Saturday, May 18, 2024

FIRST WITH SECURITY NEWS

Private investigations regulated as security service

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The provision of standard security services in South Africa was initially regulated by the Security Officers Act of 1987 that established a regulatory authority known as the Security Officers Board. This Act was repealed with the promulgation of the Private Security Industry Regulation Act of 2001 which saw the establishment of the Private Security Industry Regulatory Authority (PSIRA). The new Act not only heralded a new era for the security industry, but also added a number of industries and occupations to the list of PSIRA regulated “security services”. One of those security services, was the provision of private investigations.

Since the mid-1990’s, we have seen significant growth in the South African security industry, making the security industry one of the largest employers in the country. With the massive increase in crime, we have seen that several services traditionally the domain of the South African Police Service, have de facto been “outsourced” to the private security industry, most evident in regards to armed patrols, reaction to violent crime and provision of security personnel during unrest caused by strikes and other related activities. The increased role of the private security industry in support of the South African Police Service was most evident during the July 2021 unrest.

The role of private security has become of such importance, that the vetting of private security providers by the State Security Agency was included in the General Intelligence Laws Amendment Bill (GILAB) currently before Parliament.

We have seen an increase in joint police / private security operations targeting serious and violent crimes such as CIT heists and illegal mining colloquially known as Zama Zamas. The security industry went as far as to create a successful partnership of sorts with the South African Police service known as “E2” which stands for “eyes and ears”.

As the figures currently stand, the private security industry numbers more personnel than the South African Police Service, South African National Defence Force and the Department of Correctional Services combined (writer’s emphasis).

What is of concern is that it is not only the fight against violent crime that is sapping the resources of the South African Police Service, but also the issue of complex financial crimes which have seen a sharp uptake the past few years.

South African law enforcement is overwhelmed with the sheer number of cases requiring specialised investigation as we see a major increase in financial related crime not just in South Africa, but as worldwide phenomena. Forty percent of crimes reported in the United Kingdom during 2022/23 were fraud related (Chair of the Justice Committee, House of Commons Report 2022/23). South Africa has seen a similar increase in fraud related cases.

South African law enforcement agencies are battling with resources. Add to this the backlog created by Covid, not to mention the new cases that came out of Covid as a result of PPE fraud, as well as the added pressure to investigate the findings of the Zondo Commission and other tender related fraud; it is no wonder we are seeing more cases being referred to investigators operating in the private sector.

South Africa has an abundance of legislation ensuring that complex financial crimes can be investigated and thereafter prosecuted, yet the state law enforcement apparatus is battling with a perfect storm of limited infrastructure, lack of suitably qualified and experienced detectives, skills deficit, and most importantly, the lack of funding.

When the Investigating Directorate was formed to tackle state capture cases, their initial budget was R100 million per annum. This has subsequently increased to R350 million for the financial year 2023/2024.

The unit tasked with investigating the majority of South Africa’s complex financial crime, organised crime, crimes against the state, commercial crimes and corruption cases; the Directorate for Priority Crime Investigation (“the Hawks”), received around R2 billion in the last financial year, which makes up 2% of the annual police budget of R100 billion, whereas the VIP protection and security services division received around R3 billion from the police budget during the same period. In March 2022, the head of the Hawks, General Godfrey Lebeya, briefed the National Assembly’s Portfolio Committee on Cooperative Governance and Traditional Affairs on the corruption cases within the local government sphere. During this briefing, Lebeya stated that of the of 5332 staffers they were supposed to have, the Hawks currently functioned with only a 49.55% workforce.

This equated to an actual headcount of 2642, with a deficit of 50.45% (2690). Lebeya was quoted as saying, “Of this 2 642, only 1500 are investigating officers. It is worth noting that even though there has been marginal growth, the Hawks is nearly at the same capacity it was when established in 2009/10.” (News24 article, 25 March 2022).

With the challenges experienced by state law enforcement agencies, there has been an exponential growth in law firms and audit companies either creating their own in-house investigation capacity; or contracting out investigation requirements to private investigation companies.

Having private investigators investigate complex financial crimes is not unusual, nor is it a completely new concept, in fact Swanepoel [2001:4] stated that “it was foreseen that the State would not have capacity to investigate all crimes for a long time due to constraints and especially those of a commercial nature, the outsourcing of criminal investigation will increase.”

PSIRA defines a private investigator as “a person who, in a private capacity and for the benefit of another person, investigates the identity, actions, character, background or property of another person, without the consent of such person.” Anyone operating in the private investigation space for gain is required to register in terms of the Private Security Industry Regulation Act, act 56 of 2001. Failure to register as a private investigator with PSIRA and carrying out the duties of a private investigator whilst being unregistered constitutes a criminal offence. Furthermore, any information received from a person purporting to be a private investigator who is not registered to perform the duties of a private investigator, would in all probability be deemed as inadmissible; and the obtaining of such information by the unregistered person purporting to be a private investigator could be construed as being “fruit of the poisonous tree”.

The Private Security Industry Regulation Act is specific –

The act defines a private investigator as:

Sec 1(1) ‘private investigator’ means a person who, in a private capacity and for the benefit of another person, investigates the identity, actions, character, background or property of another person, without the consent of such a person, but does not include – 

(a) auditors, accountants, attorneys, advocates or forensic scientists conducting investigations which fall within the normal and reasonable course and scope of their professional functions;

(b) internal investigators conducting normal and reasonable investigations into employee misconduct;

(c) internal investigators conducting investigations which a business, other than an investigating business, may undertake in the course and scope of its normal and reasonable endeavours to safeguard its security, strategic, operational or business interests:

Provided that no person is excluded from the definition of a private investigator if he or she conducts any investigation which falls within the exclusive function of the State.

The act also places the onus on the clients who make use of private investigators to ensure that they are registered. Section 38(3)(g) of the Private Security Industry Regulatory Act, act 56 of 2001, makes it a criminal offence to hire unregistered private investigators.

Case law has clearly identified and given credence to the role of private investigators in South Africa.

In a paper entitled “Intelligence-led policing: A proactive approach to combating corruption”, published by the Institute of Security Studies (ISS), researcher and author Trevor Budhram speaks about the success of collaboration between state law enforcement and the private sector and the fact that case law allows for the private sector to collaborate with State law enforcement and in fact investigate crime:

In State v Botha and other, the court ruled that it was not improper that a corporation’s internal investigation unit had conducted an investigation regarding the alleged defrauding of its pension fund. The court referred to the fact that various institutions conduct their own investigations and then hand over the evidence collected to the police for prosecution. Similarly, in State v Dube, a private investigator set a trap for an employee of a vehicle manufacturer who was suspected of being involved in theft. The investigator arranged for meetings so that the suspect could be photographed and audio recorded. The High Court expressed its acceptance that private investigations occur, and that the evidence collected is handed over to the police for prosecution (SA Crime Quarterly Number 52, ISS, Pretoria June 2015).

With the ever-increasing levels of complex financial crimes by sophisticated syndicates, and the State’s current inability to tackle the sheer volume of such crimes, it stands to reason that there will be an exponential rise in the use of private investigators registered as security service providers with PSIRA to investigate these type of financial crimes, and that this will lead to more formalised collaborative efforts between the State law enforcement agencies and the private investigations sector.

Chad Thomas is the CEO at IRS Forensic Investigations

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