THE DIRECTORATE FOR PRIORITY CRIME INVESTIGATION SOUTH

AFRICAN POLICE SERVICE

BRIGADIER NP OLIVERDATE: 15 -16 AUGUST 2013

GEMS 2013 ANNUAL SYMPOSIUM

AN OVERVIEW, WITH SPECIFIC Emphasis ON THE PREVENTION, INVESTIGATION AND PREVALENCE OF MEDICAL SCHEME FRAUD

AND CORRUPTION AND THE PROPONENTS

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OUTLINE OF THE PRESENTATION Introduction. The effects of fraud and corruption. Criminal attacks on our systems. Constitutional Mandate of the SAPS. The establishment of the DPCI. Mandate of the DPCI. Objectives of the DPCI. Main responsibilities of the DPCI. The services provided by the DPCI. Commercial Crime Unit Composition.

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OUTLINE OF THE PRESENTATION CCU: Operations at Unit level CCU: Cooperation with other role players International Cooperation Special focus unit areas of the CCU Supporting Legislation Training and skills development Operation Clean Audit

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INTRODUCTION

The economic security of a country influence investment. This security is dictated by the ability of a country to

prevent economic erosion. Amongst the activities that feeds economic erosion is

fraud. The ability to commit fraud is enabled by corrupting the

system. The vulnerability of corrupting the systems depends on the

willingness and effectiveness in implementing control measures.

Corruption create malfunctions in the system which is a fertile ground for organised crime.

Medical Schemes fraud leads to increased premiums4

INTRODUCTION In the background of GEMS it states that

“Implementing GEMS provides government with greater control over the money it contributes to the private healthcare sector and also over the selection and quality of healthcare benefits to which employees contribute;

“Government is now able to directly influence the governance of GEMS because it is represented on the GEMS board of trustees. It is also represented during the annual revision of benefits and contributions”

Public funds are involved. 5

EFFECTS OF FRAUD AND CORRUPTION

They undermine the fight against poverty by putting resources meant for access to proper medical care to lower paid government officials, into the pockets of corrupt officials, members and service providers.

They increase the cost of medicine and medical care.

They increase the members monthly and/or yearly contribution and strengthen the financial muscles of criminals.

They drain resources in fighting the symptoms of criminality.

Destabilize social, financial and medical security.6

CRIMINAL ATTACKS ON OUR SYSTEMS

The attacks by criminals, members, officials or service providers, on our systems are observed mostly in the following areas

Manipulating duplicate claimsBilling for services not providedInflating claimsDirect and indirect gratificationMedical aid card fraudulently used(family etc)Over servicing(provider requests patients to

come back unnecessarily)Dispensing merchandise to patients 7

CONSTITUTIONAL MANDATE OF THE SAPS

The mandate of the SAPS is derived from Section 205 of the Constitution of the Republic of South Africa Act 108 of 1996.

The objectives of policing are:Prevent, combat and investigate crime.

Maintain public order.

Protect and secure the inhabitants of the Republic and their property.

Uphold and enforce the law.8

THE ESTABLISHMENT OF THE DPCI

The Directorate for Priority Crime Investigation (DPCI) was established on 6 July 2009, and is represented in all nine provinces of South Africa as well as on national level

DPCI was created as a result of an amendment to the law (South African Police Service Act, 1995)

In terms of the law, persons must be appointed in the DPCI based on required levels of experience, training, skills, competence and knowledge

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MANDATE OF THE DPCI

DPCI legally mandated and obliged to prevent, combat and investigate all national priority offences that require specialised skills in the prevention and investigation thereof, focusing on –

Serious Organised Crime

Serious Commercial Crime, and

Serious Corruption Medical Scheme fraud normally falls within the

mandate of serious commercial crime

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OBJECTIVES OF THE DPCI

To employ a multi-disciplinary approach and an integrated methodology involving other state departments and institutions in its investigative practices (as stipulated in the SAPS Act, 1995)

To ensure that it has the necessary independence to perform its functions objectively, independently and effectively

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MAIN RESPONSIBILITIES OF THE DPCI The prevention, combating and investigation of national

priority crime

The prevention, combating and investigation of organised crime

The prevention, combating and investigation of serious commercial crime

Maintaining the integrity of the DPCI

Providing financial and asset forfeiture investigation service The prevention, combating and investigation of serious

corruption 12

THE SERVICES PROVIDED BY THE DPCI

Legal Support provides legal guidance in terms of all crime investigation related activities of the DPCI, including operations, surveillance, bail applications, access to information, search and seizure, gathering of evidence, combating of crime and the investigation of crime within the DPCI mandate; rendering legal advice in respect of extradition and mutual legal assistance as well as providing legal training to investigators

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THE SERVICES PROVIDED BY THE DPCI (2)

Anti-Corruption Investigations is responsible to manage the prevention, combating and investigation of corruption within the DPCI and defined parameters of the JCPS Cluster (Justice, Crime Prevention and Security Cluster), and to reduce the risk of unlawful, unethical and otherwise undesirable behaviour within the DPCI

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THE SERVICES PROVIDED BY THE DPCI (2) The Organised Crime Investigation Unit is

responsible for preventing, combating and investigating serious and priority organised crime, including specific violent crimes such as cash-in-transit robberies and bank robberies, narcotics related crimes, crimes relating to precious metals, diamonds, non-ferrous metals, endangered species (rhino poaching, abalone poaching, crimes related to protected animal and plant species), organised motor vehicle theft and human trafficking

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THE SERVICES PROVIDED BY THE DPCI (3) The Commercial Crime Investigation Unit is

responsible to prevent, combat and investigate serious commercial crime, which includes certain serious and complex types of theft and fraud, electronic and computer related crimes, certain types of banking related crime (fraud with counterfeit bank cards and cheques), serious corruption, fraud and theft within government, and certain statutory offences (relating to insurance, companies, tax, intellectual property rights etc)

The Commercial Crime Investigation Unit is thus duly mandated to investigate serious medical scheme fraud and/or corruption

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THE SERVICES PROVIDED BY THE DPCI (4)

Financial and Asset Forfeiture Investigations investigates serious and priority crimes, focusing on financial investigation vide, inter alia, suspicious transactions reports, corruption reports and lifestyle investigations and renders support to investigators with financial investigations and asset forfeiture related investigations.

The Priority Crime Management Centre manages the assessment process of serious and priority crime threats at national and provincial level, guides and facilitates a strategic investigative approach for the DPCI

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THE SERVICES PROVIDED BY THE DPCI (5) The Electronic Crime Unit investigates serious

and priority electronic and computer related crime, including different forms of internet related fraud, and renders assistance to investigators across the DPCI tasked with the investigation of serious and priority crimes. The ECU consists of investigators, crime scene responders and laboratory technicians who analyse electronic and computer equipment

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COMMRCIAL CRIME UNIT: COMPOSITION

CCU consists of –

A National Head supported by a national personnel component – main responsibilities and tasks – maintaining standards, inspections and determining policy

A Serious Economic Offences Unit at national level – an investigation unit tasked with investigating serious economic crimes such as large investment fraud schemes and serious corruption cases

The Anti-Corruption Task Team (ACTT) - a multi-disciplinary investigation team consisting of DPCI investigators closely cooperating and working with investigators from the Special Investigating Unit (SIU), prosecutors from the National Prosecuting Authority (NPA), prosecutors and investigators from the Asset Forfeiture Unit (AFU) and the South African Revenue Service (SARS)

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CCU: OPERATIONS AT UNIT LEVEL Major units (e.g. Johannesburg, Pretoria, Cape Town, Port

Elizabeth, Bloemfontein, Durban, Klerksdorp) operates in different specialist groups – ensures continuity and application of special skills, knowledge and experience to cases –

Serious offences (serious fraud, theft, statutory offences)

General fraud

Banking related and electronic crimes

Intellectual property rights crime (counterfeiting/ piracy)

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CCU: COOPERATION WITH OTHER ROLE PLAYERS

CCU works together closely with various role players –

Specialised Commercial Crime Courts and prosecutors in all major areas (Pretoria, Johannesburg, Durban, Cape Town etc) – very successful project and ensures more successful prosecutions

South African Bank Risk Information Centre (SABRIC) – banking related matters

Financial Intelligence Centre

Business Against Crime (BAC)21

CCU: COOPERATION WITH OTHER ROLE PLAYERS (2)

South African Reserve Bank Financial Services Board Other Government departments, including the

South African Revenue Service (SARS) Law Societies Road Accident Fund Asset Forfeiture UnitForensic auditors and accountants Master of the High Court and Registrar of the

High Court22

INTERNATIONAL COOPERATION

Formal procedure in place i.t.o. law – formal requests received and submitted to Department of Justice

Direct police to police enquiries and cooperation

Interpol 24/7 system channel – cooperation between member countries

FIC also facilitates and assists with financial related intelligence corresponding with their counterparts abroad 23

SPECIAL FOCUS AREAS OF THE CCU Anti-Corruption Task Team – serious corruption and fraud

within government departments and institutions at all levels

Operation Clean Audit – corruption at local government level (municipalities)

Theft/ Fraud by Attorneys from trust funds

Fraud perpetrated against the Road Accident Fund (RAF)

Fraud against pension funds (focus on Government Employees Pension Fund and Special Pension Fund) and medical aid funds

Fraud with social grants

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SPECIAL FOCUS AREAS OF THE CCU (2)

Banking related crime – threats such as counterfeiting of credit and debit cards

Internet/ cyber/ banking related crime such as phishing

Fraud/Theft relating to Guardian Funds, Insolvent Estates and Deceased Estates (funds administered by the Master of the High Court)

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SUPPORTING LEGISLATION Suspicious transaction reports (Financial Intelligence

Centre Act, 2001) – all suspicious/unusual transactions, transactions above a certain threshold and cash above a certain threshold transported across the border to be reported to FIC

Knowledge/ suspicions of corruption, theft/ fraud above R100 000 to be reported by certain persons to the SAPS (Prevention and Combating of Corrupt Activities Act, 2004)

Prevention of Organised Crime Act, 1998 (Act no 121 of 1998) – section 2 (racketeering), section 4 (money laundering), section 6 (possession/ receiving the proceeds of illegal activities) Chapters 5 & 6 – Restraining and forfeiture of assets of

criminals26

TRAINING AND SKILLS DEVELOPMENT CCU facilitates, in cooperation with the Division Training,

specific commercial crime training for investigators on 3 levels

Training also requires practical investigation of cases and a practical assessment before a candidate can be declared competent as an investigator on a certain level

Investigators also regularly receive training from external role players, locally and abroad

Training and skills development is an important aspect of developing skills and expertise with investigators 27

OPERATION CLEAN AUDIT The SAPS is participating in a joint operation with the

Department of Local Government and Traditional Affairs in an operation titled Operation Clean Audit that deals with corruption within the local governments and municipalities.

Since October 2009, dedicated capacity in provinces to investigate and combat corruption and related offences such as fraud, theft & statutory fraud within local government

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OPERATION CLEAN AUDIT (2) 2011/12 period: A total of 76 cases received for investigation

26 public officials & 26 members of the public arrested and charged for various charges of fraud, corruption and theft

Since the start of project, a total of 163 persons (82 public officials and 81 members of the public) have been convicted on charges of fraud, theft, corruption and other statutory offences (Public Finance Management Act, 1999/ Local Government: Municipal Finance Management Act, 2003)

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MEDICAL SCHEME FRAUD According to surveys been done, it is

estimated that fraud against medical aid schemes amounts to R22 billion per year;

This is an enormous amount. The question is, who suffers the loss?

Government as a big contributor of public funds and the members;

Just imagine what the government can do with such an amount as part of social upliftment and/or development

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REPORTED CASES The Hawks, Free State, recently received a

report that a doctor Cunning Jackal with members defrauded Polmed and GEMS;

New investigation Amount involved R5million Excessive amount of claims, Members visits dr Jackal’s rooms frequently,

even on Saturdays and Sundays; Preliminary investigations indicate possible

kickbacks to members WC, glasses for school children. Fraudulent

claims 31

CHALLENGES Early identification of threats and syndicates Early reporting to SAPS/DPCI Under reporting

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CONCLUSION

THANK YOU

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