Public servants still profit from State tenders

12th August 2009 By: Idasa, an African Democracy Institute

At what point could corruption become endemic in South Africa? When might it become so systematised that it becomes almost irreversibly ‘the way business is done'?

Recent hearings before Parliament's Standing Committee on Public Accounts (SCOPA) provide a profoundly disturbing response. The evidence of persistent and widespread failure by government departments to implement reasonably clear ethics standards and procedures suggests there is little comfort from that quarter.

SCOPA heard that many government departments still lack the systems and skills to enforce the legal and ethical standards applicable to public servants. Almost a year after an Auditor-General's report found widespread breaches of the Public Service Code of Conduct during state procurement, many of the public servants identified have faced no disciplinary action.

One reason is that officials resign, escaping discipline. There is, thereafter, no functioning system to prevent officials finding employment in another government department.

A blacklist of convicted tender offenders required by the Prevention and Combating of Corrupt Activities Act is apparently not operative as, despite frequent reports of tender irregularities, there have been no convictions in the five years since enactment.

A related long-standing gap in the anti-corruption framework is the absence of post-employment restrictions. There is still no prohibition on officials accepting employment in private companies to which they shortly beforehand awarded a government tender.

Evidence before SCOPA follows a Public Service Commission (PSC) report finding three years ago that the Code is ineffective in preventing especially two related types of unethical and unlawful behaviour by public servants - favouring friends or family, and unauthorised outside remunerative work.

The PSC report suggested low levels of compliance with the Code, which in some departments has never been referenced in disciplinary proceedings.

It recommended a comprehensive review of the Code and ‘strong penalties for non-compliance', saying action against favouritism is ‘vital for building sound integrity systems'. This review has not yet taken place.

The Code reflects the constitutional requirement that public services should be provided impartially and efficiently. It requires public servants, in clear and obligatory terms, to avoid conflicts of interest between their public duties and private interests.

Public servants must therefore recuse themselves from "any official action or decision-making process which may result in improper personal gain, and this should be properly declared by the employee".

The Code's enforceability is problematic where no ‘direct' personal gain accrues - such as when a cousin's company secures the contract.

Identifying and avoiding sensitive situations is assisted by the requirement that all public servants involved in procurement annually declare their financial interests. Moreover, remunerated outside work requires prior consent from a senior manager.

Knowingly acquiring or holding a private interest in any contract connected with their employing department, without such prior consent, is an offence in terms of the Corrupt Activities Act. The Act also creates a legal duty on officials in authority to report corrupt transactions. Failure to report is a criminal offence.

Treasury regulations specify that no procurement decision may be taken until every member of the bid committee has signed a declaration that their impartiality in a particular procurement decision will not be compromised by any private interest.

The integrity paper-trail should, therefore, exist.

But the AG and the PSC continue to report low, even declining, levels of compliance with these reporting requirements. SCOPA heard that 10% of managers actively refused to disclose their interests, apparently without disciplinary action.

The inevitable consequence of senior managers' failure to ensure adherence to annual and transactional filing obligations is that red flags aren't raised when they and their employees fail to recuse themselves from decisions where conflicts of interest arise.

The truth may yet emerge, but only after contractual obligations are incurred, payments made to friends or family, and it has become prohibitively expensive to recover irregular expenditure.

A complete ban on outside remunerative activities by public servants may be necessary. This would significantly simplify public administration, reducing the ethical complexities and suspicion that cloud public life in South Africa.

Confidence would also be boosted if officials' financial interests were placed under independent administration, such as in a ‘blind trust', where they have reduced direct influence over the intersection between their public duties and private interests.

President Zuma has promised that his ministers will be held accountable for their performance. SCOPA should therefore refuse any longer to accept excuses from minister's hand-picked director generals. SCOPA has responded to ineffectual management by promising they will be "called to account".

SCOPA's robust approach is welcome, but would have greater impact if Parliament's own house was in order. Credible oversight requires that Members of Parliament promptly correct their own reported tardiness in complying with disclosure obligations.

If Parliament's standard-bearer committee is to be taken seriously, MPs need to convince us, and the public servants who account to them, of their own integrity and leadership.

Written by: Gary Pienaar, senior researcher with Idasa's PIMS.

This article first appeared in the Cape Times on Thursday, 30 July 2009.