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Chief Justice Raymond Zondo has recommended that the Hawks reconsider a resumption of the criminal investigations involving former State Security Agency (SSA) director general Arthur Fraser relating to the controversial covert Principal Agent Network (PAN) project.
The recommendation against Fraser features under the subheading: cash withdrawals, movement of cash, and accountability for cash.
The state capture commission of inquiry found that large sums of money running into millions were withdrawn for the covert projects in the SSA and unaccounted for.
Zondo said a PAN report compiled by an internal investigation team had revealed, amongst others, at least prima facie criminal activities which recommended criminal investigations that could have involved Fraser. After the report had been handed over to the Hawks, he said, former state security minister Siyabonga Cwele “ordered that the matter be taken from the Hawks”.
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“The resumption of the investigations should be reconsidered by the Hawks. It might be that whoever were involved, including Mr Fraser, get absolved, but the investigations should be allowed to take their normal course,” said Zondo in the final instalment of the four-year-long investigation into corruption in government.
He noted, however, that Cwele – now South Africa’s ambassador to China – had denied that he ordered the discontinuance of the investigations, “but it would remain a puzzle why they stopped”.
In any event, he said, the denial is irrelevant to the commission’s recommendations.
Zondo said:
“As already said, the handling and use of cash is inevitable, especially in covert operations. However, consideration should be given to minimising the amounts involved.”
He said there should be consequence management, including recovering the lost monies.
He cited was a case where cash in the amount of R145 million was stolen within the SSA offices, adding that former minister David Mahlobo also withdrew money, allegedly, for former President Zuma at R2.5 million a month in 2015/2016 and later raised it to R4.5 million a month in 2016/2017. The funds were approved by former ambassador to Japan Thulani Dlomo, a former director of special operations in the agency.
Zondo said large sums of money would be paid in advance and in cash for operations but there were many problems with this.
“For example, the purpose for the money would be obscure or not set out, nor was the final destination (supposedly some operatives). To sum up, the motivation would be inadequate; financial controls, such as were there, were poor or not adequately enforced.”
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He said there would be no verification as to what the money was used for because, “to start with, the intended use would itself be obscure; there was no verification as to whether the intended recipient actually got the money, such as in the form of receipts and that one of the service providers was found to be non-existent.”
“Lack of accountability manifested itself in various ways. To give two astonishing examples:
“Firstly, whereas the person to whom an advance payment was made was disqualified from taking a further advance before accounting for the first one, this rule would be circumvented.”
He continued:
“One of the people whose name was used in this manner told the commission as much.
“The second example was where a person simply acknowledged the debt in terms of the money. They were unable to account for with the money amounting to millions without any effective recovery of the money. Instead, the money, amounting to millions, would be offset against the person’s pension.”
In some instances, such people simply resigned thereafter, and a witness estimated that over the period 2012 to 2018 an amount of R1.5 billion was lost, he said.
Zondo said that Dlomo, in his capacity as the head of the Special Operations Unit, “handled a lot of cash. In many respects, the use and destination of the monies remained obscure.”
“Minister Mahlobo, too, as shown above, then as Minister of State Security, handled large sums of cash. For example, on the evidence, there was a time when he received R2.5 million a month, later increased to R4.5 million a month, which he allegedly said was for former President Zuma.”
The commission noted the denials by Mahlobo. He said, however, there were at least two eyewitnesses and secondly, the details were too much to be a figment of their imagination.
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“Probabilities are overwhelming against David Mahlobo. After his appointment, the budget of the SSA increased hugely. This conclusion was based on the scrutiny of the budget as documentary evidence relating to the budget.”
Fraser also handled and caused a lot of cash to be withdrawn, he said, adding that it was said by the Project Veza investigation team that an amount of about R125 million remained accounted for by Fraser, even as investigations were still going on.
Zondo said the role played by Dlomo, Mahlobo, Fraser and other people involved in the withdrawal, handling, and distribution of SSA’s money, should be looked into by the law enforcement agencies.
“The Inspector-General of Intelligence (IGI) should be allowed more access into the activities of the country’s intelligence services. There has been evidence by the current IGI that attempts were made to frustrate some of his investigations.”
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