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Fact Sheet on Actions Taken bythe Executive Authorities with regard to Identified Cases of
Potential Conflicts of Interests and Compliance with the
Financial Disclosure Framework
June 2013
Published in the Republic of South Africa by:
THE PUBLIC SERVICE COMMISSION (PSC)Commission House
Cnr. Hamilton & Ziervogel StreetsArcadia, 0083
Private Bag x121Pretoria, 0001
Tel: (012) 352-1000Fax: (012) 325-8382
Website: www.psc.gov.za
National Anti-Corruption Hotline Number: 0800 701 701 (Toll-Free)
Distribution by: Directorate: Communication and Information ServicesPrinted by: Okusha Designs
ISBN: 978-0-621-42380-8RP: 333/2013
Fact Sheet on Actions Taken by the Executive Authorities with regard toIdentified Cases of Potential Conflicts of
Interests and Compliance with the Financial Disclosure Framework
i
Compiled by: Branch: Ingegrity and Anti–Corruption
Table of ContentsCHAPTER 1: INTRODUCTION
1.1 Background1.2 Objectives of the assessment1.3 Mandate of the PSC1.4 Outline of the Fact Sheet
CHAPTER 2: THE METHODOLOGY
2.1 Introduction2.2 Scope of the study2.3 Methodology applied2.4 Limitations
CHAPTER 3: FINDINGS OF THE STUDY
3.1 Introduction3.2 The state and nature of compliance by EAs with the requirements of the Financial
Disclosure Framework 3.3 The types of responses provided to the PSC by the EAs regarding the decisions
taken3.3.1 Response regarding the actions taken by the EAs in relation to the properties
and companies3.3.2 Outcome of the disciplinary steps taken by EAs against the SMS members who
failed to disclose their registrable interests
CHAPTER 4: RECOMMENDATIONS AND CONCLUSION
4 Introduction4.1 Recommendations4.1.1 The state and nature of compliance by EAs with the requirements of the Financial
Disclosure Framework4.1.2 The types of response provided to the PSC by the EAs regarding the decisions
taken4.2 Conclusion
01
02020203
04
05050505
06
0707
17
17
21
23
242424
25
25
ii
LIST OF TABLES
Table 1: Compliance rate by the EAs with the recommendations of the PSC for the 2008/09 financial year
Table 2: Compliance rate by the EAs with the recommendations of the PSC for the 2009/10 financial year
Table 3: Compliance rate by the EAs with the recommendations of the PSC for the 2010/11 financial year
Table 4: Responses regarding identified cases of potential conflicts of interests in respect of the 2008/09 financial year
Table 5: Responses regarding identified cases of potential conflicts of interests in respect of the 2009/10 financial year
Table 6: Responses regarding identified cases of potential conflicts of interests in respect of the 2010/11 financial year
08
10
13
14
14
21
iii
Cha
pter
One
Introduction
02
1.1 BACKGROUND
Chapter 3 of the Public Service Regulations (PSR) provides that every designated employee (members of the Senior Management Service (SMS)) shall no later than 30 April of each year, disclose to the relevant Executive Authority (EA), particulars of all her or his registrable interests in respect of the period 1 April of the previous year to 31 March of the year in question. The EAs in turn should in terms of Regulation C.4(a) of the PSR, submit to the Public Service Commission (PSC), copies of the financial disclosure forms on which the SMS members in their respective departments disclosed their financial interests, by no later than 31 May of the year in question.
Upon receipt of financial disclosure forms the PSC, in compliance with Regulation G of Chapter 3 of the PSR, scrutinises the forms to identify incidences of potential conflicts of interest. This Regulation imposes a further duty on the PSC to inform the EAs about the identified cases ofpotential conflicts of interest. The EAs should, in turn, consult with the employees who have been found with or involved in activities that pose potential conflicts of interest, and where necessary, take appropriate steps including but not limited to the institution of disciplinary action or the granting of a waiver to the employees concerned in respect of future conflicts of interest. The EAs are, in terms of Regulation G.4, expected to revert to the PSC within 30 days after referral of identified cases of potential conflicts of interest, with information on steps taken against the affected officials. If steps were taken, the relevant EA should give the description of those steps or if no steps were taken, reasons thereof should be provided to the PSC.
The Fact Sheet on “A ctions Taken by the Executive A uthor ities w ith regard to Identified Cases o f Potential C onflicts o f Interests and Compliance w ith the Financial Disclosure Framework”, provides an overview of the extent to which the EAs have implemented the recommendations of the PSC.
1.2 OBJECTIVES OF THE STUDY
The following are the objectives of the study:
• The state and nature of compliance by the EAs with the requirements of the Financial Disclosure Framework.
• The types of responses provided to the PSC by the EAs regarding the decisions taken.• Recommendations on further steps to be taken to ensure compliance with the Financial
Disclosure Framework.
1.3 MANDATE OF THE PSC
The PSC derives its mandate to promote professional ethics, particularly with regard to the management of conflicts of interest from the Constitution of the Republic of South Africa, 1996 (the Constitution), T he Public Ser v ice C ommissio n A ct, 1997 and Chapter 3 of the PSR.
03
The following sections of the Constitution are applicable:
195(1)(a) to pro mo te a high standard o f pro fessio nal eth ics in the Public Ser v ice .196(4)(a) to promote the values and principles set out in section 195, throughout the Public Ser vice.196(4)(b) to investigate, monito r and evaluate the o rganisatio n and administratio n, and the
personnel practices, o f the Public Ser vice.196(4)(f)(i) either o f its own acco rd o r on receipt o f any complaint-to investigate and evaluate
the application o f personnel and public administration practices, and to repor t to therelevant executing author ity and legislature.
The following sections of the Public Ser vice Commission A ct, 1997 are also applicable:
8. Subject to the provisions o f the Constitution, the Commission may exercise the powers and shall perform the duties entrusted to the Commission by or under this A ct, the Constitution or the Public Ser vice A ct.
9. T he C ommission may inspect departments and o ther o rganisational components in the PublicSer vice, and has access to such o fficial documents o r may obtain such info rmation from headso f those depar tments o r o rganisational components o r from o ther o fficer s in the ser v ice o fthose departments or organisational components as may be necessar y for the performance of thefunctions of the Commission under the Constitution or the Public Ser vice A ct.
Chapter 3 of the PSR, provides for the PSC's role in the management of the Financial Disclosure Framework (FDF). In this regard, regulation G of Chapter 3 of the PSR specifically provides that the PSC should scrutinise and verify the information contained in the financial disclosure forms, to identify potential conflicts of interest and aler t Executive Authorities accordingly.
1.4 OUTLINE OF THE FACT SHEET
• Chapter 2: Provides the methodology applied in compiling the Fact Sheet.• Chapter 3: Provides the findings of the study.• Chapter 4: Provides recommendations and conclusion.
Cha
pter
Tw
o
The Methodology
05
2.1 INTRODUCTION
During 2008/09, 2009/10 and 2010/11 financial years, the scrutiny of the financial disclosure forms was conducted based on a sample of 30% of the total number of the financial disclosure forms that were received by the PSC from both national and provincial departments. The purpose of the scrutiny was to determine if there are cases of potential or actual conflicts of interests that could be identified. The 30% sample was as a result of lack of capacity in the PSC to scrutinise 100% of the disclosure forms received. This section presents the scope of the study and the methodology applied. The limitations of the study are also discussed in this Chapter.
2.2 SCOPE OF THE STUDY
This study focused on the departments whose financial disclosure forms were scrutinised in the past three financial years (i.e. 2008/09, 2009/10 and 2010/11). There were twenty-five (25)national departments, three (3) provincial departments in the Eastern Cape, eleven (11) provincial departments in the Free State, three (3) provincial departments in the Gauteng Province, four (4) provincial departments in Limpopo Province, thirteen (13) provincial departments in KwaZulu-Natal Province, twelve (12) provincial departments in Mpumalanga, twelve (12) provincial departments in the Northern Cape, eleven (11) provincial departments in North West and three (3) provincial departments in the Western Cape that were analysed as part of the 30% sample during the three financial years included in this Fact Sheet. Particular focus was on actions taken by EAs against SMS members who contravened the FDF and those whose involvement in private business activities pose actual or potential conflicts of interest, and whose details were brought to the attention of the respective EAs.
2.3 METHODOLOGY APPLIED
The methodology in compiling the Fact Sheet comprised the following:
• Drafting of letters to the EAs from whom no feedback was received on the actions taken.• Assessment of the actions taken by the EAs regarding the identified cases of potential conflicts
of interest and failure by SMS members to comply with the requirements of the FDF.• Visits to EAs to clarify actions taken where necessary.• Analysis of the responses provided by the EAs from national and provincial departments.
2.4 LIMITATIONS
The following limitations were experienced during the compilation of the Fact Sheet:
• There were 19 EAs from national departments and 57 EAs from provincial departmentswho did not provide the PSC with comments regarding the actions taken against the respective SMS members who contravened the Financial Disclosure Framework.
• There were 12 EAs who just provided the PSC with copies of responses from the SMS members without providing their own respective comments.
Cha
pter
Thr
ee
Findings of the Study
07
3.1 INTRODUCTION
This Chapter presents the findings of the study. The findings are presented according to the themes derived from the objectives of the study. The themes are:
• The state and nature of compliance by the EAs with the requirements of the Financial Disclosure Framework.
• The types of responses provided to the PSC by the EAs regarding the decisions taken.
3.2 THE STATE AND NATURE OF COMPLIANCE BY EAs WITH THEREQUIREMENTS OF THE FINANCIAL DISCLOSURE FRAMEWORK
During the period sampled in the study (2008/09, 2009/10 and 2010/11), four thousand eight hundred and eighty-nine (4889) financial disclosure forms were scrutinised from twenty-five (25) national departments and seventy-five (75) provincial departments. Twenty-nine (29) EAs consulted with the relevant SMS members and provided feedback to the PSC which is a requirement of the Financial Disclosure Framework.
• One thousand seven hundred and thir ty-eight (1738) financial disclosure forms werescrutinised in respect of twelve (12) national departments and twenty seven (27) provincial departments for the 2008/2009 financial year. Out of 1738 financial disclosure forms three hundred and sixty-four (364) cases of potential conflicts of interest were identified. Twelve (12) EAs consulted with relevant SMS members and provided feedback to the PSC which is a requirement of the Financial Disclosure Framework.
• Two thousand one hundred and three (2103) financial disclosure forms were scrutinised in respect of nine (9) national departments and thirty-six (36) provincial departments during the 2009/10 financial year. Five hundred and eighty-one (581) cases of potential conflictsof interests were identified and brought to the attention of the respective EAs. Thirteen (13) EAs consulted with relevant SMS members and provided feedback to the PSC which is compliant with the Financial Disclosure Framework.
• One thousand and forty-eight (1048) financial disclosure forms for the twenty- three (23)departments were scrutinised from three (3) national and twenty (20) provincial departments for the 2010/11 financial year. Three hundred and twenty (320) cases of potential conflictsof interest were identified and brought to the attention of the EAs. Four EAs have consulted with the relevant SMS members and have provided feedback to the PSC which is compliant with the Financial Disclosure Framework.
Overall, a total of 1646 cases of potential or actual conflicts of interest were identified during the 2008/09, 2009/10 and 2010/11 financial years. The outcome of the scrutiny was
08
communicated to the relevant EAs, in terms of Regulation G of the PSR. The EAs were requested to consult with the SMS members who did not comply with the requirements of the Financial Disclosure Framework particularly with regard to the following issues:
• the extent of the involvement of the officials in the companies;• whether the officials perform any approved work outside their normal duties for the companies;
and• whether the involvement of the officials in the companies could lead to actual conflicts of
interest.
In terms of Regulations G.3 and G.4 of the PSR an EA is, upon referral of a matter to him/her by the PSC, expected to consult with the affected officials and take appropriate steps. Such steps could be the institution of disciplinary proceedings or the granting of a waiver. An EA is also expected to inform the PSC within 30 days of the referral of the matter if he/she has taken appropriate steps; or if no steps were taken, give reasons. However, twenty-four (24) EAs were satisfied with the explanations provided by the SMS members. This means that no EA took any action.
To this end, Table 1 below shows the compliance rate by the EAs with regard to the recommendations made by the PSC for the 2008/09 financial year.
Table 1: Compliance rate by the EAs with the recommendations of the PSC for the
2008/09 financial year
NationalDepartments
No. offorms
scrutinised
No. of forms
outstanding
Cases ofconflicts of interestsidentified
Non-disclosure
of properties
EAs who consultedwith employees andprovided PSC withfeedback / EAs whodid not consult withemployees and whereno feedback wasreceived by PSC
Arts & CultureEducationCooperative Governance Human SettlementsLabourSports and RecreationState SecurityNational TreasuryOffice of the Public Service CommissionPublic Administration Leadership and Management AcademyStatistics South AfricaThe Presidency
TOTAL
46104
1217477243
257
42
4318781
1059
57
165000
0
26
3466
1215
29231462
45
12
93031
228
1921
37202991
85
6
94557
338
18
71413308
1
32124
103
xx
x
xxx
xxx3
Non-disclosure
of companies
09
NationalDepartments
No. offorms
scrutinised
No. of forms
outstanding
Cases ofconflicts of interestsidentified
Non-disclosure
of properties
EAs who consultedwith employees andprovided PSC withfeedback / EAs whodid not consult withemployees and whereno feedback wasreceived by PSC
Economic Development, Tourism and Environmental AffairsProvincial TreasurySport, Arts, Culture and RecreationPublic Works and Rural DevelopmentCo-operative Governance, Traditional Affairs and Human SettlementsAgricultureEducationPolice, Roads & TransportOffice of the PremierSocial DevelopmentHealth
TOTAL
1919
13
23
411742132924141381
22
12
1
111740551779
191
51
3
9
177104640
66
81
0
7
114113931471
02
0
1
1141003
13
x
x
xxxxxxx2
PROVINCES
Northern Cape Province
132432
14
106
13928
171515
196
000
0
00
000
0000
783
4
11
326
322
42
114
0
171
137
323
43
001
0
00
002
1015
xx
xxx7
Agriculture & Land ReformEducationHealthTransport, Roads & Public WorksTourism, Environment and ConservationSafety & LiaisonSocial Services & Population DevelopmentSport, Arts & CultureOffice of the PremierHousing & Local GovernmentEconomic AffairsProvincial TreasuryTOTALGauteng ProvinceLocal Government & HousingOffice of the PremierSport, Arts, Culture and RecreationSocial DevelopmentTOTALOVERALL TOTAL
2334
2025
1021738
37
00
10267
88
66
28364
69
57
27479
00
000
121
xx
xx0
12
Free State Province
Non-disclosure
of companies
10
Table 1 above shows that one thousand seven hundred and thirty eight (1738) financial disclosure forms were scrutinised in respect of twelve (12) national departments and twenty-seven (27) provincial departments for the 2008/09 financial year. Out of 1738 financial disclosure forms three-hundred and sixty-four (364) cases of potential conflicts of interest were identified. Two hundred and twenty-eight (228) cases were identified from the national departments and one hundred and thir ty-six (136) from provincial depar tments. Two hundred and sixty-seven (267) financial disclosure forms from both national and provincial departments were outstanding by the due date. This information was brought to the attention of the respective EAs for further handling.
Furthermore, out of 1738 financial disclosure forms that were scrutinised, the PSC found that six hundred (600) officials did not fully disclose all their registrable interests. To this end, four hundred and seventy-nine (479) cases related to non-disclosure of companies whilst one hundred and twenty-one (121) cases related to non-disclosure of properties.
As shown in Table 1 above, from the thirty-nine (39) EAs that were requested to provide feedback, only twelve (12) EAs complied with the recommendations of the PSC. At the national level, the EAs that complied with the implementation of the PSC's recommendations are for Human Settlements, National Treasury and Office of the Public Service Commission. At the provincial level, the EAs who complied with the implementation of the PSC's recommendations by consulting with SMS members and providing feedback to the PSC are:
• Two (2) EAs in the Free State Province, for Economic Development, Tourism and Environmental Affairs and Provincial Treasury.
• Seven (7) EAs in the Northern Cape Province, for Agriculture and Land Reform, Education, Health, Transport, Roads and Public Works, Tourism Environment and Conservations, Safety and Liaison, Social Services and Population Development.
Table 2 below shows the compliance rate by the EAs with regard to the recommendations made by the PSC for the 2009/10 financial year.
Table 2: Compliance rate by the EAs with the recommendations of the PSC for the 2009/10
financial year
NationalDepartments
No. offorms
scrutinised
No. of forms
outstanding
Cases ofconflicts of interestsidentified
Non-disclosure
of properties
EAs who consultedwith employees andprovided PSC withfeedback / EAs whodid not consult withemployees and whereno feedback wasreceived by PSC
Correctional ServicesEnvironmental Affairs GCIS
19411647
194270
282112
533311
2342
x
x
Non-disclosure
of companies
11
NationalDepartments
No. offorms
scrutinised
No. of forms
outstanding
Cases ofconflicts of interestsidentified
Non-disclosure
of properties
EAs who consultedwith employees andprovided PSC withfeedback / EAs whodid not consult withemployees and whereno feedback wasreceived by PSC
HealthJustice & Constitutional DevelopmentRural Development & Land ReformTourismTrade & IndustryWater AffairsTOTAL
110
134
11937199188
1144
108
134
1183119950
861
24
15
29175944
249
46
15
61207045
354
7
7
68104
71
x
x
xxxx1
PROVINCESKwaZulu-Natal
Agriculture, Environmental Affairs and Rural DevelopmentArts & CultureCommunity Safety and Liaison31CoGTAEconomicDevelopment Human SettlementsOffice of the PremierFinancePublic Works Royal HouseholdsSocial DevelopmentSports and RecreationTransportTOTAL
4126
1036
31194841233351334
360
4325
00
31631013500
145
2712
315
12411147111411
132
1711
214
14416168210513
132
31
01
102510113
19
xx
x
x
xx
x
x5
Mpumalanga
Agriculture, Rural Development & Land AdministrationCommunity Safety, Security & LiaisonCoGTASport, Culture & RecreationEconomicDevelopment Environment & TourismEducationFinanceHealth & Social DevelopmentHuman Settlements
19
1322
11
313418
5713
7
93
0
1454
136
9
67
5
1096
175
7
410
7
975
145
0
21
0
362
73
x
x
x
x
xx
Non-disclosure
of companies
12
NationalDepartments
No. offorms
scrutinised
No. of forms
outstanding
Cases ofconflicts of interestsidentified
Non-disclosure
of properties
EAs who consultedwith employees andprovided PSC withfeedback / EAs whodid not consult withemployees and whereno feedback wasreceived by PSC
Office of the PremierPublic Works, Roads & TransportTOTAL
40
62320
39
7107
10
25109
16
24108
5
635
x4
North West
Agriculture, Conservation & Rural DevelopmentEconomicDevelopment EducationFinanceHealthHuman SettlementsLocal Government & Traditional AffairsOffice of the PremierPublic Safety & LiaisonTransport, Roads & Public WorksSocial Development, Women, Children & People with DisabilitiesSports, Arts & CultureTOTALOVERALL TOTAL
27
1440223912
172815
30
1817
2792103
3
1453012
17281
31
017
1311244
11
5123116
786
14
26
91581
10
6176188
545
15
47
105699
0
25232
211
3
02
23148
xx
xx
xx
x
x3
13
Mpumalanga
Table 2 above shows that two thousand one hundred and three (2103) financial disclosure forms were scrutinised in respect of nine (9) national departments and thirty-six (36) provincial departments for the 2009/10 financial year. Five-hundred and eighty-one (581) cases of potential conflicts of interest were identified i.e. two hundred and forty-nine (249) from national departments and three hundred and thirty-two (332) from provincial departments. The PSC found that 847officials did not fully disclose all their registrable interests. Six hundred and ninety-nine (699)officials from both national and provincial departments did not disclose their companies whilst one hundred and four-eight (148) officials from both national and provincial departments did not disclose their properties. One thousand two hundred and forty-four (1244) financial disclosure forms from both national and provincial departments were outstanding by the due date.
From the forty five (45) EAs that were requested to provide feedback, only thirteen (13) EAs indicated that they had complied with the recommendations of the PSC. At the national level, only the EA for Environmental Affairs complied with the implementation of the PSC's
Non-disclosure
of companies
13
recommendations. At the provincial level, twelve (12) EAs complied with the implementation of the PSC's recommendations by consulting with SMS members and provide feedback to the PSC and they are:
• Five (5) EAs in the KwaZulu-Natal Province namely, Cooperative Governance and Traditional Affairs, Human Settlements, Public Works, Social Development and Sports and Recreation.
• Four (4) EAs in Mpumalanga Province namely, Cooperative Governance Traditional Affairs, Education, Finance and Office of the Premier.
• Three (3) EAs in North West Province namely, Agriculture, Conservation and Rural Development, Local Government & Traditional Affairs and Social Development, Women, Children and People with Disabilities.
Table 3 below shows the compliance rate by the EAs with regard to the recommendations made by the PSC for the 2010/11 financial year.
Table 3: Compliance rate by the EAs with the recommendations of the PSC for the 2010/11
financial year
NationalDepartments
No. offorms
scrutinised
No. of forms
outstanding
Cases ofconflicts of interestsidentified
Non-disclosure
of companies
Non-disclosure
of properties
EAs who consultedwith employees andprovided PSC withfeedback / EAs whodid not consult withemployees and whereno feedback wasreceived by PSC
Cooperative Governance HealthTransportTOTAL
15797111365
0310
31
492338
110
531446
113
541625
PROVINCESEastern Cape
HealthHuman SettlementsRoads & Public WorksTOTAL
1033736
176
34401
75
36121361
31142065
822
12
x
x1
x x
x0
Free State
HealthTOTAL
4747
99
1313
1515
11
x0
Gauteng
Local Government & HousingRoads & TransportTOTAL
7870
148
02020
282452
293160
628
xx0
14
NationalDepartments
No. offorms
scrutinised
No. of forms
outstanding
Cases ofconflicts of interestsidentified
Non-disclosure
of companies
Non-disclosure
of properties
EAs who consultedwith employees andprovided PSC withfeedback / EAs whodid not consult withemployees and whereno feedback wasreceived by PSC
KwaZulu-Natal
Human SettlementsPublic WorksTransportTOTAL
18213271
0110
11
476
17
2104
16
1214
x x
x0
HealthHuman SettlementsTOTAL
311142
022
95
14
84
12
011
Mpumalanga
x x
0
CoGTA & Human SettlementsHealthRoads & Public WorksTransport, Safety & LiaisonTOTAL
222014
864
130
04
944
118
835
117
143
08
Northern Cape
x x x
x0
HealthTOTAL
4141
1818
2020
1010
33
North West
0
HealthHuman SettlementsTransport & Public WorksTOTALOVERALL TOTAL
4812
3494
1048
00
00
170
62
715
320
94
720
328
31
26
68
Western Cape
34
The PSC used a sectorial approach to conduct the scrutiny of the financial disclosure forms for the 2010/2011 financial year in respect of the forms received before the due date of the 31
st
of May 2011. The approach focused on the sectors that were involved in tender contracts.
Table 3 above shows that one thousand and forty-eight (1048) financial disclosure forms for the twenty-three (23) departments were scrutinised from three (3) national and twenty (20)provincial departments. Three-hundred and twenty (320) cases of potential conflicts of interest were identified i.e. one hundred and ten (110) from national departments and two hundred and ten (210) from provincial departments. The PSC found that three hundred and ninety-six (396) officials did not fully disclose all their registrable interests. From the twenty-three (23)departments that were scrutinised, only four (4) EAs complied with the implementation of the PSCs recommendations by consulting with SMS members and provide feedback to the PSC and they are:
15
• One (1) in the Department of Health.• Three (3) EAs in the Western Cape Province namely, Health, Human Settlements, Transport
and Public Works.
In the Eastern Cape Province, one hundred and seventy-six (176) financial disclosure forms for the Departments of Health, Human Settlements and Roads and Public Works were scrutinised. The PSC found that sixty-one (61) cases of potential conflicts of interest were identified. 65officials did not disclose their companies and 12 officials did not disclose their properties. The PSC had recommended that the EAs should take appropriate actions on SMS members who failed to submit their financial disclosure forms and those who failed to disclose their financial interests. However, these recommendations were not implemented.
In the Free State Province, forty-seven (47) financial disclosure forms for the Department of Health were scrutinised. Thirteen (13) cases of potential conflicts of interest were identified. Fifteen (15) officials did not disclose their companies and one (1) official did not disclose his/her properties. The PSC had recommended that the EAs should take appropriate actions on SMS members who failed to submit their financial disclosure forms and the official who failed to disclose his/her financial interests. However, these recommendations were not implemented.
In the Gauteng Province, one hundred and forty-eight (148) financial disclosure forms for the Departments of Local Government and Housing, and Roads and Transport were scrutinised. Fifty two (52) cases of potential conflicts of interest were identified. The PSC found that sixty (60)officials did not disclose their companies and eight (8) officials did not disclose their properties. The PSC had recommended that the EAs should take appropriate actions on SMS members who failed to submit their financial disclosure forms and those who failed to disclose their financial interests. However, these recommendations were not implemented.
In the KwaZulu-Natal Province, seventy-one (71) financial disclosure forms for the Departments of Human Settlements, Public Works and Transport were scrutinised. The PSC found that seventeen (17) cases of potential conflicts of interest were identified. Sixteen (16) officials did not disclose their companies and eight (8) officials did not disclose their properties. The PSC had recommended that the EAs should take appropriate actions on SMS members who failed to submit their financial disclosure forms and those who failed to disclose their financial interests. However, these recommendations were not implemented.
In the Mpumalanga Province, forty-two (42) financial disclosure forms for the Departments of Health and Human Settlements were scrutinised. The PSC found that twelve (12) officials did not disclose their companies and one (1) official did not disclose his/her properties. The PSC had recommended that the EAs should take appropriate actions on SMS members who failed to submit their financial disclosure forms and the official who failed to disclose his/her financial interests. However, these recommendations were not implemented.
16
In the Northern Cape Province, sixty-four (64) financial disclosure forms for the Departments of Cooperative Governance, Traditional Affairs and Human Settlements, Health, Roads and Public Works and Transport, Safety and Liaison were scrutinised. The PSC found that seventeen (17) officials did not disclose companies and eight (8) officials did not disclose properties. The PSC had recommended that the EAs should take appropriate actions on SMS members who failed to submit their financial disclosure forms and those who failed to disclose their financial interests. However, these recommendations were not implemented.
In the North West Province, forty-one (41) financial disclosure forms for the Department of Health were scrutinised. Twenty (20) cases of potential conflicts of interest were identified. Ten (10) officials did not disclose their companies and three (3) officials did not disclose their properties. The PSC had recommended that the EAs should take appropriate actions against SMS members who failed to submit their financial disclosure forms as well as failure to disclose theirfinancial interests. However, these recommendations were not implemented.
The fact that serving officials are doing business with government is a serious concern as this is a classic of actual conflicts of interest, which may also lead to corruption. Officials can use their influence in the Public Service to secure Government contracts unduly and to the detriment of well deserving competitors.
The findings of the study show that there is poor rate of compliance by the EAs with the recommendations of the PSC for the three financial years. To this end, the PSC is concerned that the EAs do not take steps to ensure effective management of conflicts of interest within their respective departments. Therefore, failure to implement the recommendations made by the PSC on Financial Disclosure Framework will undermine the fight against corruption.
In the research report on “O ver view of the Implementation of the Financial Disclosure Framework: Financial Year 2008/2009” 1 the PSC found that the total amount paid by national departments to senior managers doing business with Government during the period 2005 to 2007 was R52 038 516.56. The bigger amounts in this regard were paid by the Department of Education (R30 307 163.00) and International Relations & Cooperation (R20 954 545.44). The total amount spent by provinces is R8 015 557.26, with the bigger spenders being the Department of Roadsand Transport in Limpopo (R3 527 492.21), Local Government in North West (R1 362 117.50) and Transport & Public Works in the Western Cape Province (R1 481 275.35).
Moreover, the Auditor-General also raised the following concerns regarding the officials involved in doing business with Government:
• Tenderers made misrepresentations by not declar ing in the tender documentation that employees were related to the companies and CCs that were tender ing.
1Public Service Commission. Overview of the Implementation of the Financial Disclosure Framework: Financial Year 2008/2009, December 2011.
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• Depar tments did no t always obtain three quo tations fo r transactions w ith a value above R10 000 but not exceeding R200 000, in line w ith the regulations fo r the procurement o f goodsand ser vices.
• Depar tments d id no t always apply the prescr ipts o f the Preferential Pro curement Po licy Framework A ct, 2000 (A ct No. 5 o f 2000) (PPPFA ) when evaluating quo tations that exceeded R30 000.
• In certain instances departments did not invite bids for procurement where the value of the goods or ser vices exceeded R200 000, in accordance with the regulations, and had awarded the contracts to employees-related entities.
• There are inconsistencies between departments in rectifying these problems. In some instancesdepartments charged employees with misconduct and discharged them or issued final warnings,while o thers indicated that disciplinar y steps could not be taken as employees were not awarethat they should have obtained approval to perfo rm o ther remunerative wo rk. A consistentapproach, which includes awareness, training, disciplining and legal action as well as the blacklisting o f entities, should be encouraged.
The PSC is of the view that whilst it is incumbent on senior managers to disclose conflicts of interest and to recuse themselves from processes which could result in actual conflicts of interest, there is a need for the Heads of Department and EAs to proactively identify and manage conflicts of interest in the workplace. Failure to do so may result in corrupt practices and tarnish the integrity of the Public Service.
3.3 THE TYPES OF RESPONSES PROVIDED TO THE PSC BY THE EAsREGARDING THE DECISIONS TAKEN
3.3.1 Responses regarding the Actions Taken by the EAs in Relation to Propertiesand Companies.
It is essential that senior managers must, in terms of the framework, disclose all directorships/partnerships in private companies and close corporations. The Financial Disclosure Framework forms a key element in, amongst others, the conducting of life-style audits of members of the SMS where this is deemed necessary.
The Deeds Registry Office of the Department of Rural Development and Land Reform has a system called the Aktex Information System (AKTEX). On this system, the Deeds Office registers all properties as acquired by South Africans. In order to verify properties as disclosed by SMS members on their disclosure forms the PSC decided to do a search of properties as registered on the AKTEX of the Deeds Registration Office. This search enables the PSC to:
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• Verify all properties as disclosed by a member of the SMS;• Obtain clarification on whether or not a member of the SMS has neglected to disclose a
property. Such an official should then be charged with misconduct as provided for in paragraph H(b) of Chapter 3 of the Public Service Regulations; and
• Provide the relevant EA with information at its disposal, who may then take disciplinary steps against a member of the SMS who failed to disclose a property.
The PSC conducted the scrutiny of the financial disclosure forms of SMS members for the 2008/09; 2009/10; and 2010/11 financial years. After the scrutiny, the EAs were provided with letters informing them of the cases of potential conflicts of interest identified and the officials who failed to disclose their registrable interests. To this end, the EAs responses on the implementation of the PSC's recommendations are discussed in Table 4 below:
Table 4: Responses regarding identified cases of potential conflicts of interests in respect of the 2008/09 financial year
Response received from department
National Departments/Province
Human Settlements
National Treasury
Office of the Public ServiceCommission
Economic Dev. Tourism andEnvironmental Affairs
Provincial Treasury
All Departments
The Executive Authority was satisfied with the responses provided by the officials and no further action was necessary. The Executive Authority acknowledged receipt of the PSC's report and indicated that he was reviewing the issues raised therein on a case-by-case basis and in a manner that will ensure procedural fairness. The Executive Authority was satisfied with the responses provided by the officials and no further action was necessary.An official was found to be involved in four companies that are posing potential conflicts of interest. However, the official indicated that one company is active and others are dormant. There was no indication of whether the official performs remunerative work outside of the Public Service as a result of her involvement in the company.The official was advised to resign from the company or seek permission to do remunerative work outside his employment in the Department.The Premier sent letters to five Heads of Department who were allegedly involved in companies that pose potential conflicts of interest and requested them to respond to the findings by the PSC. However, no response was received.
Name of Department
Response received from department
Free State
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Response received from department
National Departments/Province
Agriculture & Land Reform
Transport, Roads and PublicWorks
Education
Health
Social Services & PopulationDevelopment
Safety & Liaison
Name of Department
Response received from department
Northern Cape The EA provided feedback indicating that one official was a member of the Board of a company which constitutes a potential conflict of interest as a result of being nominated to represent the Department.The EA informed the PSC that he was investigating the matter and that he will revert to the PSC with feedback. No further response was provided in this regard.The EA indicated that one official resigned from the company which was found to be posing a potential conflict of interest. The EA was satisfied with the responses provided by the officials and no further action was necessary.The EA indicated that one official was found to be involved in the company which constitutes an actual conflict of interest as a result of being nominated to represent the Department.The EA was satisfied with the responses provided by the officials and no further action was necessary.
Table 5: Responses regarding identified cases of potential conflicts of interests in respect
of the 2009/10 financial year
NationalDept/Province
Environmental Affairs
CoGTA
Human Settlements
The Executive Authority informed the PSC that two of the officials who were found to be involved in registrable interests that pose potential conflicts of interest had already been transferred to the Department of Agriculture, Forestry and Fisheries. As a result no action could be taken against them. The remaining members were made aware of the PSC's findings and given the opportunity to consider these and provide responses.The EA informed the PSC that she had written to all the affected officials, requesting them to provide the necessary responses and feedback will be provided to the PSC.The EA indicated that 9 officials who were identified in the PSC's repor t were not SMS members. Therefore, Financial Disclosure Framework is not applicable to them.
Name Of Department
Response Received fromExecutive Authority
National Department
KwaZulu-Natal
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NationalDept/Province
Provincial Treasury
Public Works
Sports & Recreation
CoGTA
Education
Finance
Agriculture, Conservation & Rural DevelopmentLocal Government & Traditional Affairs
Social Development, Women, Children & People with Disabilities
The EA was satisfied with the responses provided by the officials and no further action was necessary.The EA responded by providing the PSC with copies of the responses received from the affected officials. However, no indication was provided as to whether the EA was satisfied with the responses or not, and if not what action was taken.A response from the Department was received through the Office of the HoD, who provided the PSC with copies of the letters received from the affected officials. No indication was provided as to whether the EA was satisfied with the responses or not, and if not what action was taken. The EA informed the PSC that he consulted with the affected officials and that he was satisfied with the responses provided. In view thereof, no further action was necessary.The EA was satisfied with the responses provided by the officials and no further action was necessary.The EA was satisfied with the responses provided by the officials and no further action was necessary.The EA was satisfied with the responses provided by the officials and no further action was necessary.Two of the officials involved had since left the Department and, therefore, no action could be taken against them.The other five officials provided explanations to the EA. The latter has not informed the PSC of the actions taken. A thorough investigation was conducted by the Depar tment following the PSC repor t. The investigation included checking whether the companies that were not disclosed were registered on the Provincial Supply Chain Database, to establish whether they could be conducting business with the Department. However, the Executive Authority did not provide an indication of the action she had taken against officials.
Name Of Department
Response Received fromExecutive Authority
Mpumalanga
North West
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Table 6: Responses regarding identified cases of potential conflicts of interests in respect of the 2010/11 financial year
NationalDept/Province
Health
Health
Human Settlements
Transport & Public Works
The Executive Authority informed the PSC that he investigated each case that was presented to him and that he was satisfied with the responses provided by the affected officials.The EA was satisfied with the responses provided by the officials and no further action was necessary.The EA was satisfied with the responses provided by the officials and no further action was necessary.The Department was satisfied with the responses provided by the officials and saw no reason to take any further action against them.
Name Of Department
Response Received fromExecutive Authority
National Department
Western Cape
3.3.2 Outcome of Disciplinary Steps Taken by EAs against the SMS Members whoFailed to Disclose their Registrable Interests
As a result of the PSC's intervention, there seems to have been little progress in the number of disciplinary sanctions taken by EAs against the perpetrators. Five (5) EAs had instituted disciplinary actions against the SMS members who failed to disclose their registrable interests i.e. One (1)EA for national department and four (4) EAs for provincial departments. A total of 23 officials were found guilty of misconduct related to non-disclosure during three financial years (2008/09; 2009/10; and 2010/11 financial years). At the provincial level, a total of 22 officials were found guilty of misconduct for not fully disclosing companies and properties whilst only one (1) official was found guilty of misconduct for non-submission of financial disclosure forms in national depar tments. The following are the types of sanctions that were taken against the officials that were charged and found guilty of misconduct during three financial years (2008/09; 2009/10; and 2010/11 financial years:
• Five (5) officials at the Department of Economic Development, Tourism and EnvironmentalAffairs in the Free State Province were issued with written warnings for failing to disclosecompanies in the 2008/09 financial year ;
• One (1) official at the ProvincialTreasury in the Free State Province was issued with a written warning for failing to disclose a company and properties in the 2008/09 financial year ;
• Twelve (12) officials at the Department of Agriculture, Conservation & Rural Development in the North West Province were issued with written warnings for failing to disclose companies and properties in the 2009/10 financial year ;
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• Four (4) officials at the Department of Social Development, Women, Children & People with Disabilities in the North West Province were issued with written warnings for failing to disclose companies and properties in the 2009/10 financial year ; and
• One (1) official at the Department of Environmental Affairs was issued with a written warning for failing to submit a financial disclosure form in the 2009/10 financial year.
It is, therefore, evident that the FDF is not fully implemented by the EAs and departments, and these results undermine the fight against corruption. Effective implementation of the FDF can yield the much needed results of combating corruption in the Public Service, not only in terms of monetary value but also in terms of action taken against perpetrators. It is hoped that the findings contained in this fact sheet will continue to raise awareness with regard to the extent of corruption in the Public Service.
Cha
pter
Fou
r
Recommendationsand Conclusion
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4. INTRODUCTION
This chapter presents the recommendations and conclusion of the study. The recommendations are presented closely to the themes derived from the objectives of the study.
4.1 RECOMMENDATIONS
This chapter presents recommendations and conclusion of the study. The recommendations are presented according to the themes derived from the study.
4.1.1 The State and Nature of Compliance by the EAs with the Requirements of theFinancial Disclosure Framework
The PSC noted that during the period sampled in the study (2008/09, 2009/10 and 2010/11), out of twenty-five (25) national departments and seventy-five (75) provincial departments that were scrutinised, only twenty-nine (29) EAs complied with the requirement to report back to the PSC in terms of Regulation G.4 of the PSR. The findings show that almost all EAs who reported back to the PSC on actions taken were satisfied with the explanation provided by the affected officials. The explanations that were provided by the officials were that they did not disclose some of the companies that are registered in their names because their companies were dormant or deregistered by the CIPC. In some cases, reasons provided were that the officials resigned as directors of the companies identified and the CIPC records were not updated. Therefore, the PSC recommends the following:
• Senior managers are entrusted with public funds and, therefore, they need to demonstrate a high level of professional ethics by disclosing their financial interests. The submission of financial disclosure forms by the due date is a regulatory requirement and compliance therewith is a sign of good governance. By complying with all the regulatory requirements that govern public administration, particularly those relating to the promotion and maintenance of professional ethics, senior managers will not only ensure accountability but also promote the ideals of an integrity driven Public Administration.
• It is imperative that the EAs also comply with the requirement to provide the PSC with an indication of actions taken as a result of the recommendations made by the PSC and EAs should take appropriate disciplinary action against SMS members who transgressed on the requirements of the Financial Disclosure Framework.
• It is recommended that the Fact Sheet on actions taken by Executive Authorities with regard to identified cases of potential conflicts of interests and compliance with the Financial Disclosure Framework should be presented to:
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o The Portfolio Committee of Public Service and Administrationo National and Provincial Legislatures.o Relevant Executive Authorities at national and provincial departments.
4.1.2 The Types of Responses Provided to the PSC by the EAs Regarding the DecisionsTaken.
In terms of the effective management of the Financial Disclosure Framework, the EAs propose that the PSC should amend the Financial Disclosure Framework to address the following issues:
o SMS members who are on suspension during the filing period should submit their financial disclosure forms as they are still in the employ of the Public Service.
o SMS members should not make excuses for not disclosing companies by indicating thatthey are not involved in everyday business activities of the companies.
o SMS members who wish to engage in Remunerative Work Outside the Public Service(RWOPS) should during the filing period attach a letter for the granting of permission. The approval should only be for the financial year in question.
o The EAs should ensure that SMS members disclose all the properties registered undertheir names (attach copies of CIPC reports and deeds registry reports).
o Financial disclosure forms must be submitted to the respective EAs by the due date of30 April each year, under all circumstances.
o EAs must establish special units (Ethics Officers) within their departments to assist withthe administration of the Financial Disclosure Framework.
o The Financial disclosure framework should make provision for officials upon leaving theoffice in order to scrutinise the registrable interest's assets of an official and to verifywhether there are assets due to the State.
o The PSC recommends that guidelines on minimum sanctions for specific offenses related to non-compliance with the Financial Disclosure Framework be issued by the Minister for Public Service and Administration. The guidelines should make provision for minimumsentences to be imposed by departments on acts of misconduct.
4.2 CONCLUSION
There was poor compliance rate by the EAs to implement the PSC's recommendations with respect to SMS members who did not disclose their registrable interests. The PSC also noted
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that certain EAs did not take action against the SMS members who failed to submit their financial disclosure forms as required in terms of Chapter 3 H of the Public Service Regulations of 2001 as amended and the Disciplinary Code of Procedures as contained in the SMS Handbook.
The PSC is concerned that the EAs only imposed written warnings against the SMS members who failed to submit their financial disclosure forms and who were found doing businesses with Government. The PSC is of the view that the sanctions levelled against the SMS members were not severe enough to prevent officials from engaging in such activities in future. On the other hand, the EAs do not take appropriate steps to address non-compliance by SMS members. These actions could undermine the effective management of conflict of interest as whole. It is therefore, critical that guidelines on minimum sanctions for specific offenses related to non-compliance with the Financial Disclosure Framework be issued by the Minister for Public Service and Administration. The guidelines should make provision for minimum sentences to be imposed by departments on acts of misconduct.
It appears from the findings of this Fact Sheet that the majority of EAs were satisfied with the explanation provided by the affected SMS members that they did not disclose some of the companies that are registered in their names because of those companies being dormant or deregistered by the CIPC. In view of the presentation that was made to PSC by officials from the CIPC on 12 March 2013, a company that has been deregistered may, unless it is a close corporation, be revived through a payment of a fee to be prescribed by the CIPC. A dormant company, however, may still trade if an opportunity presented itself. Another finding that was made was that certain officials were not aware that they should also declare residential properties.
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Notes
PUBLIC SERVICE COMMISSION PROVINCIAL OFFICES
Eastern Cape91 Alexandra RoadKing William’s Town, 5601
Tel: (043) 643-4704Fax: (043) 642-1371
GautengTen Sixty-Six Building16th Floor, 35 Pritchard StreetJohannesburg, 2001
Tel: (011) 833-5721Fax: (011) 834-1200
Mpumalanga19 Russel StreetNelspruit, 1200
Tel: (013) 755-4070Fax: (013) 752-5814
LimpopoKirk Patrick Building40 Schoeman StreetPolokwane, 0699
Tel: (015) 291-4783Fax: (015) 291-4683
Western CapeSanlam Golden Acre Building21st Floor, Adderley StreetCape Town, 8001
Tel: (021) 421-3980Fax: (021) 421-4060
Free State62 Fedsure Building3rd Floor, St Andrews StreetBloemfontein, 9301
Tel: (051) 448-8696Fax: (051) 448-4135
KwaZulu-NataliDUBE BuildingGround Floor, 249 Burger StreetPietermaritzburg, 3201
Tel: (033) 345-9998Fax: (033) 345-8505
Northern CapeWoolworths Building1st Floor, cnr Chapel & Lennox StreetsKimberley, 8301
Tel: (053) 832-6222Fax: (053) 832-6225
North WestMmabatho Post Office BuildingGround Floor, University DriveMmabatho, 2735
Tel: (018) 384-1000Fax: (018) 384-1012
Parliamentary OfficeSanlam Golden Acre Building21st Floor, Adderley StreetCape Town, 8001
Tel: (021) 418-4940Fax: (021) 418-1362
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