Financial Disclosures and Compliance of Heads of Department: status report by Public Service Commission

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Meeting Summary

The Director-General told the Committee that the total compliance rate – at national and provincial level was 74%. Compliance meant that the financial disclosure form was completed and sent to the Commission by the due date. The Commission had now moved on from only monitoring compliance to looking at the accuracy of the information submitted.

Members questions centred on the powers of the Commission and what they could do to strengthen the powers of the Commission. Members asked if the Financial Disclosure Framework applied to ministers and politicians. How were they made accountable? A key theme from the Members’ questions was about the consequences of non-compliance and deception.

The Commission would release a report in two months with the details of the individuals, departments and entities who had failed to comply. It announced that a process was underway to amend the Public Service Act to give greater powers to the Commission to keep officials accountable. The collaboration between the PSC and the National Assembly/ National Council of Provinces on this matter was emphasised.

Meeting report

The Chairperson welcomed everyone present and Mr L Gunda (ID, Northern Cape) to open with a prayer.

Public Service Commission (PSC) Status Report on Financial Disclosure Compliance 
Ms Sellinah Nkosi, PSC Commissioner, apologised on behalf of the Chairperson of the PSC, Mr Ben Mthembu who had a prior commitment elsewhere in Parliament. In her introduction, she noted that the PSC was a Chapter 10 institution that looked into, inter alia, the personnel practices of government departments.

Professor Richard Levin, PSC Director-General,  gave a summary of the mandate of the PSC and a background to the Financial Disclosure Framework. The Minister of Public Service and Administration had approved that the Framework be incorporated as Chapter 3 of the Public Service Regulations (PSR). All members of the Senior Management Service (SMS) were required to disclose to their respective Executive Authority the particulars of all registrable assets no later than 30 April each year. The PSR required submission of these disclosures to the PSC by 31 May each year.

Role of PSC in Financial Disclosure Framework
The Framework provided for the PSC’s role in the management of conflict of interests in the Public Service. The PSC had been managing the Framework since 2000. Initially, the focus had been on compliance with the requirement to submit financial disclosure forms. Since 2006, the focus had been expanded to include scrutiny of the disclosures to identity potential and actual conflicts of interests; and to advise Executive Authorities accordingly. The PSC was in the process of scrutinising 100% of the forms. Previously, they had only scrutinised 30%. The compliance rate in submission of financial disclosure forms in 2007/08 had been 48% and had risen to 74% in 2011/12. While this improvement was positive, it was felt that only 100% was acceptable as all it entailed was filling in a form and submitting it.

Compliance with the Framework
For 2011/12, there were 9 078 SMS members in the country – 5 206 at national departments and 3 872 at provincial level. The Western Cape and Northern Cape were at 100% compliance and Gauteng at 99%. The Eastern Cape and Free State were at 74% and 64% respectively. The North West was the lowest at 27%. National departments averaged 67% and provinces 84%. The country total average was 74%.

It was important to note that some departments were 100% compliant and their average was brought down by non-compliant counterparts. Some departments had not submitted a single form by the due date. 17 national departments and 14 provincial departments in three provinces did not submit forms by the due date.  In this case, the PSC wrote to Executive Authorities to alert them; they often recommended disciplinary action, in terms of the SMS Handbook. An electronic submission process would be implemented in the 2013/14 financial year.

Compliance By Directors-General And Heads Of Department
37% of forms of Directors-General were outstanding by 31 May 2012 – in three cases, they were on leave or suspended. The responsibility lay with the Executive Authorities to ensure compliance. DGs and HODs, as accounting officers, had to set an example. Nationally, 26 of 45 Directors-General had submitted on time. Provincially, only the North West had not complied.

Scrutiny of the Framework
This process involved the verification of information related to directorships and partnerships on the
Companies and Intellectual Property Commission (CIPC) database. All the activities of an SMS member were assessed against their official duties. The Deeds Registry database was another source used to verify information.  The departmental supplier database was also being scrutinised more closely as this was where most potential conflicts happened. There were 30% potential conflicts across the board - nationally and provincially. The correlation between between official duties and private companies was 20.8%. Many potential conflicts became actual conflicts when supplier databases were scrutinised. This raised many ethical questions. Chief among which was that South Africa faced many challenges to do with poverty and inequality and there was a limited/restrictive national wealth pot. Therefore, it was problematic when civil servants wanted to operate from several income streams – so-called double dipping. This also raised questions about their commitment to their official duties.

 Comparative Study
The management of conflict of interest in the Public Service was not functioning optimally yet. There was a need to entrench it in the public service as one of the strategies to fight corruption. The PSC had looked at other countries to view best practice. The Asian countries in particular – Vietnam, Thailand, Korea, Sri Lanka – had stringent sanctions and fines. In Botswana, there was a requirement to disclose whenever a significant change had occurred and the information of spouses and family members was required.

The following lessons had been learned from the comparative study:
▪ All public servants had to disclose as soon as a conflict of interest occurred.
▪ Supervisors would be involved in managing conflicts of interest.
▪ Clear-cut sanctions and fines should be imposed
▪ Disclosure of financial interest was required upon leaving office.

The PSC was not the policymaker in this regard, but based on its role, the PSC could make recommendations for the policymakers. Parliament could influence the policy outcomes of the Executive.

Professionalising the Public Service
It was evident from the National Development Plan (NDP) that SA needed to focus on building a professional public service and a capable state. In terms of the NDP, key issues to be targeted are:

▪ Stabilise political-administrative interface.
▪ Current emphasis on political deployment need to be replaced by focus on professional public service – that serves government but is also sufficiently autonomous from political patronage.
▪ Make the public service and local government careers of choice.
▪ Recruitment should be based on experience and expertise.
▪ Develop technical and specialist professional skills.

The NDP also recommended that rules restricting business interests be more specific and clear. The PSC had engaged with Cabinet and made recommendations to them, which they had approved. Among these were amendments to the Act. The Public Service Act regulated the general public service profession. Section 30 of the Act set the condition for employees doing business with the State. There was no need to amend this section of the Act.

The improvement in the submission rate was attributed to strategies by the PSC to assist departments to comply. Often, officials submitted on time but Executive Authorities neglected to submit forms to the PSC on time. The National Assembly had been supportive in terms of performance agreements. The PSC recommend that the National Assembly and Provincial Legislatures monitor this compliance. Further, there should be a requirement for departments to report on action taken against transgressors.

Discussion
The Chairperson thanked Prof Levin for the presentation. The core of the presentation was “fight against corruption”, but apparently, there were many challenges.

Mr Gunda thanked the PSC for the presentation. The Act was about public servants, but what about ministers and politicians who also had dealings with government? What mechanisms were there to deal with the North West and Free State? He asked that the PSC please name the DGs and HODs who had not complied. Could the Committee see the SMS Handbook? What were the main reasons for the non-compliance? What role did the Anti-Corruption Unit play? Had any offenders been prosecuted successfully? Why had the Financial Disclosure Framework not been included in the performance agreements of SMS members?

Mr Nesi (ANC, Eastern Cape) asked what were the consequences. Were politicians included as public servants? If not, why not?

Mr Joseph (DA, Western Cape) said the issue was about values and principles. Many people studied public administration, it was important at the point of education to deal with this matter and to entrench values and ethics at an earlier stage. When there were media reports, was it because someone in the department had spoken out or was it the PSC reporting to the public and taxpayers? Why were statistics based on 30% and not 100%? What could the National Council of Provinces do to help, besides oversight?

Mr D Bloem (Cope, Free State) agreed that it was all about corruption. Corruption needed to be fought from the top – with ministers and the President. Each and everyone in the public service must be included. Some Members of Parliament were also involved with illicit practices, this made oversight hard. What were the consequences for non-compliance? The PSC should detail the consequences on their next visit; or was it for the Committee to work it out? Please name and shame the 17 departments that had not complied.

The Chairperson asked about the powers of the PSC. Was it equal to the Public Protector? The PSC was trying to deal with the core of corruption. The Committee would have to make serious recommendations to strengthen the powers of the PSC.  Did the PSC consider involving the Hawks or the police when making recommendations? Often ghost or front companies were created or money was not banked to avoid detection. How did the PSC deal with this? The idea of lifestyle audits was a good one. Compliance should be included in all employment contracts, not just in performance agreements.

Prof Levin noted that one of the key themes from the Members’ questions was “consequences”. Linked to this was the mandate of the PSC. Discipline was essentially a departmental matter. The PSC dealt with grievances, conditions and practices, inter alia. The strength and enforceability of the recommendations was at issues; this was dealt with by the NDP. To this end, the PSC was looking to amend its founding legislation – the Public Service Act. Currently, they could only issue directions on key personnel practices. They wrote to the Executive Authorities to alert them to potential/actual conflicts, but if there was no response from them, there was little the Commission could do. The recommendations were often taken seriously.

The Anti-Corruption Unit was not involved in financial disclosure follow-up. The mandate did not suit the scrutiny of politicians; there was separate legislation to deal with this. The information on which DGs had failed to comply could be provided to the Committee. These Directors-General were among those who had failed to comply:

▪ Basic Education
▪ SAPS (assumed duty after the due date)
▪  IPID
▪ Agriculture (on special leave)
▪ Communication
▪ Defence
▪ Correctional Services
▪ Dirco
▪ Labour Mineral Resources
▪ Military Veterans
▪ NPA (on special leave)
▪ PALAMA
▪ Public Service and Administration
▪ Rural Development
▪ State Security (Acting DG)  
▪ Sport 
▪ Women, Children and persons with disabilities.

Prof Levin said that information that was more detailed could be given the Committee. It would be important to focus on civic education to strengthen ethical awareness. The NCOP was uniquely placed to deal with the issue. It was for the PSC to inform the Committee for them to act on it.

Ms Nkosi, PSC Commissioner, noted that the North West had not had a Commissioner for the last four years. There was one now and she would liaise with the Executive Authorities before the due dates to ensure compliance. After scrutinising forms, a letter was sent to the Executive Authority. It was up to the Executive Authority to engage with relevant officials and take the necessary action. The Executive Authorities were failing. A report was due in two months on the actions taken by Executive Authorities. It would be presented to Parliament. The accuracy of the information was verified by the CIPC and the Deeds Registry. Often, there was a lag between officials deregistering their interests and it being captured on the CIPC database. Although the PSC did a lot of investigating, the Act did not require them to report their findings, unlike the Public Protector. A report was given to the complainant and the relevant Executive Authority. The Chief State Law Advisor was being engaged to amend the Act to allow the publishing of findings and to strengthen their recommendations. The SMS Handbook was readily available to members.

Mr Mike Seloane, PSC Commissioner, emphasised the collaboration between the PSC and the National Assembly/ National Council of Provinces. Similar to the Auditor-General, who audits statements and reports to Parliament, the PSC audits personnel practices. Little could be done about the Executive Authorities, they had to ensure that all officials disclosed and complied. However, they themselves were accountable to Parliament. A separate Act dealt with the disclosure of politicians. The PSC provided evidence on disclosure and practices.

Mr Dovhani Mavuphiswana, Deputy-Director General: PSC, said here was a joint responsibility between the PSC and the Department of Public Service and Administration (DPSA) to raise awareness about the importance of filing the forms on time. The induction of officials was important to make all who entered the public service aware of the expectations and ethical behaviour. There was a requirement for cases involving more than R100 000 to be reported to the Hawks. Once again, the PSC could only make recommendations, but it remained the responsibility of the Executive Authorities to report cases. Parliament could help by asking Executive Authorities to account for the actions they had taken on PSC recommendations. The PSC had presented reports to the Portfolio Committee and the Executive before on the issues to be brought to the attention of Accounting Officers, corruption had come to the fore then too.

A manual was given to all Executive Authorities to explain their duties and responsibilities as soon as they were appointed; all the relevant issues were dealt with in the manual.

Mr Bloem said the responses had made matters clear. The Committee could understand. He recommended to the Committee that they call the departments to account. The National Assembly had apparently not acted on the recommendations.

Mr Gunda asked why local government was not covered.

Mr Seloane said the Constitution did not cover local government, but the Act was being amended to remedy this.

Mr Joseph asked why information verification had been based on 30% instead of 100% of disclosures.

Ms Nkosi said human resource constraints had made this hard. The 2011/12 report would be based on 100%, which is what was strived for.

The Chairperson said the PSC had to assist Parliament. A detailed report was requested for the Committee; they would take it from there. The Committee needed to work closer with the PSC.

The meeting was adjourned.

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