State attorneys who collude with unscrupulous lawyers in elaborate scams to defraud the government have cost taxpayers more than R80bn by deliberately losing lawsuits against the state and settling claims out of court.
This wholesale looting of the state purse has prompted a probe by the Special Investigating Unit (SIU) - with government officials estimating that the figure may exceed R100bn.
Criminal cases have already been opened against several state attorneys and private legal firms that intentionally bungle claims against the state and then receive a portion of the payout as a kickback.
The Sunday Times understands that the biggest offender is the state attorney's office in the Eastern Cape, which has settled more cases than any other province - and that health claims nationwide are particularly vulnerable to the scams.Justice minister Michael Masutha and his health counterpart, Aaron Motsoaledi, said corruption was so widespread that since 2013, the department of health alone had paid out R60bn in fraudulent malpractice claims that could have been defended.
Motsoaledi said he recently intercepted a legal payment in Limpopo where the health department was being sued for R70m for a "botched circumcision".
When the case came to his attention, Motsoaledi became suspicious about the extent of medical malpractice that could warrant such a huge figure.
"When my legal unit was asking for information, there was no co-operation. I then called the MEC and she knew nothing about it. I was shocked that there was a case of R70m and the MEC knew nothing about it."
When he and an expert at Steve Biko Academic Hospital in Pretoria examined the file, Motsoaledi "found that no circumcision took place. This guy had an illness and the hospital saved his life."
Motsoaledi said he suspected that if he had not taken an interest in the case, it would have been settled for millions.
"I suspect that this would have been settled out of court and a minimum of R10m would be paid and the state attorney would regard it as a win," he said.The case has been referred to the Hawks and the lawyer representing the case is also facing a probe.
In another case, the health department was being sued for R25m on behalf of a patient born with cerebral palsy 19 years ago in Limpopo.
But scrutiny of the medical file by a paediatric neurosurgeon at Steve Biko found that the patient did not in fact have cerebral palsy. Motsoaledi said his officials found that the so-called victim had also applied for a driver's licence.
"We were going to pay for caretakers because they argued this guy couldn't take care of himself. But actually this person had no illness," he said.
Motsoaledi said the SIU investigation must get to the bottom of hundreds of cases in which the government enters into settlements without scrutinising the facts.
"It is a network involving a number of offices. When we have meetings we constantly complain about the state attorney."
The SIU is also probing how 80% of claims against the Eastern Cape health department in one region are represented by just five lawyers.
When the SIU swooped on one firm's office this week, it began dropping cases.
One notorious law firm in the Eastern Cape being investigated by the SIU has a total of 28 cases against the state, with each claim being R15.8m - a total of R442.4m.
The theft is thought to be prevalent in Gauteng too, with Motsoaledi saying: "Sometimes there are duplications. The cases are the same but the names are changed. There are so many. But you can't say the state attorney is working by themselves. There are many people involved."
An official with knowledge of the SIU investigation said they already have a list of kingpins."In some situations, officials earning under R20,000 a month are driving luxury vehicles. This investigation is going to be far bigger than planned," the official said.
He said some law firms approached by officials to "play the game" had initially refused - but have now started coming forward with information.
Masutha's own department may have been a victim of the scam.
A 2016 report by the Public Service Commission showed that the state attorney's office was losing 70% of its cases. At the time this was attributed to inefficiency, but it may in fact be down to collusion.
"Some of those cases, the state attorney would deliberately lose the case," said Masutha. In the case of the health department's massive malpractice bill "there may have been collaboration. The police have also experienced a huge quantum of claims where there is collusion," he said.
Masutha said rough estimates put the figure lost through corruption at the state attorney's office at R80bn.
The minister said that in some instances, lawyers working for the state would file court papers late to "deliberately plunder the state's case". In other instances "the affected department knows nothing about [the case]".
President Cyril Ramaphosa recently issued a proclamation for the SIU to investigate malfeasance at the state attorney's office from 2013.
The SIU is now looking into whether unlawful transactions had taken place and whether there was "intentional or negligent loss of public money or damage to public property".
The proclamation instructs the SIU to reclaim the losses suffered by the state from any officials implicated.Masutha said suspicions were confirmed when word spread about the imminent SIU investigation and "in some of the regions, the moment they heard the SIU was coming to investigate - even before the investigation started - they started dropping some claims completely. They are running away."
An insider in the department of justice noted that the problem had long been flagged but "there was no political will to deal with it".
Masutha said there had been efforts before his tenure as justice minister to deal with the matter, but "we are dealing with some of the smartest people, who can elude the system".
Eastern Cape health superintendent-general Thobile Mbengashe said his department had been working with the SIU since noticing a surge in claims between 2012 and 2016, mainly in the Mthatha area.
"We seconded the SIU to our department and allowed them free access to all our systems to check whether there were some patterns of irregularities," he said.
The SIU found that five lawyers were making over 80% of the claims.
Mbengashe said claims would be recycled too.
"Sometimes they will actually file a claim in Mthatha and they will file [the same claim] in Grahamstown or they will file the claim in Bhisho," he said. - Additional reporting by Aphiwe Deklerk..