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26 February 2013

PRESENTATION TO THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS THE STATUS OF FINANCIAL DISCLOSURES AND COMPLIANCE OF DEPARTMENTAL HEADS. 26 February 2013. OUTLINE OF THE PRESENTATION. INTRODUCTION BACKGROUND ON THE FRAMEWORK

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26 February 2013

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  1. PRESENTATION TO THE SELECT COMMITTEE ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRSTHE STATUS OF FINANCIAL DISCLOSURES AND COMPLIANCE OF DEPARTMENTAL HEADS 26 February 2013

  2. OUTLINE OF THE PRESENTATION • INTRODUCTION • BACKGROUND ON THE FRAMEWORK • ROLE OF THE PSC IN THE FINANCIAL DISCLOSURE FRAMEWORK • COMPLIANCE WITH THE FRAMEWORK • COMPLIANCE BY DIRECTORS-GENERAL AND HEADS OF DEPARTMENT • SCRUTINY OF THE FRAMEWORK • COMPARATIVE STUDY • PROFESSIONALISING THE PUBLIC SERVICE • CONCLUSION

  3. INTRODUCTION • The Public Service Commission (PSC)– • is established in terms of the Constitution; • promotes and maintains effective and efficient public administration with a high standard of professional ethics. • Its core business is to investigate, monitor, evaluate and advise on strategic Public Service issues. • This presentation provides a brief overview of the management of the Financial Disclosure Framework (Framework) in the Public Service, as well as information on compliance by Heads of Departments with the Framework. 3

  4. BACKGROUND ON THE FRAMEWORK • The PSC has since 1999 realized the importance of managing the potential conflicts of interest of public servants and subsequently developed the Framework. • The Minister for Public Service and Administration during March 2000 approved that the Framework be incorporated as Chapter 3 of the Public Service Regulations (PSR). • All members of the Senior Management Service (SMS) are required to disclose to their respective Executive Authorities (EAs), particulars of all their registrable interests not later than 30 April each year. • The PSR further require of the EAs to submit copies of the forms on which the designated employees disclosed their financial interests, to the PSC by not later than 31 May of each year.

  5. ROLE OF THE PSC IN THE FINANCIAL DISCLOSURE FRAMEWORK • The Framework provides for the PSC’s role in the management of conflicts of interest in the Public Service. Therefore, since 2000, the PSC has been managing the Framework. • During the initial years, the focus of the PSC’s work on the Framework was on compliance with the requirement to submit financial disclosure forms. • Since 2006, the PSC expanded its focus to include the scrutiny of the disclosures to identify potential and actual conflicts of interest in departments and to advise Executive Authorities accordingly. • The PSC is in the process of scrutinizing 100% of the financial disclosure forms. In previous years, due to capacity constraints, the PSC only scrutinized 30% of the disclosure forms on an annual basis. This initiative will assist the PSC in identifying potential and actual conflicts of interest in all departments and advise Executive Authorities accordingly.

  6. COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK (1) • The compliance rate by the stipulated due date from the 2007/2008 financial year to the 2011/2012 financial year has improved. • While there has been an improvement, only 100% compliance is acceptable!

  7. COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK

  8. COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK (2) • The compliance rate by the due date in the national and provincial departments has improved from below 50% between 2007/2008 and 2009/2010 financial years, to 74% in the 2011/2012 reporting period. • There has been a slight increase of 6%compliance in the 2011/2012 financial year compared to the financial year 2010/2011. • The Northern Cape and Western Cape are the only two Provinces that achieved a 100% compliance rate by the due date. • There are some departments, both at national and provincial level that did not submit a single financial disclosure form to the PSC by the due date of the 31 May 2012.

  9. COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK (3) • Seventeennational departments and fourteenprovincial departments in three provinces did not submit financial disclosure forms by the due date. • The North West Province did not submit any disclosure form by the due date. • The EAs were advised that disciplinary action should be taken against defaulting SMS members, in terms of the Disciplinary Code and Procedures as contained in the SMS Handbook. • To promote the timeous submission of the disclosure forms and in order to improve the scrutiny process, the electronic submission of the disclosure forms will be implemented during the 2013/2014 financial year.

  10. COMPLIANCE BY DIRECTORS-GENERAL AND HEADS OF DEPARTMENT • The financial disclosure forms of 37% of Directors-General (DG’s) were outstanding by the due date of 31 May 2012. • In three cases, the DGs were either placed on special leave or suspended. • The EAs have the responsibility of ensuring that the officials concerned submit their financial disclosure forms. • The non-submission and late submission of disclosure forms by DGs and Heads of Department (HoDs) is a cause for concern. As Accounting Officers, they should set the example in ethical behavior in departments. • They should promote transparency by, inter alia, submitting their financial disclosure forms timeously and encourage officials within their respective departments to do likewise.

  11. COMPLIANCE BY DGs

  12. COMPLIANCE BY HoDs OF PROVINCES • AllHoDs in the following provinces submitted forms by the due date: Gauteng, Limpopo, Mpumalanga, Northern Cape, Western Cape • The forms of HoDs in the following provincial departments were not submitted by 31 May 2012:

  13. SCRUTINY OF THE FINANCIAL DISCLOSURE FRAMEWORK (1) • The scrutiny process involves the verification of information relating to directorships and partnerships on the CIPC database. • The nature of activities relating to consultancies and retainerships as well as work performed by an SMS member outside of the Public Service, are used to formulate an opinion on the prevalence of potential or actual conflicts of interest. • All the activities that an SMS member is involved in are assessed against the official activities of the particular SMS member. • The Deeds Registry database is also consulted to verify whether a particular senior manager disclosed all his/her properties.

  14. SCRUTINY OF THE FINANCIAL DISCLOSURE FRAMEWORK (2)

  15. COMPARATIVE STUDY (1) • The management of conflicts of interest in the Public Service is not yet functioning optimally. • There is a need to entrench the management of conflicts of interest within the Public Service as one of the strategies to fight corruption.

  16. COMPARATIVE STUDY (2) • The following lessons were learned through a comparative analysis of the management of conflicts of interest: • All public servants should disclose conflicts of interest as soon as they occur. • All public servants should disclose spousal interests and those of their family members. • Supervisors should be involved in managing conflicts of interest. • Departments should adopt conflicts of interest policies. • Cash loans, earned income, cash and debts should be disclosed. • Registrable interests should be disclosed when there is a change in assets. • Clear-cut sanctions and fines should be imposed on late and non-submissions of financial disclosure forms. • Disclosure of financial interests upon leaving office.

  17. PROFESSIONALISING THE PUBLIC SERVICE (1) • It is evident from the National Development Plan (NDP) that South Africa needs to focus relentlessly on building a professional public service and a capable state. • The experience of other countries shows that this cannot be done overnight. Measures will have to be strengthened over time. • In terms of the NDP the following key areas should be targeted: • Stabilise the political-administrative interface. • The current emphasis on “political deployment” needs to be replaced by a focus on building a professional public service that serves government, but is sufficiently autonomous to be insulated from political patronage. • Make the public service and local government careers of choice. • At the top, recruitment and management should be based on experience and expertise. • Develop technical and specialist professional skills.

  18. PROFESSIONALISING THE PUBLIC SERVICE (2) • The NDP has recommended that rules restricting the business interests of public servants be made more specific and clear. • In December 2012 Cabinet approved a recommendation by the PSC to prohibit public servants from doing business with Government. • The Bill of Rights provides that “Every citizen has the right to choose their trade, occupation or profession freely. The practice of a trade, occupation or profession may be regulated by law”. • The Public Service Act is the legislation that regulates the general public service profession • Section 30 of the Act sets out some of these conditions and determines that no employee shall perform or engage himself or herself to perform remunerative work outside his or her employment, except with the written permission of the executive authority of the department.   • There is a need to amend this section of the legislation.

  19. CONCLUSION • The improvement in the submission rate by the due date could be attributed to the strategies adopted by the PSC to assist departments in complying with the regulatory requirement. • The PSC is still concerned that there may be instances where designated officials submit their financial disclosure forms by 30 April to their respective EAs, but the EAs delay in submitting the forms to the PSC. • The obligation to submit the disclosure forms to the PSC rests with the EAs. • The PSC is, therefore, of the opinion that the National Assembly and Provincial Legislatures should monitor and ensure that EAs comply with the Framework. • In order to achieve this, Parliament and Provincial Legislatures must also assist the PSC by including, in their monitoring mechanisms, the aspect of requiring departments to report on actions that have been taken against transgressors, and where no action has been taken, reasons for such omission.

  20. THANK YOU! Siyabonga! PSC Website: www.psc.gov.za National Anti-Corruption Hotline for the Public Service: 0800 701 701

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