SIU flags over R2 billion in irregular defence contracts, lines up mass referrals for prosecution - IOL

The Special Investigating Unit (SIU) has identified more than R2 billion worth of Department of Defence contracts that could face civil proceedings in the Special Tribunal, as wide-ranging procurement investigations move closer to possible court action and criminal, disciplinary and regulatory referrals.

The potential action emerged during the SIU’s briefing to Parliament’s Portfolio Committee on Defence and Military Veterans on Wednesday, where principal investigator Jabu Masilela, who oversees the Defence portfolio, detailed progress in several investigations.

The contracts under scrutiny include a R217 million deal linked to the acquisition of an Alpha 2 behavioural drug from Cuba, as well as contracts and variations worth hundreds of millions of rand investigated under Proclamation R239 of 2025.

Masilela told MPs that the investigation into the acquisition of the Alpha 2 behavioural drug from Cuba had been finalised.

The investigation resulted in 16 referrals involving role players identified during the probe. Fourteen have been delivered to the Department of Defence, while two were undergoing quality review.

“We have since made or finalised those referrals, and 14 of them have been delivered to the department, and two have been subjected to quality review,” Masilela said.

The matter is now being assessed to determine whether there is sufficient evidence to institute civil proceedings in the Special Tribunal to set aside the approximately R217 million contract between the Department of Defence and the Republic of Cuba.

The SIU is also considering the potential recovery of about R33.4 million paid to Cuba.

Masilela said the matter had been referred for an assessment of whether there was adequate evidence to pursue “civil proceedings through a special tribunal for setting aside the contract worth around 217 million” as well as “the potential recovery of an amount of approximately 33.4 million paid to Cuba”.

The SIU has also identified possible civil proceedings arising from its ongoing investigation under Proclamation R239 of 2025, which deals with the procurement of various asset-related services.

In one focus area, investigators identified the possibility of approaching the Special Tribunal to set aside a R49 million contract, as well as subsequent contracts and variations totalling more than R593 million.

“That is just on one focus area as far as the R239 is concerned,” Masilela told the committee.

The investigation could also result in 20 disciplinary referrals and 10 referrals to the National Prosecuting Authority (NPA).

The SIU has further identified 10 referrals to the South African Revenue Service (SARS), two to the South African Institute of Chartered Accountants and one to the Legal Practice Council.

A second focus area under the same proclamation has put two more contracts, valued at R680 million and R922 million, in the sights of potential civil proceedings.

“We've also identified prospects to institute civil proceedings through the special tribunal in terms of the contract which was allotted in the amount of 680 million and another contract in the amount of 922 million,” Masilela said.

That focus area has also generated seven systemic recommendations, 11 disciplinary referrals, five referrals to the NPA, three to SARS, and one each to the Competition Commission and National Treasury.

The R239 investigation remains ongoing and is expected to be completed by the end of November 2026.

Meanwhile, the SIU is continuing its investigation under Proclamation R260 of 2025, which is expected to be completed by March 31, 2027.

Masilela said investigators had identified eight referrals to the NPA against specific entities, three disciplinary referrals against officials and 10 referrals to the Competition Commission in one focus area.

A second focus area has identified possible civil proceedings involving contracts valued at about R82 million.

It has also generated potential NPA referrals against 10 entities, 13 referrals to SARS and three disciplinary referrals against officials.

The parliamentary briefing also highlighted broader concerns identified through the SIU’s investigations into the Defence portfolio, including poor record-keeping and failures to implement recommendations previously made by the unit.

The SIU said it had only three outstanding investigations across the portfolio and undertook to accelerate their completion.

Two are expected to be finalised this year, while one is scheduled for completion next year.