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. A Sunday Times report notes the looting, which government officials claim may exceed R100bn, is being investigated by the Special Investigations Unit (SIU).

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 says the biggest offender is the State Attorney's Office in the Eastern Cape, which has settled more cases than any other province. 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 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.

Motsoaledi said: ‘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.’

Motsoaledi cited an example of how the scam works. He reportedly told the Sunday Times that he had 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'. 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.

An official with knowledge of the SIU investigation reportedly told the newspaper 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 is quoted as saying.

He said some law firms approached by officials to ‘play the game’ had initially refused, but have now started coming forward with information. 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.

Full Sunday Times report