Cybercriminals fleece public works of R300m over 10 years

The department of public works & infrastructure has lost at least R300m to cybercrime over the past 10 years, and the amount could rise as investigations continue, according to minister Dean Macpherson.

In the most recent incident, cyberattackers stole a further R24m, prompting a full forensic investigation by the Hawks, the SAPS, the State Security Agency and experts in the ICT and cybersecurity industry.

Four officials have been suspended, three of whom are in senior management and the fourth in middle management, and investigators seized 30 laptops. The department was forced to shut down its payment system, causing delays in paying creditors.

“It has become clear that the department has been a soft target and playground for cybercriminals for over a 10-year period and this should have been picked up a lot earlier,” Macpherson said in a statement.

“I cannot discount the possibility of collusion between officials and criminals in this prolonged period of theft. It is clear that we need better financial controls, which I have said to the department are a matter of urgency.”

‘Shocking financial controls’

In an interview with Business Day, Macpherson said the theft was the result of “shocking financial controls” that were a systemic problem.

Questions had to be asked how that crime could carry on for so long without being detected, he said, and pledged to crack down on the syndicates and those in cahoots with them internally or externally.

Macpherson added that SA’s infrastructure investment lagged far behind what was required for its needs and for growth, and he would be exploring ways to increase it exponentially.

“I want to turn SA into a construction site, which means ramping up infrastructure development across the country,” he told Business Day.

He will also investigate new approaches to management of the government’s asset portfolio, which includes about 88,000 buildings, so as to generate cash for the department, which could be used for infrastructure investment. That would initially involve improving the state’s asset register, he said.

Macpherson said the private sector had a huge appetite for infrastructure investment, which offered good returns, but there was a lack of bankable projects. He noted that SA’s gross fixed capital formation was about 14% of GDP when it should be about 30%.

The investment value of projects in procurement is currently about R170bn and R233bn in construction, while completed projects amount to R9bn, most of which are in the energy sector. Macpherson believes this needs to be increased significantly.

He said he planned to engage with the Treasury and Infrastructure SA — which is envisaged as the single point of entry for infrastructure planning, management and delivery — on how to scale up infrastructure investment. The body needed to create a long-term infrastructure pipeline that included local bulk infrastructure, he said.

The financing model for infrastructure projects needed to be looked at and there had to be a holistic picture of the entire infrastructure pipeline over a 5-10 year time frame to offer investors, he added.

Construction mafia

Macpherson was adamant that the construction mafia should be treated as enemies of the state rather than as legitimate business forums.

Regarding government buildings falling under the department, Macpherson said he wanted other departments to pay rent. Public works & infrastructure is owed about R17bn by departments and other spheres of government, and had a bank overdraft of R3bn that needed to be paid.

“It is vitally important that departments pay us for the services we provide. That is absolutely crucial. I want to rethink that model of how we interact with government departments,” he said.

Macpherson also believes the department can partner with the private sector by offering 99-year leases, for example, thereby increasing the value of the portfolio as the private sector upgraded the buildings.

ensorl@businesslive.co.za