by director-general Manala Manzini, operations director Arthur Fraser, Covert Support Unit (CSU) operations manager Prince Makhwathana, and CSU financial officer Martie Wallace. It authorised the PAN top structure to identify projects and targets of national interest, appoint assets (agents and spies), purchase cars, lease safe houses and incur whatever cost was necessary to get the venture off the ground.
When Engelke unearthed the document, he said to his co-investigators: “This is it. This was their passport to do whatever they wanted.”
Their first stop was Kasrils, who had resigned in September 2008. He has always been to his detractors a leftist rabble-rouser; to his devotees the archetypal counter-revolutionary. He confirmed that he hadn't signed the document. He also made it clear that he had only approved the concept of a PAN and did not authorise the implementation of the programme.
When the investigators confronted Manzini (then retired), he retorted that he had complete trust in his former operations director, Arthur Fraser. He looked at Engelke and added: “I don't like your tone, my boy. I will sort you out.”
In the end, all roads led back to Fraser. Little is known about him, but he was born on the Cape Flats, one of six children of a factory worker mother and a teacher father. The SSA website simply states that he “joined the ANC underground structures early in his life”, was an investigator at the Truth and Reconciliation Commission, headed the immigration branch of the Department of Home Affairs, and has an honours degree in video and film production from London University. He is the brother of former cabinet minister Geraldine Fraser-Moleketi.
When the team confronted Fraser, he refused to offer any explanation but was surprised when shown the copy-and-paste attempt of Kasrils's signature and said he knew nothing about it. A few days later, he was suspended, after which he offered his resignation – certainly not the action of an innocent man. PAN was shut down and the SSA, which had replaced the NIA, was compelled to integrate the programme's agents into the agency. The manager of the CSU, Prince Makhwathana, and most of the PAN mangers were also suspended.
Njenje accepted Fraser's resignation. With Fraser being history, the investigators broke PAN open and bared a gluttony of depravity that permeated right to the top. One of the first to confess her connivance in wrongdoing was Martie Wallace, the financial officer at the CSU (Wallace was her “agent” name). She made an affidavit and said that both her brother and her husband were appointed as PAN agents. She admitted that she had taken R1.2 million in cash, bought a townhouse and registered the property in her brother's name. The property was then leased back to PAN – for R1.2 million!
With Wallace on board and singing, skeletons tumbled out. Several SSA officials had resigned and were reappointed as PAN agents at a much higher salary. One of them registered a company and got R18 million in cash to buy six upmarket properties – including in Waterkloof in Pretoria – and leased them back to PAN.
This practice was repeated several times across the country. An invoice for nearly R6 million was forged for a leased property and the money was then paid into a private bank account. The investigators found that agents had committed forgery, fraud and various offences in terms of the Prevention and Combating of Corrupt Activities Act.
As far as the appointment of agents was concerned, the investigators found “wide-scale financial mismanagement, fruitless expenditure, nepotism and corruption”. Makhwathana had signed the employment contracts of the 72 PAN agents, although he did not have the authority to do so. The salary bill came to R33 million annually, which amounted to almost R40,000 per agent per month.
After PAN had purchased 293 vehicles for their 72 agents, they needed warehouses to store them. They entered into an agreement with a private company that belonged to Arthur Fraser's brother, Barry. PAN paid him R24 million for the rental of the warehouse. Some of cars had been unused for almost four years. There were other Fraser family members working for PAN. Arthur's son Lyle became the floor manager at the warehouse while his mother, Ms C.F. Fraser, was also a PAN agent. Both Barry Fraser and Ms Fraser were board members of a community-based organisation that dealt with conflict resolution at schools. PAN contributed R10 million towards the organisation although it had nothing to do with national security.
PAN imported state-of-the-art surveillance vans from the British-based Gamma Group for an amount of R45.7 million. Gamma is a high-tech manufacturer that counts the world's foremost intelligence agencies among its clients. Their surveillance vehicles contain equipment for the “video and audio processing of targets”, “grabber” surveillance machines and “command and control software”. Engelke found that the “correct supply chain management procedures” were not followed in their purchase. The vehicles were also registered in the name of the agency, which created the danger that should anyone check their number plates, their cover would be blown.
The investigators found that Fraser had told an NIA agent, John Galloway, to resign and start a security company to supply PAN with high-tech equipment. Galloway was paid R11 million while he was still an NIA employee and before the company was set up. This already amounted to fraud. He left the service in March 2008, set up G-Tech and was paid another R47 million. He conducted his business from home, had no employees and provided services that the investigators said were of “poor quality”. Galloway purchased within a span of 20 months property worth R11 million.
Wallace revealed to the investigators that enormous amounts of cash – up to R10 million at a time – were delivered to the PAN offices on a regular basis. Packets of money were wrapped in tinfoil and packed in bags. The investigators produced an internal audit report that revealed that there were discrepancies on temporary advances to the amount of R85 million. More than R200 million was unaccounted for.
Both Manzini and Fraser were fingered as having “forced” the chief financial officer of the NIA to release millions of rand to the Covert Support Unit by way of verbal approvals, which was in complete contradiction with the regulatory framework.
When the investigators evaluated the projects, they found little of value. Two drug addicts were, for example, recruited to work on Project Émigré and spy on immigrants. They did nothing. Project Kagee was supposed to focus on “counter-terrorism”. PAN paid an informant R12 million for information that “could have been obtained through open sources”. The informant used his hard-earned dosh to buy a stake in a BMW dealership.
The investigators said the projects were badly planned, managed and conducted and were costly to the NIA because any agent could have gathered the information. None of the projects had individual authorisation, operational plans or budgets as required. They were often initiated on the verbal instruction of Fraser and wads of money were thrown at them.
The investigators did lifestyle audits of the PAN managers and found that several seemed to have won the Lotto. Their personal wealth had increased dramatically during the lifespan of PAN. One of the managers who lived in a townhouse upgraded to a three-storey mansion and bought his wife a Range Rover Evoque for almost a million rand.
One of the most damning findings of the PAN investigation was about Fraser himself. The investigators stated there was “an intention to create an alternative intelligence capacity”. Said the report: “An expensive communication system was put in place at Mr Fraser's private residence and he has been the sole recipient of information gathered by the PANs.”
PAN agents had sent their intelligence reports in an encrypted electronic format to Fraser's personal server instead of submitting them to the NIA mainframe where they could be checked, analysed and verified, and then disseminated and integrated into the agency's information management system.
The SSA removed the server from Fraser's house. When they analysed the device, they found 800 intel reports that he had failed to send to the agency's mainframe. The investigators said this was in contradiction of the internal regulatory framework and transgressed the Protection of Information Act. As a result, the investigators concluded, Fraser could probably be charged with treason. “It also gives clear indications of the intent to establish an alternative intelligence structure for purposes unknown.”
When Engelke challenged Fraser about the server, he refused to discuss it. Speculation was rife that Fraser was a double agent or that PAN