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Trading Public Knowledge for Private Gain: Is the Revolving Door Spinning out of Control?

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Trading Public Knowledge for Private Gain: Is the Revolving Door Spinning out of Control?

23rd February 2010

By: ISS, Institute for Security Studies

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Current debates on ethics in public life often overlook an important area of activity that provides numerous opportunities for unethical conduct by elected and unelected public officials. This concerns the ‘revolving door', understood as the rapid movement of people between government and the business sector. It involves the appointment of corporate executive and business lobbyists to key posts within government, or, alternatively, the recruitment of senior public officials into more lucrative private sector positions. It also includes former lawmakers and executive members who become lobbyists, working to advance the special interests of the corporate clients that pay them.

In the two latter scenarios former public officials take up profitable jobs within the same corporate industrie, who had business pending before them when they served in government and that they were in charge of regulating. And in all cases, rather than money exercising its undue influence, these individuals use their knowledge of the workings of government and the public-sector and their contacts to exact benefits for business.

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Public officials may be influenced by the promise of a future job with a private company that desires a government contract or wants to shape public policy. Private sector interests are cognizant of the fact that an effective way of shaping policy and the regulatory environment is to employ former government officials most familiar with its decision-making processes.

Moreover, former public officials recently recruited into the private sector as lobbyists or senior executives have extra-ordinary access to lawmakers and can use their government connections to benefit themselves or the business interests they have come to represent after they leave office. This access provides certain government contractors with an unfair advantage over their competitors since they can use insider knowledge to the benefit of their new employer.

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The revolving door threatens the integrity of government. Serving the public interest is fundamental to public office. Public officials should always make decisions and give advice that benefits the public good, without thinking about their personal gain. Moreover, public duties should be conducted in a fair and impartial manner. When undue influence is leveraged on behalf of a particular set of corporate interests the decisions that ensue do not necessarily represent the public's best interest or may even be potentially detrimental to the public interest.

Perhaps most importantly, at a time when citizens' trust in public officials, and politicians in particular, is in global decline the mere appearance of undue influence on decisions that affect the public interest is likely to damage the reputation of government further. Citizens expect public officials to manage public resources and serve the public interest with integrity and fairness. If citizens believe that public officials do not act for the public good, or that they misuse their office to benefit themselves or others close to them, then public trust, vital to the well being of democratic institutions, is eroded. And, when public trust in democratic institutions declines citizens tend to withdraw from participative democracy, such as elections, placing the legitimacy of the entire democratic system at stake.

South African Law has inadequate measures to deal with the post-employment activities of government officials. This is despite the numerous examples of Cabinet members who shift from their executive posts into senior positions within the private sectors often with companies that reside in the sector within which they previously operated. Yet, calls for post employment restrictions date back to 2001 when the Joint Investigative Team (JIT) report into allegations of corruption relating to the Strategic Defence procurement Package (aka Arms Deal) recommended that ‘Parliament take urgent steps to ensure that high ranking officials and office bearers, such as Ministers and Deputy Ministers, are not allowed to be involved, whether personally or as part of private enterprise, for a reasonable time after they leave office in contracts that are concluded with the state.' And more recently, the 2006 Public Service Commission Report on Managing Conflicts of Interest in the Public Service, recognized the increasing movement between the public and private sector, and subsequently highlighted the need for a cooling off period and for the regulation of post employment activities generally in South Africa.

So why does this phenomenon remain unregulated? Perhaps one reason relates to the uncertainty about what constitutes a conflict of interest in the first instance. The problem concerns ambiguity over definition and which suggests that South Africa's body politic remains uncertain about the nature and causes of conflicts of interest in public life. The ensuing confusion holds up regulatory efforts, and ultimately, the fight against corruption in the public sector. Until broad consensus is reached about what should constitute minimum standards of ethical conduct for public officials, a number of activities that are ethically dubious will remain legal.

A second cause for the lack of a post employment regulatory framework may be found in contextual considerations particular to South Africa. ‘Cooling off periods', restrict government officials from being employed in the same private sector industry usually for one year after leaving office. However, these restrictions need to be balanced with the individual's legitimate and Constitutional rights to economic freedom and activity. However, the historically perverse nature of the relationship between business and government in South Africa was such that many who currently hold public positions were previously denied job opportunities in the private sector. Past discriminatory practice now make the balancing effort between restrictions and rights morally more complex and difficult to regulate. Consequently, a reluctance to control the post employment movements of government officials has ensued.

Yet, the fact remains that each year millions of Rands are spent paying people to lobby on behalf of corporate interests whom the electorate had originally entrusted to regulate the same industries in the public interest.

Future restrictions will need to be pragmatic, carefully balancing preventative measures against the individual's right to a livelihood. A flexible regulatory approach may want to consider restrictions on the type of activities that former public officials can play for their new private sector employee such as lobbying the department from which they came. Alternately, regulations can place limitations on companies employing former public servants from entering into contracts with departments who employed the former official for a period of one year. These restrictions are more binding on the private sector entity rather than the individual and do not directly impede their ability to gain employment in the private sector. Most importantly however, these restrictions still ensure that potential conflicts of interest and undue influence are checked for a time period at least. They also act as an unmistakable reminder to all parties that the ‘revolving door' constantly requires ethical consideration.

Written by: Collette Schulz-Herzenberg, Senior Researcher, Corruption & Governance Programme in Cape Town

 

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