Media statement by Minister Derek Hanekom, MP, minister of Science and Technology on Tuesday, 1 April 2014
1. INTRODUCTORY STATEMENT
In May 2013, the Technology Innovation Agency (TIA) Board received several allegations levelled against the former Chief Executive Officer (CEO) and other officers of the Agency.
In terms of the TIA Act, the Board informed me of the allegations they received and which they planned to investigate. They further informed me they would first conduct a fact finding exercise to establish whether there was any substance to the allegations.
The outcome of the fact finding exercise – completed on 9 July 2013 - showed that there were sufficient grounds to conduct a forensic investigation. The CEO, Mr Simphiwe Duma, was informed of the outcome of the fact-finding exercise and he elected to go on Special Leave with effect from 17 July 2013.
Deloitte was then appointed by the TIA Board on 31 July 2013 to investigate the allegations. Deloitte handed the draft report to the Board early in October 2013.
The Board, having considered this report, informed me of the outcome of the forensic investigation by Deloitte and, with my concurrence, a disciplinary process commenced. On 17 October 2013, the CEO was accordingly put on suspension by the Board. Subsequently, the CFO and four other staff members were also put on suspension by the Board.
The disciplinary hearing of the CEO, based on the final Deloitte Report, was conducted in accordance with the TIA’s Disciplinary Code and the Labour Relations Act.
At the conclusion of this process, the TIA Board received the report of the Chairman of the Disciplinary Hearing, which recommended the dismissal of the CEO in respect of several charges against him. In the words of the Chairman of the Disciplinary Hearing:
“The sanction of a dismissal has been recommended on the basis of each of the transgressions considered separately and not based on cumulative effect thereof.”
This report was considered and accepted by the Board of the Agency at its meeting of 26 March 2014. They then recommended to me that the CEO be dismissed. I concurred with this recommendation.
In terms of the TIA Act, the CEO is appointed by the Minister of Science and Technology upon the recommendation of the Board. Likewise, the dismissal or termination of the contract of the CEO occurs on the recommendation of the TIA Board, once this has been recommended to the Minister for final determination.
In accordance with this responsibility, it is with regret that I have to announce that Mr Simphiwe Duma was dismissed from the Agency with effect from 31 March 2014.
As a direct consequence of these investigations, the services of the Chief Financial Officer (CFO) of TIA, Ms Barbara Kortjass, have also been terminated by the TIA Board.
2. ALLEGATIONS INVESTIGATED AND FINDINGS
2.1. Allegations investigated by Deloitte forensic investigators
The allegations investigated are contained in the summary on page 2 and 3 of the Deloitte report titled, “Technology Innovation Agency Report: Forensic Investigation into various allegations” (the Deloitte Report) and pertain to allegations of:
- intimidation [of external auditors];
- irregular investment transactions;
- procurement of Goods and Services;
- Mr Duma’s expenses.
2.2. Findings of the forensic investigation
The findings of the forensic investigation are contained in the summary and in detail in the Deloitte Report which has been made available in hard copy to the media present here, and on the DST and the TIA websites for public access. The report is being made available, in its entirety, except for paragraphs 5.434 to 5.441; which have been extracted from the Deloitte Report by the decision of the TIA Board.
2.3. Actions taken on the basis of the findings of the forensic investigation
I would like to remind the members of the media present here and the public that TIA is a national public entity listed in Schedule 3A of the Public Finance Management Act (PFMA), Act No.1 of 1999. The TIA Board is the accounting authority of the Agency. The fiduciary duties of accounting authorities of public entities are set out in section 50 of the PFMA.
Furthermore, Section 34 of the Prevention and Combating of Corrupt Activities Act, Act No. 12 of 2004, places an obligation on persons to report suspected corruption to the authorities.
The TIA Board has briefed me on the actions it has taken in terms of its fiduciary duties and I highlight the following:
2.3.1. Disciplinary proceedings against employees implicated
Six staff members of TIA, including the CEO and the CFO, were subjected to disciplinary proceedings. Five staff members were subjected to formal disciplinary processes and one to an internal disciplinary process.
Five of the disciplinary hearings (including the internal process) have now been concluded. As I have already said, the CEO has been dismissed. The CFO of TIA, Ms Barbara Kortjass, who went through the same disciplinary hearing as the CEO, has also been dismissed with effect from 31 March 2014. Three staff members were handed appropriate sanctions and are all back in their positions in TIA.
One staff member is still undergoing the disciplinary process.
2.3.2. Reporting as required in terms of Section 34 of the Prevention and Combating of Corrupt Activities Act.
A report that is inclusive of the Deloitte Report and the TIA’s internal Investment Audit Report on the Terbrugge Trust Community (TCT) Project has been filed with the Directorate for Priority Crimes Investigation (DPCI) by the Chairperson of the TIA Board, as mandated by the Board, on 31 March 2014.
2.3.3. Reporting as required by the Public Finance Management Act
The Board is currently in the process of reporting these matters as required in terms of the PFMA to National Treasury, as well as the Auditor General.
2.3.4. Investment Audit of the Terbrugge Community Trust (TCT) Project
In respect of the Terbrugge Community Trust Project, executives at TIA conducted an Investment Audit. The Investment Audit Report has been finalised and points to several breaches of the agreement, as well as poor management, poor financial management and poor governance of the project.
The TIA Board has resolved to utilise all available legal avenues to seek full recourse in respect of the Agency’s resources. Furthermore, the Investment Audit Report has been submitted, together with the Deloitte Report, to the authorities in terms of the Prevention and Combating of Corrupt Activities Act to enable further investigation of the Terbrugge Community Trust Project.
The finalisation of the disciplinary processes against the former CEO of TIA and other staff concludes a rather difficult and unfortunate chapter in the history of the Agency. The focus now will be on the recruitment of a suitably skilled and qualified individual who will add to the strength of the Agency’s Board, and ensure that the day-to-day operations of the Agency are conducted competently, and with honesty and integrity.
3.1. Interim leadership
With my concurrence, the TIA Board appointed Mr Mkhululi Mazibuko, the Agency’s Chief Operations Officer, as the Acting CEO. Mr Werner van der Merwe has been the Acting CFO during the absence of the former CFO. I would like to express my appreciation to both of them for managing the Agency’s day-to-day activities under very difficult circumstances.
The Board has indicated that it would be discussing with me its recommendations regarding the leadership of the Agency during the intervening period leading to the appointment of a permanent CEO and CFO. Any significant announcements in this regard will be made in due course.
3.2. TIA’s new strategy and annual performance plan
Much has already been reported on the Ministerial Review of TIA, which was conducted in the early part of 2013. I am pleased to say that the Board and the Executives of the Agency have responded to the recommendations of the Ministerial Review in a commendable manner. A new Strategy which takes into account the recommendations of the Ministerial Review has been forwarded to me for consideration, and I approved the Annual Performance Plan in February this year for implementation.
3.3. TIA Staff
It would be remiss of me if I did not thank the staff of TIA for their patience, resilience and commitment to the Agency’s mandate and its work. They have been commendable in carrying out the work of TIA during this entire process.
3.4. TIA Stakeholders
The Agency works with many stakeholders in the National System of Innovation, in the economy and in society. Many of these stakeholders, in making submissions for the Ministerial Review, reaffirmed the importance of the Agency despite some of the challenges that are currently being addressed. The Board of the Agency has informed me that it will be actively engaging the stakeholders once the new Strategy is approved. I therefore ask all stakeholders to actively participate in these planned engagements.
3.5. TIA Board
I would like to express my appreciation to the members of the TIA Board, led by the Chairperson, Ms Khungeka Njobe, for the dedicated and professional manner in which they have dealt with this matter. This was not an easy introduction to TIA’s activities for the new Board, but I look forward to the same dedication and expertise in positioning the TIA to achieve its full potential in the National System of Innovation.
The mandate of the TIA remains compelling and is critical to the stimulation of our economy and for social development, and the South African Government remains committed to the success of the institution.
I thank you