mr Borcherds). Ms Rodwell made this advance to84 Mr Borcherds on the basis of
an instruction from Mr Theron (both telephonic and a written internal
memorandum85). Ms Rodwell explained that Mr Hector, a reservist referred to in
section 4, collected the money on 11 June 2004. She subsequently received a
receipt signed by Mr Borcherds acknowledging receipt of the advance.

83
Receipt for R500 by Mr Borcherds attached as annexure WPP41
84
Ms Rodwell’s affidavit attached as Annexure WPP42
85
Internal memorandum from Mr Theron requesting the advance attached as Annexure WPP43

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This advance remained outstanding for approximately 3 years. Ms Rodwell
states that she was contacted by Mr Theron during 2007 to confirm any monies
still owing by Mr Borcherds. Ms Rodwell confirmed that R5 250 was owed by
Mr Borcherds, consisting of the R3 500, as well as R1 750 paid to "F Sieed" on
his instruction. The latter payment is dealt with in more detail below. Ms Rodwell
stated that she followed up these amounts with Mr Borcherds by sending him a
facsimile on 18 July 2007 and discussing the matter with him personally.86

According to Ms Rodwell, during this discussion Mr Borcherds only agreed to
repay the R3 500, stating that he was not responsible for the R1 750 paid to
F Sieed, given that this payment had been authorised by Mr Adam.87
Ms Rodwell confirmed that Mr Borcherds had repaid only the R3 500 on
27 July 2007.88 Ms Rodwell also provided a copy of the Western Cape regional
office advance register, which reflects the R 1750 advance in respect of F Sieed
as outstanding.89

Advances/payments to Mr Borcherds from the Gauteng regional office

Mr Theron provided us with a schedule of advances/payments made to
Mr Borcherds by the Gauteng WPU regional office. These payments are set out
in Table 12 below.

Table 12: Advances to Mr Borcherds from Gauteng WPU regional office
Date Advance Official Repaid
29 Sep 2003 R 3 000 Mr Theron 14 March 2007 (R1200)
27 July 2007 (R1 800)
Total R 3 000

Mr Theron instructed the acting head of the Gauteng region of the WPU (on the
basis of Mr Borcherds’ request) to advance R3 000 to Mr Borcherds.90

86
Facsimile to Mr Borcherds from Ms Rodwell in respect of the outstanding advance attached as Annexure WPP44
87
The note written by Ms Rodwell following her discussion with Mr Borcherds regarding the outstanding advance(s),
attached as Annexure WPP45
88
Proof of payment of the Western Cape advance attached as Annexure WPP46 (R3 500)
89
Affidavit of Somayja Davids and Copy of memo dated 19 September 2003 attached as Annexure WPP47
90
Mr Theron’s instruction to the Gauteng regional head in respect of the R3 000 advance attached as Annexure WPP48

115
Other than the advances totalling R13 500 (detailed above), Mr Theron was not
aware of any other payments made by the WPU to Mr Borcherds. However,
Mr Theron stated that notwithstanding this, it was possible that other advances
and/or payments had been made to Mr Borcherds by the regional offices of
which he was not aware.

Repayment of advances by Mr Borcherds

As is evident from the advance schedules set out above, advances made to
Mr Borcherds totalling R9 500 remained unpaid for approximately four years, in
addition to which, interest was not charged by WPU on these outstanding
balances. Numerous requests for payment appear to have been made to
Mr Borcherds by various staff members of the WPU.

Mr Theron states that the regions highlighted these outstanding advances to
him on a number of occasions. As a result, Mr Theron telephoned Mr Borcherds
about settlement of these funds, only to be told by Mr Borcherds that he did not
have sufficient funds to settle the outstanding amounts immediately, but would
attend to it. According to Mr Theron, following his regional inspections for the
2006/2007 year, he apprised Mr Adam of the amounts owed by Mr Borcherds.

We were provided with two letters to Mr Borcherds, one drafted by Mr Adam on
13 February 2007 and the other by Mr Theron 21 May 2007.91 Both letters
address the issue of the R3 000 owing in respect of the advance issued by the
KZN regional office. Mr Theron’s letter refers to the fact that interest has not
been charged, as well as the issues that may arise from paying an advance
from an operational budget.

It appears that Mr Borcherds advised Mr Theron during the first half of 2007
(possibly after the letter in May 2007 referred to above ) that he would utilise the
proceeds of certain outstanding subsistence and travelling (S&T) claims to
which he was entitled, to repay the outstanding advances that he owed to the
relevant regional offices.

Immediately after this, in July 2007, Mr Borcherds submitted S&T claims for the
period 15 June 2007 to 6 July 2007 amounting to R 20 122.62. Mr Theron

91
The letters by Mr Adam and Mr Theron to Mr Borcherds are attached as Annexure WPP49

116
stated that these subsistence payments were made to Mr Borcherds in three
instalments on 9 July 2007, 12 July 2007 and 23 July 2007. We confirmed that
these payments were reflected on the relevant Persal documentation and on
Mr Borcherds' bank statements.

Table 13 sets out the schedule of the S&T claims submitted by Mr Borcherds in
July 2007.

Table 13: Schedule of S&T claims submitted by
Mr Borcherds in July 2007
Date on S&T claim form Period covered in claim
15/06/2007 07/02/2006 to 16/02/2006
15/06/2007 02/03/2006 to 30/03/2006
15/06/2007 09/04/2006 to 12/04/2006
15/06/2007 03/05/2006 to 05/05/2006
15/06/2007 04/06/2006 to 06/06/2006
15/06/2007 06/06/2006 to 09/06/2006
15/06/2007 09/07/2006 to 01/08/2006
15/06/2007 04/08/2006 to 04/08/2006
15/06/2007 07/09/2006 to 12/09/2006
06/07/2007 08/10/2006 to 01/11/2006
06/07/2007 08/11/2006 to 30/11/2006
06/07/2007 20/12/2006 to 31/12/2006
06/07/2007 01/01/2007 to 19/01/2007
06/07/2007 04/02/2007 to 23/02/2007
06/07/2007 16/03/2007 to 31/03/2007
06/07/2007 01/04/2007 to 20/04/2007
06/07/2007 23/05/2007 to 25/05/2007

During our analysis of the S&T claims submitted by Mr Borcherds for the
purpose of settling his outstanding advances, we identified two claims that had
been submitted in respect of subsistence and travel conducted between
20 December 2006 and 19 January 2007 (highlighted in grey in Table 13).
Given that this is usually a holiday period, we requested further supporting
documentation in respect of these S&T claims.

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S&T claim – 20 December 2006 to 31 December 2006

Mr Theron provided us with the supporting documentation in respect of this
claim by Mr Borcherds.92 It is evident from this documentation that Mr Borcherds
claimed for subsistence and travel whilst working in Port Elizabeth between
20 December 2006 and 31 December 2006. This period, for which
Mr Borcherds received S&T, included 25 and 26 December 2006, which were
public holidays, as well as Saturdays and Sundays.

S&T claim – 1 January 2007 to 4 January 2007

The supporting claim documentation provided by Mr Theron, indicates that
Mr Borcherds submitted a claim for subsistence and travel whilst working in
Port Elizabeth between 1 January 2007 and 4 January 2007.93 This period
includes the public holiday of 1 January 2007.

Mr Theron provided us with a copy of an operational plan for the WPU’s Eastern
Cape region for the months of December 2006 and January 2007.94 Mr Theron
stated in his affidavit that Port Elizabeth falls within the Eastern Cape region,
and as such any WPU projects performed in the region would need to be
outlined in an operational plan.

Our review of these operational plans corroborated Mr Theron’s statements,
and there appear to have been no WPU operations in the area from
20 December 2006 to 31 December 2006 and from 1 January 2007 to
4 January 2007. As all operations are required to be outlined in the operational
plans, and given that Mr Theron was unable to locate any addendum
highlighting changes to the plans, it appears that operations did not occur in this
region over the festive period.

Analysis of vehicle records to confirm the whereabouts of Mr Borcherds

in order to confirm the whereabouts of Mr Borcherds during the claim period
between December 2006 and January 2007, Mr Theron obtained a copy of the

92
Supporting documentation for Mr Borcherds S&T claim (20 December 2006 to 31 December 2006) attached as
Annexure WPP50
93
Supporting documentation for Mr Borcherds S&T claim (1 January 2007 to 4 January 2007) attached as Annexure
WPP51
94
Eastern Cape operational plans (December 2006 and January 2007) attached as Annexure WPP52

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requisition form for a government vehicle booked by Mr Borcherds on
31 December 2006.95 This form, signed by Mr Borcherds on 31 December 2006,
confirmed that an Isuzu 300 KB double cab LDV (Reg No. HYV 730 GP) was
used by Mr Borcherds from 1 December 2006 to 31 December 2006. This
vehicle covered a total distance of 3 721 kilometres during the period in
question. The reason given on the form for the use of the vehicle was "covert
operations". A similar vehicle requisition form was signed by Mr Borcherds for
the use of the same vehicle from 1 January 2007 to 31 January 2007. In this
instance, the form reflects that the vehicle was also used for "covert operations"
and it travelled 4 401 kilometres during this period.96

We also noted that the transport officer failed to sign the two vehicle requisition
forms referred to above.

Mr Theron provided us with petrol slips which report when the petrol card that
had been allocated to Mr Borcherds was used to purchase diesel for the Isuzu
300 KB double cab bakkie.97

The information provided on these diesel slips is summarised in Table 14.

Table 14: Schedule of diesel slips in respect of bakkie used by Mr Borcherds
Date Time Service Station Province Amount Paid

20/12/2006 00:14 Grasmere 1 Stop South Gauteng R362.55
20/12/2006 03.40 Bloemfontein 1 Stop South Free State R278.75
20/12/2006 07.22 Top Service Station, Cradock Eastern Cape R330.45
23/12/2006 11.20 Caltex Wavelands, Jeffreys Eastern Cape R397.80
Bay
03/01/2007 07:14 Main Road Service Station Eastern Cape R397.95
03/01/2007 11:19 HVD Diensstasie Free State R318.60
03/01/2007 16:59 Grasmere 1 Stop North Gauteng R430.30

WPU form ‘requisition: government garage vehicle allocated without driver for December 2006 , attached as Annexure
95

WPP53
WPU form ‘requisition: government garage vehicle allocated without driver for January 2007 , attached as Annexure
96

WPP54
97
Petrol slips attached as Annexure WPP55

119
The diesel purchases indicate that the bakkie was used by Mr Borcherds to
travel to the Eastern Cape, leaving on 20 December 2006 and returning to
Gauteng on 3 January 2007. This raises the question as to why Mr Borcherds
claimed S&T in respect of 4 January 2007.

Finally, Mr Theron confirmed that interest was not charged by WPU on the
outstanding advances to Mr Borcherds. He was unable to explain why no
interest was charged.

Payment to an unknown person on the instruction of Mr Borcherds

Mr Borcherds asked Ms Rodwell to pay R1 000 to Fahieka Sieed in early 2003.
Ms Rodwell referred to a telephonic request from Mr Borcherds, and that he had
indicated that the payment was in connection with Military Intelligence or Crime
Intelligence. Ms Rodwell stated that she had found this request strange as she
was not aware of such a person on the WPP at that time and had never heard
the name prior to this incident.98 According to Ms Rodwell, the money was
delivered to Fahieka Sieed by Inspector Dean Patton of the WPU.
Fahieka Sieed signed for receipt of the amount of R1 000 on 8 February 2003. 99
Ms Rodwell further stated that Mr Borcherds had contacted her later in 2003
and instructed her to pay a further R750 to Fahieka Sieed,100 resulting in a total
outstanding advance of R1 750.

We interviewed Inspector Dean Patton about the payment. He remembered
delivering money to a person in Athlone in Cape Town. He stated that he
regularly dropped off money for witnesses in Cape Town, but he could recall
this incident as he had never worked in Athlone prior to this incident. Inspector
Patton could not recall the exact address, but could recall delivering money to
Fahieka Sieed on at least one occasion.

Mr Theron was unaware of the payments to Fahieka Sieed and had no
knowledge of the purpose of the payments. Mr Theron confirmed that
Fahieka Sieed was not on the WPP and concluded that such a payment would
be irregular.

98
Ms Rodwell’s affidavit attached as Annexure WPP 42
99
Receipt from Fahieka Sieed signed on 8 February 2003 attached as Annexure WPP56
100
Receipt from Fahieka Sieed for the second payment of R750 attached as Annexure WPP57

120
Ms Rodwell stated that Mr Borcherds had refused to repay the amounts
advanced to Fahieka Sieed on the basis that these payments had been
authorised by Mr Adam. These advances are still outstanding according to
Ms Rodwell and they are reflected as such in the Western Cape regional office
advance register.

7.1.3 Conclusions
Mr Borcherds instructed Mr Theron and the relevant regional staff members to
advance him amounts totalling R13 500 during 2003 and 2004. Mr Borcherds
failed to provide any reason for these payments other than to inform Mr Theron
that he was entitled to these advances given his position as head of operations
of the WPU. We were unable to obtain any supporting documentation in respect
of these payments other than certain written instructions provided by Mr Theron
to the regional heads. There was no WPU policy in respect of advances to
members and the advances were recorded in the regional offices only, usually
in the advance register.

It is evident that although some of these payments were recorded as a
subsistence advance in the advance registers, there is no documentation to
support this classification. The advances to Mr Borcherds were authorised by
Mr Borcherds and Mr Theron, with the regional heads or staff members simply
carrying out an instruction.

Notwithstanding numerous requests by the regional heads, and by Mr Theron
and Mr Adam, Mr Borcherds failed to repay R9 500 for almost four years on the
basis that he had insufficient funds. It was only after the AG reported these
advances as an issue in the 2006/2007 financial audit that Mr Borcherds repaid
the outstanding amounts between March 2007 and July 2007.

However, it appears that Mr Borcherds repaid these advances following the
submission of a subsistence and travel claim (S&T), which included a claim for
the period 20 December 2006 to 4 January 2007. On the basis of the available
S&T documentation provided to us by Mr Theron, it appears as if Mr Borcherds
claimed for S&T in respect of at least three public holidays. It also appears on
the basis of the evidence obtained to date that this claim was submitted on the
basis of a covert operation performed in the Eastern Cape, yet a review of the

121
operational plans and an addendum for this region indicate that no operations
were conducted during this period. It is therefore possible that subsistence and
travel claims totalling R20 122.62 were paid to Mr Borcherds on the basis of
fictitious claims.

We were unable to correlate the subsistence claim to the leave records
submitted by Mr Borcherds given that the WPU leave records are not updated
on a regular basis. It is also evident that the S&T claims submitted by
Mr Borcherds were not subject to adequate internal controls, for example there
was no request for a copy of the operational plan for review or any checking as
to whether the claim included any public holidays.

It is also apparent that Mr Borcherds misused his position as head of operations
to expedite advances to be paid to him. He effectively overrode internal controls
to facilitate the payment of these advances. In addition, given that Mr Borcherds
had no delegation to authorise payments, he should not have requested such
advances. Mr Borcherds’ failure to repay these advances and/or pay interest to
the WPU in respect of the outstanding balances for an extended period of time
resulted in financial loss to the WPU, and we believe this constitutes gross
misconduct on the part of Mr Borcherds. We also believe that Mr Borcherds
incorrectly represented to Mr Theron that he was unable to repay these loans
due to financial constraints. Our analysis of Mr Borcherds' bank statements
indicates that he had sufficient funds to repay these outstanding balances. A
more detailed analysis of Mr Borcherds financial affairs is set out in section 7.

It is also evident that Mr Borcherds requested payments totalling R1 750 to
Fahieka Sieed, without providing supporting documentation. This payment was
therefore not in respect of goods or services procured by the WPU, nor was it in
respect of a witness/dependent of the WPP. We believe that payments to third
parties other than for the aforementioned reasons are not authorised by the
WPA and subordinate legislation. As such, we consider this payment to be
irregular. In addition, Mr Borcherds authorised the payment without the requisite
delegation, thereby rendering the payments irregular.

Mr Borcherds alleges that the payment to Fahieka Sieed was made on the
instruction of Mr Adam. We were unable to obtain any corroborating evidence in
this regard.

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Although we were advised by Mr Theron that advances totalling R13 500 had
been made to Mr Borcherds, he concluded that further advances may have
occurred without his knowledge. During the course of our analysis of
Mr Borcherds' bank account, we identified the advances outlined above as cash
deposits in the account. In addition to these deposits, we identified a number of
other cash deposits, detailed in section 7 of this report. In the absence of
performing a complete audit on the WPU accounting records, we are unable to
conclude with any certainty whether the R13 500 constitutes all advances made
to Mr Borcherds by the WPU.

7.1.4 Recommendations

Institute disciplinary action against Mr Borcherds

We recommend that disciplinary action is taken against Mr Borcherds for
misconduct, for authorising irregular advances totalling R13 500 payable to his
own account. These payments were also contrary to normal processes and
were made without the requisite approval.

Conduct audits of regional cashbooks

We recommend that all regions conduct an audit of their respective cashbooks
with a view to quantifying all cash payments made to Mr Borcherds.

Perform a complete audit of Mr Borcherds' subsistence and travel claims

We recommend that a complete audit of Mr Borcherds' subsistence and travel
claims is conducted with a view to confirming possible fraud perpetrated by
Mr Borcherds in respect of his claim relating to the period from 20 December
2006 to 4 January 2007, and to identifying any further instances of S&T fraud.

Review WPU internal controls relating to S&T claims

We recommend that the WPU review their internal control systems with respect
to S&T claims.

123
Institute disciplinary action against Mr Borcherds for misconduct

We recommend that the WPU institute disciplinary action against Mr Borcherds
for misconduct, since he authorised payments of R1 750 to Fahieka Sieed, an
unknown individual not on the WPP and not related to any goods/services
provided to the WPU. As such, these payments constitute irregular expenditure,
especially given that Mr Borcherds was not authorised to request payments by
the WPU.

Institute criminal action against Mr Borcherds for misrepresentation

In addition, we recommend that criminal action is instituted against
Mr Borcherds on the basis that he unlawfully and intentionally misrepresented
to the WPU that Fahieka Sieed was entitled to the payments of R 1 750, as a
witness on the WPP, when in fact the said person was never admitted to the
Program and was not a witness. This misrepresentation caused actual prejudice
to the WPU in the amount of R1 750.

Obtain further information relating to cash deposits in Mr Borcherds'
account

Given the number of unknown cash deposits in Mr Borcherds' bank account, we
suggest that further information about these deposits is obtained. This
recommendation, however, is dealt with in more detail in paragraph 7.2.2.

7.2 Mr Borcherds' Financial Profile
In light of the allegations regarding irregular payments to Mr Borcherds, we
compiled a financial profile for Mr Borcherds, with a view to identifying any
payments and/or assets indicative of possibly corrupt, fraudulent or irregular
activities.

7.2.1 Methodology and procedure

Analysis of bank account information

Our financial profiling of Mr Borcherds consisted of identifying and obtaining all
bank account information reviewing the activity on the respective bank accounts

124
during 2001 to 2007. This bank analysis was performed to identify suspicious
deposits suggestive of irregularities and/or misconduct.

Asset tracing

We performed limited asset tracing procedures, such as CIPRO and Deed
searches with a view to identifying fixed assets and/or businesses owned by
Mr Borcherds. These assets when compared with the salary information could
possibly indicate that Mr Borcherds received monies from another source,
possibly irregular.

Acquisition of salary information

We obtained Mr Borcherds' salary information from 2001 to 2007, in order to
eliminate the deposits on the bank statements that relate to routine salary
payments.

7.2.2 Investigation findings
The Persal payslip reports for Mr Borcherds from 1 March 2003 to 15 October
2007 reflect total payments in respect of salary and employment, (including
travel, subsistence and bonuses) of:

Gross Net
1 March 2003– 28 February 2004 R 224 966 R103 258
1 March 2004– 28 February 2005 R 255 694 R124 990
1 March 2005– 28 February 2006 R 324 836 R158 619
1 March 2006 –28 February 2007 R 385 945 R116 678
1 March 2007–15 October 2007 R 354 128 R175 297

We were unable to reconcile the payments per the payslips to the IRP5
certificates. The variances for each tax year range from R 63 000 in additional
payments on the payslip, compared to the income reflected on the IRP5
certificate, to R 34 000 surplus income per the IRP5 certificate. This could be
due to incomplete payroll information being provided to us and/or amounts paid
to the individual but not included on the IRP 5 certificate. This could be the case
in respect of subsistence payments when they were not taxable and thus in
prior years could be omitted from the IRP5 certificate.

125
We confirmed that usually subsistence and travel claims were paid to
Mr Borcherds from head office using the Persal system.

We did not identify any assets owned by Mr Borcherds inconsistent with his
salary-related income, and possibly indicative of irregular sources of income.

We identified 5 bank accounts held by Mr Borcherds following an enquiry with
SABRIC in respect of bank accounts held by for Mr Borcherds and/or his
spouse. The bank accounts identified from this enquiry were as follows:

ABSA Current account 038094910533
ABSA Classic 4565466084130014
ABSA Combi account 4938050046250993
ABSA Garage card 9565466084130013
ABSA Vehicle Finance 073947842

Cash deposits totalling R73 200 were identified in Mr Borcherds' current
account between March 2001 and August 2007. A breakdown of these cash
deposits according to our financial analysis is set out in Table 15 below.

Table 15: Schedule of cash deposits identified in Mr Borcherds'
current bank account
Identified as an advance paid
Date Amount from a WPU regional office

04 April 2001 R1 500
13 June 2001 R300
04 February 2002 R 1 000
11 October 2002 R 200
27 July 2003 R3 000
03 October 2003 R3 000 Advance from KZN
27 October 2004 R1 200
16 January 2006 R20 000
25 January 2006 R13 000
23 March 2006 R20 000
26 June 2006 R10 000
Total R73 200

126
Other than the deposit on 3 October 2003 (R3 000), which appears to be the
advance from KZN regional office, we were unable to establish the source of the
remaining cash deposits. Given that we were unable to quantify all advances
paid to Mr Borcherds by the regional WPU offices, further investigation may be
warranted to establish whether these cash deposits relate to such advances.

We also identified other deposits in Mr Borcherds' current accounts that may
warrant further investigation; these are outlined in Table 16. These deposits were
in addition to salary related payments, which were separately identified on the
bank statements and reconciled to the salary payments reflected in the Persal
records.101 We are currently obtaining the details of the respective accounts from
which the funds were transferred into Mr Borcherds’ bank account.

101
The salary payments identified by us in the bank statements in 2005/2006 were R15 378 less than persal records. The
salary payments identified by us in the bank statements for March 2007 to September 2008 were R42 760 less than the
persal records.

127
Table 16: Schedule of unexplained deposits identified in Mr Borcherds' current
bank account
Date Amount Transferring Comments
bank account
8 May 2001 R5 000.00 9987304
22 November 2001 R10 000.00 55609017576
22 March 2002 R6 500.00 55609017576
12 November 2002 R10 000.00 55609017576
22 August 2003 R12 100.00 55609017576
9 December 2004 R25 000.00 9987304
1 June 2005 R13 000.00 9987304
5 September 2005 R100 000.00 4057808126 Withdrawn in cash in three
lump sum payments in a
short space of time
24 September 2005 R348 286.82 4057808126
07 February 2006 R104 377.04 4057808126
07 March 2006 R22 743.28 4057808126
04 May 2006 R50 000.00 4059731301
26 March 2007 R100 000.00 1960000292 Withdrawn in cash in four
instalments 2 to 3 days
after the deposit

TTOTAL R807 007.14

We also identified R 300 000 was withdrawn from Mr Borcherds' current bank
account between October 2005 and February 2006, as set out in Table 17. We
are currently obtaining the details of the account referenced with these
withdrawals.

128
Table 17: Schedule of withdrawals from Mr Borcherd’s current
bank account
Date Amount Account
15 October 2005 R10 000 Pinpad withdrawal (Cash)
24 October 2005 R30 000 38046430414
11 November 2005 R30 000 38046430414
25 November 2005 R20 000 38046430414
29 November 2005 R20 000 38046430414
06 December 2005 R10 000 38046430414
06 December 2005 R20 000 38046430414
08 December 2005 R10 000 38046430414
13 December 2005 R40 000 38046430414
12 January 2006 R25 000 38046430414
16 January 2006 R15 000 38046430414
18 January 2006 R10 000 38046430414
26 January 2005 R15 000 38046430414
08 February 2006 R25 000 38046430414
10 February 2006 R20 000 38046430414
TOTAL R300 000

7.2.3 Conclusions
We were unable to identify any significant assets held by Mr Borcherds which
were inconsistent with his income. We did, however, identify a number of cash
deposits and deposits in Mr Borcherds current bank account, the sources of
which are currently unknown (ie these deposits do not appear to arise from
Mr Borcherds’ employment at the NPA). These deposits are potentially
suspicious, given that they are fairly large amounts and round numbers.

In addition, during our investigation we identified an advance paid to
Mr Borcherds by WPU in cash and deposited into his current bank account.
This advance is possibly irregular in nature, and is discussed in detail in section
7. We were unable to quantify advances paid to Mr Borcherds by the WPU
regional offices given that this would require a complete audit of all nine regions'
accounting records. It is therefore possible that other deposits (especially the

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cash deposits) reflected in Mr Borcherds’ current account may relate to further
advances not identified by us during the investigation, and, as such, warrant
further investigation.

7.2.4 Recommendation

Conduct a more extensive investigation or Mr Borcherds' financial affairs

In light of the allegations of irregular payments to Mr Borcherds, and the fact
that unexplained deposits were identified during the course of our investigation,
we recommend that a more extensive investigation of Mr Borcherds' affairs is
conducted with a view to quantifying all advances/payments to Mr Borcherds
from the WPU and identifying possible corrupt/irregular payments. Further work
currently entails obtaining the underlying documentation for the cash deposited
into Mr Borcherds' current bank account and identifying the holder of bank
account(s) from which funds were transferred and/or received.

7.3 Mr Adam's financial profile
Although we did not receive any direct allegations regarding irregular payments
to Mr Adam, we compiled a financial profile of Mr Adam to evaluate the
possibility of irregular payments given the general allegations concerning
irregular procurement by the WPU and the key position Mr Adam played in
authorising procurement for the WPU.

7.3.1 Methodology and procedure

Analysis of bank account information

Financial profiling of Mr Adam included identifying and obtaining all bank
account information, and reviewing the activity on the respective bank accounts
during 2001 to 2007. This bank analysis was performed with a view to
identifying suspicious deposits suggestive of irregularities and/or misconduct.

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Asset tracing

We performed limited asset tracing procedures, such as CIPRO and Deed
searches with a view to identifying fixed assets and/or businesses owned by
Mr Adam. These assets when compared with the salary information may
indicate that Mr Adam received monies from another source, possibly irregular
in nature.

Acquisition of salary information

We obtained all of the salary information in respect of Mr Adam for 2001 to
2007, in order to eliminate those deposits on the bank statements which relate
to routine salary payments.

7.3.2 Investigation findings
We reviewed the Persal payslip reports for Mr Adam from 1 March 2003 to
15 October 2007, as provided by WPU. In terms of these reports, Mr Adam
received total payments in respect of salary and employment related payments
(such as subsistence, travel claims and bonuses) of:

1 March 2003 and 28 February 2004 R 601 655
1 March 2004 and 28 February 2005 R 663 930
1 March 2005 and 28 February 2006 R 866 235
1 March 2006 and 28 February 200 R 666 012

We were unable to reconcile the payments according to the payslips to the
IRP5 certificates as variances were identified. These variances for each tax
year ranged from R 153 729 in additional payments per the payslip(s) as
opposed to the income reflected on the IRP 5 certificate to R 42 766 excess on
the IRP 5 certificate. This could be due to incomplete payroll information being
provided to us and/or amounts paid to the individual but not included on the
IRP5 certificate. This could be the case in respect of subsistence payments
when they were not taxable and thus in prior years could be omitted from the
IRP5 certificate.

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We confirmed that usually subsistence and travel claims are paid to Mr Adam
from the head office using the Persal system.

We did not identify any assets owned by Mr Adam inconsistent with his salary-
related income and possibly indicative of irregular sources of income.

We identified 9 bank accounts held by Mr Adam following an enquiry with
SABRIC in respect of bank accounts held by/for Mr Adam and/or his spouse.
The bank accounts, all held at ABSA, identified from this enquiry were as
follows:

Current Account 0010 2099 0771
Home Loan 0080 5512 2392
Credit Card 4550 2720 2687 2029
Private Bank 4787 6900 0537 3054
Garage 9550 2720 2687 2036
Garage 9787 6900 0537 3064
Vehicle Finance 06455 4900
Vehicle Finance 06672 8086

Our analysis of the deposits in Mr Adam’s cheque bank accounts for the period
25 December 2000 to 24 September 2007 is set out in Table 18.

Table 18: Schedule of deposits identified
in Mr Adam’s current bank account
Income Amount (R)
Salaries R 2 566 578
Cash deposits R 354 755
Other deposits R 445 039
Total R 3 366 372

Deposits totalling R799 794 were made into Mr Adam’s current bank account
during this period. These deposits are neither regular in amount nor in timing. It
also appears from the descriptions on the bank statements that some of the
deposits relate to proceeds from the trading of investments and trading in

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foreign currency (which is consistent with the extent to which Mr Adam travels).
The analysis also shows multiple cash deposits of R1 600 during the period.
There are also a number of deposits related to “prosecsaut” payments
referenced to BASJPA.

7.3.3 Conclusions
Other deposits, totalling R799 794, were reflected in Mr Adam’s current bank
account during 25 December 2000 to 24 September 2007, which equates to
approximately R100 000 per year. A number of the ‘other deposits’ have
descriptions which suggest that these deposits relate to investments, travel and
payments from BASJPA. Our asset reconciliation in comparison with the
surplus funds available to Mr Adam does, however, suggest that we failed to
identify all assets owned by Mr Adam. No specific allegations regarding
irregular payments were made in respect of Mr Adam, and we identified no
evidence during our investigation to suggest the possibility that Mr Adam
benefited from corrupt/irregular payments.

7.3.4 Recommendation
In light of the conclusions set out above, we believe that no further work is
warranted in respect of Mr Adam’s financial affairs.

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8 CONCLUSION

The Deputy National Director of Public Prosecutions (DNDPP), Dr Silas
Ramaite, referred this matter to the Special Investigating Unit (SIU) in
November 2006, requesting the SIU to confirm (or otherwise) certain of the
findings outlined in the IMU report and to investigate those allegations omitted
from the initial report.

As a result, the SIU requested Proclamation R23 of 2007, which sets out the
SIU terms of reference, which can broadly be outlined in the following key focus
areas:

 Unlawful use/abuse of certain safe houses and properties leased by the
WPU
 Irregular appointment of SAPS reservists to the WPU, and the payment of
allowances and bonuses to such reservists
 Payment of exorbitant allowances to certain witnesses on the Witness
Protection Programme and the favouring of witnesses from Cape Town
 The procurement policy implemented by the WPU being contrary to supply
chain management prescripts and applicable legislation
 The irregular procurement of goods and services from Mr First Aid and
PASCO Risk Management
 Irregular payments/advances made to the National Co-ordinator of the
WPU, Mr Ronnie Borcherds (Mr Borcherds)

The SIU implemented a phased approached to this investigation and followed
on the following areas during the three phases of this investigation:

Phase 1: Allegations in respect of safe houses and reservists

Phase 2: Allegations in respect of irregularities relating to procurement and
payment(s) to witnesses

Phase 3: Allegations in respect of irregular payment(s) made to Mr Borcherds

The findings of the investigation were as follows:

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8.1 Phase 1: Safe houses
It was alleged that Messrs Adam and Borcherds made use of properties leased
by the WPU for private purposes. Mr Adam was alleged to have allowed his
sons to reside in a WPU safe house situated at 407 Costa Brava, 299 Beach
Road, Sea Point, Cape Town. Mr Borcherds was alleged to have used a
penthouse leased by the WPU for private purposes, the property in question is
situated at 85 Arum Road, Table View (Nautica 801), Blouberg strand.

Irregular use of WPU properties by Messrs Adam and Borcherds

Unlawful use of official WPU property / safe house by Mr Adam

The investigation into the allegations against Mr Adam has uncovered evidence
of impropriety pertaining to the unlawful use of the operational house at
407 Costa Brava, Sea Point, Cape Town.

The evidence gathered supports the allegation that Mr Adam allowed his sons
to use the WPU safe house in Sea Point for approximately three months. His
sons vacated the premises after being questioned by the IMU. Mr Adam admits
to placing his sons in an official WPU safe house, but maintains that his
decision to do so was based on his belief that they were under threat from
PAGAD.

This reason appears to be irreconcilable with the fact that he placed them back
in the so-called danger area in Rylands shortly after they had vacated the Sea
Point safe house. Mr Adam’s failure to discuss this threat with any of his
superiors, his sons or the NPA’s Security and Risk Management Division also
raises serious questions about the substance and severity of these alleged
threats.

It is clear that whilst Mr Adam’s sons occupied the safe house, the WPU would
not have been able to derive the intended usage and benefit from the property.
Conversely, Mr Adam derived an undue benefit to the value of R58 080 by
placing his sons in the safe house for what was, in effect, private use of the
property.

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Unlawful use of official WPU property / safe house by Mr Borcherds

Evidence obtained during the course of the investigation supports the allegation
that Mr Borcherds, as well as other members of the WPU, used the properties
in question for private purposes. The evidence indicates that 801 Nautica was
regularly used for parties and social gatherings, and was used by Mr Borcherds
(and other senior members of the WPU) as a vacation home.

Given the lack of usage records for this property, we were unable to quantify the
private usage by Mr Borcherds and/or other WPU members. However, the
private and unauthorised use of WPU assets clearly created potential prejudice
to the WPU.

The investigation revealed that the properties allegedly abused by
Messrs Adam and Borcherds were properties leased for the Special Operations
team. Both properties were procured outside of normal long-term witness
accommodation requirements. In addition, it appears that a lack of proper
control is exercised over these properties.

Recommendations

Institute disciplinary action against Mr Adam and Mr Borcherds

We recommend that disciplinary action is instituted against both Mr Adam and
Mr Borcherds for misconduct pertaining to the use of operational houses, and
that the three month rental totalling R58 080 is recovered from Mr Adam.

Consider criminal action against Mr Adam and Mr Borcherds

We also recommend that criminal action is considered against Messrs Adam
and Borcherds for their unlawful misrepresentation regarding the use of
407 Costa Brava, Sea Point and Nautica 801, Bloubergstrand.

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Fraud and systemic risks identified during our investigation of safe
houses

The combination of the nature of the apartments (luxury apartments), the
relatively high rentals, the evidence of private usage, the lack of adequate
usage records and the absence of a regulated procurement process creates an
environment that is highly susceptible to fraud and error.

Recommendations

In order to upgrade the systems and processes related to accommodation
expenditure in the WPU, we recommend the following:

Implement usage records for all safe and operational houses

It is advisable that the WPU implement usage records for all safe houses and
operational houses.

Evaluate usage of houses regularly

It is advisable that the WPU evaluate usage of the houses on a periodic basis to
ensure that fruitless and wasteful expenditure is avoided.

Draft a policy on personal use of departmental assets

The WPU should draft a robust policy on personal use of departmental assets,
and ensure that this is communicated and agreed to by all employees.

Maintain a register of interests

A register of interests should be maintained in which all employees record any
relationships they have with witnesses, suppliers or other parties where conflict
of interest could create risk.

8.2 Phase 1: Reservists
The allegation investigated in this section relates to the alleged irregular
appointment of three “SAPS reservists”, namely Mr Hector, Mr Le Fleur and Mr
Campher. Mr Hector was alleged to be related to Mr Borcherds.

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Irregular appointmentment of three SAPS reservists

Appointment of reservists

Even though the appointment of the “reservists” can be regarded as
unconventional and somewhat “creative”, it cannot be said that the conduct of
Mr Adam or Mr Borcherds, amounted to misconduct because their actions were
directed at ensuring the continuation of WPP operations given the shortage of
personnel. There is no evidence suggesting that any of the reservists were
related to any senior members of the Witness Protection Unit.

Payments to reservists

The monthly payment as per the DPSA daily rate did not appear to be irregular.
However, given the lack of clarity around the contractual agreement between
the WPU and these three reservists, we could not eliminate the possibility that
the payment of bonuses may be irregular.

The omission by the WPU to deduct tax from the bonus payments made to the
reservists constitutes a contravention of the Income Tax Act (No 58) of 1962 (as
amended). The manner in which taxation is levied on the monthly payments
made to the reservists is determined by whether these payments are classified
as subsistence allowance or salary. Given that this issue was outside of our
mandate, we are not in a position to conclude in respect of the payment
classification. However, it is evident that regardless of the classification, the
WPU appear to have under-deducted income tax.

Vetting of reservists

During the investigation the SIU identified that one of the reservists (Mr Le
Fleur) had a previous conviction for theft. Neither Mr Adam nor Mr Borcherds
were aware of this as no proper integrity screening process was undertaken
prior to appointing Le Fleur as a WPU protector. Given the nature of WPU’s
core business it is important that WPU protectors be people of high integrity.

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Recommendations

Obtain legal certainty with respect to appointment

We recommend that legal certainty is obtained with respect to the appointment
of security officers (protectors).

Improve vetting process of security officers

We recommend that the vetting process of security officers (also referred to as
“reservists” and protectors) is significantly improved with a view to managing
risk for the WPU. Given the mandate of the WPU it is highly desirable that
witness protectors be persons of high integrity.

8.3 Phase 2: Witness Expenditure
It was alleged that exorbitant allowances were paid by Messrs Adam and
Borcherds to a witness and his dependents, Mr A Janodien and his family (the
Janodien family). It was also alleged that Mr Janodien had a close relationship
with Mr Adam, and to a lesser extent with Mr Borcherds and that as a result this
witness and his family were unduly favoured by Messrs Adam and Borcherds,
who authorised irregular payments to the witness and his family.

8.3.1 Conclusions relating to witness payments
The regulations for the WPA have not yet been published (approximately nine
years after the promulgation of the WPA), and this has resulted in the continued
application of the regulations of the Criminal Procedure Act 51 of 1977 (CPA)
for calculating and determining witness payments. These regulations were
drafted a number of years ago and there is therefore a significant variance
between the type of witness payments currently effected by the WPU and that
allowed for in terms of the regulations. The lack of a WPU policy with respect to
witness payments has resulted in witness payments being effected on a
discretionary basis by Messrs Adam and Borcherds.

Regulation 22 continues to be the authority with respect to types and amounts
of payment that may be made to witnesses. In addition, the regulations
prescribe the process to be followed in cases where the rates are considered to

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be inadequate, with the DG of Justice being required to approve any additional
expenditure.

We believe that the argument that section 4 of the WPA (dealing with the
powers, function and duties of directors) provided Mr Adam with a discretion to
approve any transaction connected with providing support services to witnesses
and their extended family is flawed. It is not possible to have discretion on an
issue that is otherwise regulated, as is the case with witness payments.

However, even if Mr Adam had understood himself to have unfettered discretion
with respect to witness support, we believe that an analysis of the totality of
evidential material shows the manner in which he exercised this discretion to be
unreasonable. For example:

 The prescripts refer to the purchase of necessary clothing for witnesses
whereas our analysis identified that designer labels were purchased by
WPU for certain witnesses (refer to paragraph 5.2 for further details
regarding the nature of clothing purchased by the witnesses).
 Salary replacements continued to be paid by the WPU in spite of a witness
having a business and the WPU failed to obtain proper confirmation of
income.
 Funding was provided to witnesses by the WPU for items that could not be
considered to be part of necessary living expenditure and which, in terms of
the regulations, would be required to have been financed by the witness
from their respective salary replacement income – for example, designer
clothing, loans in respect of the purchase of birds, school day trips, repairs
to motor vehicles, general loans/advances, fishing equipment, transport to
school and transport in general.
 Loans were provided to witnesses without an underlying agreement and
subsequent loans were advanced despite the previous loan not having
been repaid; further to this, interest was not charged on the loans issued.

A number of the witness payments were authorised by Mr Borcherds, the WPU
deputy head. We established from Mr Theron that there is no written delegation
authorising Mr Borcherds to perform functions such as exercising discretion with
respect to witness payments in excess of the regulations and/or authorising
payments and specifically witness payments. The only written authority in

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respect of Mr Borcherds powers and duties is his letter of appointment provided
by the WPU. We believe that Mr Borcherds was not authorised to approve
witness payments and/or use discretion in making payments outside of the
regulated rates. The witness payments authorised by Mr Borcherds are
therefore irregular.

Recommendations

Institute disciplinary action against Mr Adam

For the reasons outlined, we believe that Mr Adam’s approval of witness
payments in excess of prescribed tariffs is irregular and constitutes misconduct.
We therefore recommend that the WPU institutes disciplinary action against
Mr Adam. In the alternative, even if Mr Adam understood his discretion to
extend to authorising all transactions in the WPU, including any witness
payments, the way in which he exercised this discretion was unreasonable and
as such constituted misconduct warranting disciplinary action.

Institute disciplinary action against Mr Borcherds

We believe that Mr Borcherds' approval of witness payments in excess of
prescribed tariffs is unlawful and constitutes misconduct.

Formulate regulations in terms of section 23 of the WPA

We recommend that regulations specific to the WPP regarding witness
payments be formulated and enacted in terms of section 23 of the WPA.

Insist on documentary proof verifying use of WPU funds

We recommend that witnesses provide documentary proof of purchase/delivery
to ensure and/or verify that WPU funds are used in terms of the initial
motivation/request.

Review WPU financial systems for witness payments

We recommend a review of the WPU financial systems for witness payments,
with a view to introducing a central electronic record of all payment requests
made by a respective witness together with a record of all payments made by

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the WPU. This will allow comparisons to be made between witnesses and more
easily identify any fraud/error.

8.3.2 Conclusions with respect to payments made to the Janodien family
The Janodien family received payments of R 4 367 900 between May 2002 and
August 2007. The payments prescribed by regulation 22 are limited to a salary
replacement of R400 per day, a clothing allowance of R400 per family member
per year for necessary clothing as well as medical expenditure. The state is also
entitled to adjust allowances for any payments made in respect of clothing or
medical expenses. All witness payments in excess of these prescribed
payments are required to be authorised by the DG of Justice.

It appears that payments totalling R 1 018 827 were made to the Janodien
family in excess of the payment types and values prescribed in the regulations.
This estimate of irregular expenditure does not include the possible excess
payments made in respect of salary replacements.

With reference to all of the witness payments outlined above, we believe that
even if Messrs Adam and Borcherds understood their discretion/mandate to
extend to authorising all witness payments in the WPU, the evidence indicates
that they exercised this discretion/mandate in an unreasonable manner. A few
key examples are listed below: Clothing allowances paid to the Janodien family
in 2002 totalling R159 729 appear to be irregular to the extent that the excess
expenditure was not approved by the DG of Justice. Payments totalling R855
795 (excluding bonuses) were made to the Janodien family for salary
replacement between May 2002 and August 2007. We are not aware of any
approval from the DG of Justice in respect of salary payments in excess of the
prescribed rate. Annual bonuses totalling R 85 645 were paid to the Janodien
family between May 2002 and August 2007.

These payments, approved by Messrs Adam and Borcherds, were not
authorised in terms of the applicable regulation and thus were entirely at the
discretion of the head and national co-ordinator. The bonus payments therefore
appear to be irregular.

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We were unable to identify any evidence to support the allegation that the
Janodien family was unduly favoured by Mr Adam and/or Borcherds and/or
were related to Mr Adam.

Recommendations

Institute disciplinary action against Mr Adam

Mr Adam’s approval of the payments to the Janodien family in excess of the
prescribed tariffs is irregular and unauthorised and constitutes misconduct. We
therefore recommend that the WPU institutes disciplinary action against
Mr Adam.

Institute disciplinary action against Mr Borcherds

We believe that Mr Borcherds' approval of payments to the Janodien family in
excess of the prescribed tariffs is unlawful and constitutes misconduct. We
therefore recommend that the WPU institutes disciplinary action against
Mr Borcherds.

8.3.3 Loans/advances made by the WPU to witnesses
A key focus area of our proclamation related to the allegation(s) in respect of
the payment of financial benefits to witnesses and/or persons in contravention
of, in excess of and/or without compliance to the WPA and/or policies,
procedures, prescripts, directives, guidelines.

During our analysis of five regional cashbooks, we identified specific
advances/loans made to various witnesses and/or their dependents. Loans
totalling R187 628 were issued to the Janodien family from the Kwazulu-Natal
(KZN) regional office between 2002 and 2007. These loans were approved by
Messrs Adam and Borcherds although the issuing of loans to witnesses is not
authorised in terms of the WPA or subordinate legislation (namely regulation
22), and as such requires the approval of the DG of Justice. The issuing of
loans does not appear to be peculiar to the Janodien family

It is evident that loan agreements and repayment schedules were not entered
into for the majority of loans. In addition, the WPU failed to charge interest on

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loans made to witnesses and dependents resulting in a loss of income to the
WPU. This was primarily a result of inadequate documentation in respect of
policies and procedures as the WPU had no formal policy relating to witness
loans and all loans were approved on the basis of the discretion exercised by
Mr Adam and/or Mr Borcherds. Given the contents of the WPA and regulation
22 outlined above, it is evident that Mr Adam and/or Mr Borcherds did not have
sufficient authority to approve these payments.

It is further evident that R69 000 loaned to the Janodien family had been
outstanding for a significant period but was not subject to interest. These loans
appeared to have been approved predominantly by Mr Borcherds, although the
loans remained unpaid with the knowledge and approval of Mr Adam and
Mr Borcherds.

Recommendations

Institute disciplinary action against Mr Adam

For the reasons outlined, we believe that Mr Adam’s approval of the loans to the
Janodien family is irregular and unauthorised and constitutes misconduct. We
therefore recommend that the WPU institutes disciplinary action against
Mr Adam. In the alternative, even if Mr Adam understood his discretion to
extend to authorising loans to the Janodien family, the way in which he
exercised this discretion was unreasonable and as such constituted misconduct
warranting disciplinary action.

Institute disciplinary action against Mr Borcherds

We believe that Mr Borcherds' approval of loans to the Janodien family is
unlawful and constitutes misconduct. We therefore recommend that the WPU
institutes disciplinary action against Mr Borcherds. In the alternative, even if
Mr Borcherds understood his mandate to extend to authorising the loans to the
Janodien family, the way in which he exercised this mandate was unreasonable
and as such constituted misconduct warranting disciplinary action.

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Draft loan agreements for all current witness loans and provide loan
certificates

We recommend that the WPU should draft loan agreements for all current
witness loans and that a central register at head office must be maintained in
respect of loans held at the respective regions.

Acquire proper authority for all future loans

We also recommend that no further loans are issued to witnesses without the
necessary authority, which is currently the approval of the DG of Justice.

8.4 Phase 2: Procurement Investigation
There are two allegations that relate to procurement irregularities that required
investigation, the allegations are:

 that Mr Etienne Theron, the WPU Financial Manager, facilitated the
procurement of medical kits for the WPU, totalling R200 000 from a
company (Mr First Aid) allegedly owned by his father-in-law. It is further
alleged that Mr Theron circumvented prescribed procurement policies.
 that both Mr Adam and Mr Borcherds are shareholders in a security
consulting company, PASCO Risk Management Consultants (PASCO),
further, it is alleged that the WPU purchased cameras through PASCO to
the amount of R500 000 and that normal procurement policies and
procedures were circumvented in the process.

Fraud and systemic risks identified during our investigation of
procurement

It is evident that the procurement polices and practices of the WPU are contrary
to supply chain management prescripts and applicable legislation.

At no stage was a “blanket authority” to dispense with normal prescribed
procurement policies and applicable legislation granted to the WPU by the State
Tender Board. The WPU’s own submission to the State Tender Board was
based on the need to acquire urgent safe houses in certain circumstances.

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These submissions did not include the procurement of goods or services that
were of a general or operational nature. The WPU’s contention that the National
Treasury granted them a “special dispensation” in respect of goods procured for
operational purposes, up to and including R500 000 appears to be a
misrepresentation of the increase in the emergency delegation granted to the
WPU. A blanket "special dispensation" was never contemplated or authorised
by the State Tender Board.

Goods or services procured in terms of this emergency delegation would need
to meet the requirements of the emergency delegation as set out in delegation
8.3.2 and delegation 8.3.3, namely:

 The reasons for the emergency and the losses or consequences that will
follow if action was not taken must be certified at director level and placed
on record for audit purposes.
 Where only one price quotation is received and accepted, and taking the
circumstances into account, all reasonable steps must be taken to ensure
that a fair price is obtained.

During the course of performing our regional cashbook review and witness
payment analysis, we inspected a large amount of supporting documentation
contained in the regional payment files. We also interviewed the regional heads
to gain an understanding of the financial systems, during the course of these
procedures, we established that:

 No emergency documentation is compiled and/or maintained by the
regional offices and/or head office.
 No authorisation is required by the head office for payments made outside
of the NPA procurement policy, given that in terms of the WPU
procurement policy for operational items, no procurement process is
required.

During our review, we identified very few quotations included in the payment
supporting documentation. We also established that no fair or competitive
process is carried out for the majority of procurement at the regional offices.

In addition, the goods/services procured in terms of paragraph 6 of the WPU
expenditure and procurement policy, to the extent that they do not qualify as an

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emergency, are a contravention of applicable prescripts and legislation and
consequently must be deemed irregular. During our review of the cashbooks,
we established that the majority of expenditure paid by the regions could not
reasonably be judged to be related to an emergency situation.

In terms of the delegations, expenditure up to R25 000 was authorised by the
regional heads. As such, these regional heads could be considered guilty of
misconduct given that all regional procurement could be considered irregular
baed on the WPU procurement policy and non-compliance with the delegations
relating to emergencies.

In addition, the procurement policy compiled by the WPU (approved by Messrs
Theron and Adam) does not reflect the legal obligations required in terms of
section 217 of the Constitution of the Republic of South Africa, Act 108 of 1996,
namely fairness, equity, transparency, competitiveness and cost effectiveness.

Finally, the current procurement policies and practices present major risks to
the WPU in terms of the control environment and create a high susceptibility to
possible fraud and irregularities. In addition, procurement effected by the WPU
in accordance with the WPU expenditure and procurement policy will continue
to be irregular in nature, given its non-compliance with supply chain
management prescripts and incorrect application of the delegation from the
State Tender Board.

Recommendations

Review WPU Expenditure and Procurement policy

We recommend that the current WPU expenditure and procurement policy is
reviewed and amended, so that it complies with relevant legislation and
prescripts.

Institute disciplinary action against Mr Adam and Mr Theron

We also recommend that disciplinary action is instituted against Mr Adam and
Mr Theron in respect of the unlawful misrepresentation of the emergency
delegation granted to the WPU by National Treasury.

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Allegation in respect of procurement transactions with the supplier
Mr First Aid

We were unable to find any evidence to confirm the allegation that Mr Theron’s
father-in-law is linked to Mr First Aid in any way. The procurement of the
medical kits from Mr First Aid was irregular and did not comply with the
prescribed supply chain management prescripts and applicable legislation. It is
clear that the WPU placed reliance on the fact that when procuring goods for
operational purposes to the amount of R500 000, they were exempted from
adhering to normal supply chain management prescripts and legislation.

We could find no evidence that the above goods were procured through
Mr First Aid due to an emergency as contemplated by the supply chain
management prescripts.

Our competitive cost analysis indicated that the prices charged by Mr First Aid
were substantially higher than market value, resulting in financial loss to the
WPU. This state of affairs was the direct result of the inappropriate application
of the "special delegation" by Messrs Adam and Theron, as well as what
appears to be manipulation of the procurement system to allow for exemption
from any competitive procurement process (such as more than one quote).

Recommendation

Institute disciplinary action against Mr Adam and Mr Theron

We recommend that disciplinary action is instituted against Mr Adam and
Mr Theron for the irregular purchases made from Mr First Aid based on their
manipulation of the National Treasury emergency delegation.

Allegations in respect of procurement transactions with the supplier
PASCO

We could find no evidence to confirm that either Mr Borcherds or Mr Adam have
a business interest in PASCO. We further confirmed that seven video cameras
were purchased for the WPU through PASCO. However, the total amount
involved was R43 084.02 and not R500 000, as alleged.

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The WPU and PASCO entered into a service agreement in terms of which
PASCO would supply and maintain equipment for WPU. No formal tender
process was followed in securing PASCO as a service provider and entering
into the contract may therefore be irregular. Further, PASCO charged a
handling fee for goods procured for the WPU. The service agreement between
the two parties makes no provision for a handling fee and the handling fee may
therefore be irregular.

We could find no evidence that any goods were procured through PASCO as a
result of an emergency situation as contemplated by the supply chain
management prescripts.

In many instances, payments to PASCO were effected from various regional
offices in order to justify the expenditure as operational in nature, which would
allow for the dispensing of supply chain management prescripts in terms of
WPU policies.

Recommendations

Institute disciplinary action against Mr Adam and Mr Theron

We recommend that disciplinary action be instituted against Mr Adam and Mr
Theron for the irregular purchases made from PASCO based on their
manipulation of the National Treasury emergency delegation.

Seek legal opinion regarding recovery of handling fees

We also recommend that the WPU/NPA seek a legal opinion regarding the
possible recovery of the handling fees charged by PASCO for goods procured
for the WPU.

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8.5 Phase 3: Irregular payments to Mr Borcherds and financial
analysis of Messrs Adam and Borcherds
Mr Borcherds instructed Mr Theron and the relevant regional staff members to
advance him amounts totalling R13 500 during 2003 and 2004. Mr Borcherds
failed to provide any reason for these payments other than to inform Mr Theron
that he was entitled to these advances given his position as head of operations
of the WPU. We were unable to obtain any supporting documentation in respect
of these payments other than certain written instructions provided by Mr Theron
to the regional heads. There was no WPU policy in respect of advances to
members and the advances were recorded in the regional offices only, usually
in the advance register.

Further, some of these payments were recorded as a subsistence advance in
the advance registers, there is no documentation to support this classification.
The advances to Mr Borcherds were authorised by Mr Borcherds and
Mr Theron, with the regional heads or staff members simply carrying out an
instruction.

Notwithstanding numerous requests by the regional heads, and by Mr Theron
and Mr Adam, Mr Borcherds failed to repay R9 500 for almost four years on the
basis that he had insufficient funds. It was only after the AG reported these
advances as an issue in the 2006/2007 financial audit that Mr Borcherds repaid
the outstanding amounts between March 2007 and July 2007.

However, it appears that Mr Borcherds repaid these advances following the
submission of a subsistence and travel claim (S&T), which included a claim for
the period 20 December 2006 to 4 January 2007. On the basis of the available
S&T documentation provided to us by Mr Theron, it appears as if Mr Borcherds
claimed for S&T in respect of at least three public holidays. It also appears on
the basis of the evidence obtained to date that this claim was submitted on the
basis of a covert operation performed in the Eastern Cape, yet a review of the
operational plans and an addendum for this region indicate that no operations
were conducted during this period. It is therefore possible that subsistence and
travel claims totalling R20 122.62 were paid to Mr Borcherds on the basis of
fictitious claims.

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We were unable to correlate the subsistence claim to the leave records
submitted by Mr Borcherds given that the WPU leave records are not updated
on a regular basis.

It is apparent that Mr Borcherds misused his position as head of operations to
expedite advances to be paid to him. He effectively overrode internal controls to
facilitate the payment of these advances. In addition, given that Mr Borcherds
had no delegation to authorise payments, he should not have requested such
advances. Mr Borcherds’ failure to repay these advances and/or pay interest to
the WPU in respect of the outstanding balances for an extended period of time
resulted in financial loss to the WPU, and we believe this constitutes gross
misconduct on the part of Mr Borcherds. We also believe that Mr Borcherds
incorrectly represented to Mr Theron that he was unable to repay these loans
due to financial constraints. Our analysis of Mr Borcherds' bank statements
indicates that he had sufficient funds to repay these outstanding balances. A
more detailed analysis of Mr Borcherds financial affairs is set out in section 7.

In addition, Mr Borcherds requested payments totalling R1 750 to Fahieka
Sieed, without providing supporting documentation. This payment was therefore
not shown to be in respect of goods or services procured by the WPU, nor in
respect of a witness/dependent of the WPP. We believe that payments to third
parties other than for the aforementioned reasons are not authorised by the
WPA and subordinate legislation. As such, we consider this payment to be
irregular. In addition, Mr Borcherds authorised the payment without the requisite
delegation, thereby rendering the payments irregular.

Mr Borcherds alleges that the payment to Fahieka Sieed was made on the
instruction of Mr Adam. We were unable to obtain any corroborating evidence in
this regard.

Although we were advised by Mr Theron that advances totalling R13 500 had
been made to Mr Borcherds, he concluded that further advances may have
occurred without his knowledge. We are unable to conclude with any certainty
whether the R13 500 constitutes all advances made to Mr Borcherds by the
WPU.

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Recommendations

Institute disciplinary action against Mr Borcherds

We recommend that disciplinary action is taken against Mr Borcherds for
misconduct, for authorising irregular advances totalling R13 500 payable to his
own account. These payments were also contrary to normal processes and
were made without the requisite approval.

Conduct audits of regional cashbooks

We recommend that all regions conduct an audit of their respective cashbooks
with a view to quantifying all cash payments made to Mr Borcherds, these funds
should be recovered from Mr Borcherds.

Perform a complete audit of Mr Borcherds' subsistence and travel claims

We recommend that a complete audit of Mr Borcherds' subsistence and travel
claims is conducted with a view to confirming possible fraud perpetrated by
Mr Borcherds in respect of his claim relating to the period from 20 December
2006 to 4 January 2007, and to identifying any further instances of S&T fraud.

Review WPU internal controls relating to S&T claims

We recommend that the WPU review their internal control systems with respect
to S&T claims.

Institute disciplinary action against Mr Borcherds for misconduct

We recommend that the WPU institute disciplinary action against Mr Borcherds
for misconduct, since he authorised payments of R1 750 to Fahieka Sieed, an
unknown individual not on the WPP and not related to any goods/services
provided to the WPU. As such, these payments constitute irregular expenditure,
especially given that Mr Borcherds was not authorised to request payments by
the WPU.

Institute criminal action against Mr Borcherds for misrepresentation

In addition, we recommend that criminal action is instituted against
Mr Borcherds on the basis that he unlawfully and intentionally misrepresented
to the WPU that Fahieka Sieed was entitled to the payments of R 1 750, as a
witness on the WPP, when in fact the said person was never admitted to the

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Programme and was not a witness. This misrepresentation caused actual
prejudice to the WPU in the amount of R1 750.

Obtain further information relating to cash deposits in Mr Borcherds'
account

Given the number of unknown cash deposits in Mr Borcherds' bank account, we
suggest that further information about these deposits is obtained.

8.5.1 Mr Borcherds' Financial Profile
We were unable to identify any significant assets held by Mr Borcherds which
were inconsistent with his income. The analysis of his bank accounts did,
however, reveal a number of cash deposits and other non-salary related
deposits. These deposits are potentially suspicious, given that they are fairly
large amounts and round numbers. In addition, during our investigation, we
identified advances paid to Mr Borcherds from regional offices in cash that were
deposited into his bank account.

In addition, we were unable to quantify the advances paid to Mr Borcherds by
the WPU regional offices and thus it is possible that these other deposits
(especially the cash deposits) may relate to further advances not identified by
us during the investigation.

Recommendation

Conduct a more extensive investigation or Mr Borcherds' financial affairs

In light of the allegations of irregular payments to Mr Borcherds, and the fact
that such payments were identified during the course of our investigation, we
recommend that a more extensive investigation of Mr Borcherds' affairs is
conducted with a view to quantifying all advances/payments to Mr Borcherds
from the WPU and identifying possible corrupt/irregular payments.

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8.5.2 Mr Adam's financial profile
'Other deposits', totalling R799 794, were reflected in Mr Adam’s bank account
during 25 December 2000 to 24 September 2007, which equates to
approximately R100 000 per year. A number of the ‘other deposits’ have
descriptions which suggest that these deposits relate to investments, travel and
payments from BASJPA. Our asset reconciliation in comparison with the
surplus funds available to Mr Adam does, however, suggest that we failed to
identify all assets owned by Mr Adam. No specific allegations regarding
irregular payments were made in respect of Mr Adam, and we identified no
evidence during our investigation to suggest the possibility that Mr Adam
benefited from corrupt/irregular payments.

Recommendation

In light of the conclusions set out above, we believe that no further work is
warranted in respect of Mr Adam’s financial affairs.

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