The South African local government elections on Wednesday, 3 August 2016 present the opportunity for newly appointed local government officials to be reminded of the laws that are in place to protect public funds.

Both the Public Finance Management Act and the Municipal Finance Management Act aim to promote ethical standards and good business practice in government. The Municipal Finance Management Act specifically, drives strong ethical standards which impact supply chain management and encourage municipalities and their business associates to build environments where business is conducted with integrity, respect and mutual trust.

Periodically, however, there are high profile cases of government employees involved in fraudulent tender allocations and theft through shell companies. This affects service delivery and misuses funds that could be better used to uplift communities.

Rudi Kruger, general manager of LexisNexis Governance, Risk & Compliance says that newly appointed municipal officials have the opportunity to win the trust of South Africans by abiding by the law.

“There have been incidents that have led to public dissatisfaction with regard to the procurement process and awarding of tenders. However, the hope is that any newly appointed public officer will take their role seriously and win back public trust,” said Kruger.

Recent examples of municipal fraud and corruption include the arrest of an administrator for the City of Cape Town earlier this year for allegedly defrauding the municipality of R70 million. Recently Eastern Cape Provincial Deputy Minister of Cooperative Governance and Traditional Affairs Andries Nel said at least 200 municipal officials in that province had been arrested for fraud and corruption over the past year. A case is also presently open involving Executive Mayor of the Amathole District Municipality Nomasikizi Konza and her co-accused, the former chairperson of the municipal Account Committee at Amathole District Municipality and councillor of Nkonkobe local Municipality.

The Municipal Finance Management Act stipulates that ‘A supply chain management policy must establish a code of ethical standards complying with subregulation (2) for officials and other role players in the supply chain management system in order to promote—mutual trust and respect; and an environment where business can be conducted with integrity and in a fair and reasonable manner.

Officials and other role players involved in the implementation of the supply chain management policy of the municipality or municipal entity are expected to:

• treat all providers and potential providers equitably;
• not use his or her position for private gain or to improperly benefit another person;
• not accept any reward, gift, favour, hospitality or other benefit directly or indirectly, including to any close family member, partner or associate of that person;
• declare to the accounting officer details of any reward, gift, favour, hospitality or other benefit promised, offered or granted to that person or to any close family member, partner or associate of that person;
• declare to the accounting officer details of any private or business interest which that person, or any close family member, partner or associate, may have in any proposed procurement or disposal process of, or in any award of a contract by, the municipality or municipal entity;
• immediately withdraw from participating in any manner whatsoever in a procurement or disposal process or in the award of a contract in which that person, or any close family member, partner or associate, has any private or business interest;
• be scrupulous in his or her use of property belonging to the municipality or municipal entity;
• assist the accounting officer in combating fraud, corruption, favouritism and unfair and irregular practices in the supply chain management system; and
• report to the accounting officer any alleged irregular conduct in the supply chain management system which that person may become aware of, including any alleged fraud, corruption, favouritism or unfair conduct; alleged contravention of regulation 47 (1); or alleged breach of the code of ethical standards.

In addition, companies working with the government sector or hoping to do so cannot afford to be found non-compliant with the Public and Municipal Management Finance Acts.

A solution that is tailor-made to weed out such non-compliance is ProcureCheck, a useful vetting tool from LexisNexis GRC which assists organisations like municipalities with facilitating transparent networking environments, where business can be conducted with integrity and in a credible and reasonable manner. The solution enables supply chain officers to combat corruption and identify possible fraudulent activity among vendors and employees. It also highlight business interests of employees within your organisation.

For a full list of ProcureCheck benefits click here.