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DA: Statement by Lindiwe Mazibuko, Democratic Alliance Parliamentary Leader, on DA tabling bill regulating business interests of state employees (26/02/2013)

26th February 2013


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The DA will today submit a bill in Parliament to regulate the business interests of state employees. This long-standing DA policy has already been introduced by the DA-led government in the Western Cape through Provincial Treasury Regulations. It is essential that it be extended to the entire country so that the fight against corruption in the public service is effective. Much of government corruption is the result of public servants and politicians starting or becoming major shareholders in companies that do business with the state.

We support National Planning Minister Trevor Manuel’s recent statement that no public servant should be able to do business with government. There should be consequences for those civil servants that benefit from state contracts.

The DA has been proposing such legislation since 2011. In March 2011, the DA proposed this bill through a private members’ legislative proposal, but it was rejected on the grounds that it pre-empted similar legislation which would soon be introduced by the Department of Public Service and Administration. Yet, nearly two years later, this legislation has still not materialised.

The recent ruling in the case of Ambrosini v Speaker of the National Assembly now allows MPs to submit draft bills directly to Parliament, which is what we will do today.

This bill seeks to:

  • Prohibit government employees and their families from directly or indirectly holding more than 5% of shares, stock, membership or other interests in an entity that does business with government, unless approval is given by the relevant Minister in accordance with certain criteria set out in the bill;
  • Ensure that, before the government enters into any contract with an entity for the sale, lease or supply of goods and services, the entity must provide an affidavit disclosing whether or not it is owned or part-owned by employees of the government; and
  • Require that all government employees disclose their business interests at prescribed intervals, in the same way that members of cabinet already do.

While the DA welcomes Public Service and Administration Minister Lindiwe Sisulu’s recent commitment to similar steps, no more time can be wasted. Indeed, the government’s foot-dragging on this issue has meant that the fight against corruption has been weakened considerably.

Last year, the late Minister of Public Service and Administration, Roy Padayachie, confirmed again in a response to a written parliamentary question that this ban on state employees doing business with government would be implemented through the Draft Public Service Integrity Framework.  He noted in this reply that it would be submitted to cabinet in June 2012. There has yet to be any indication that this has in fact happened, or that any further progress has been made in this regard.

The DA has also submitted this proposed legislation in every single provincial legislature. The ANC has rejected it in every single province.

All the while, the large-scale looting of government funds by members of the public service continues:

  • In January 2012, it was revealed in the Auditor-General’s 2011/12 report that the Free State government alone had awarded 50% of its contracts to politicians and their family members. It was also revealed that approximately 191 government officials and 18 close relatives benefited from state tenders valued at R133 million in the last financial year.
  • According to PricewaterhouseCoopers, the Eastern Cape Health Department has lost at least R45 million to corruption and irregular contracts with state employees.
  • Eastern Cape civil servants and their close family members secured almost R1 billion in government tenders during the 2010/2011 financial year: suppliers won 485 contracts worth R891 million, and councillors and their families benefitted from nearly R100 million worth of Eastern Cape municipal government tenders.
  • A Special Investigating Unit probe has revealed that close to 9 000 Department of Health employees are active company directors and about 1 000 do business with the Department. The report shows that R42.8 million had been paid to 235 employees. The 2010/2011 Auditor-General’s report revealed that R54.6 million was awarded to government department officials. Provincial officials and their families benefited from nearly R1 billion worth of government tenders in the same period.
  • The Department of Basic Education revealed this year that at least 3 314 of its employees had engaged in business with the state in the past two financial years, earning a combined R152 million. Of these employees, 2 485 were teachers.
  • Corruption Watch confirms 8 034 Eastern Cape Health Department employees are directors of active companies, whilst 929 are listed suppliers to government. A report compiled by Corruption Watch also points out that R11 million was paid over four years for services rendered by 35 companies whose directors were spouses of department employees.

In 2010, it was estimated that R624 million worth of state money went to companies with links to civil servants, their families or members of their spouses’ families. While ordinary South Africans need government to deliver quality services, many civil servants have undermined this objective by inappropriately benefiting from government tenders. This bill to regulate the business interests of state employees will go a long way toward addressing the problem.

South Africans cannot wait any longer for broken promises by the Department of Public Service and Administration. Minister Sisulu now has a bill before Parliament to work with. If she is really committed to the fight against corruption, she must come to the table and support this proposed legislation.

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