The Public Service Commission (PSC) releases an Overview on the Implementation of the Financial Disclosure Framework for the 2008/2009 Financial Year

03 December 2010

A.  Background

The Public Service Commission (PSC) has as early as 1999 recognised the importance of managing conflicts of interest of the public servants, and developed a Financial Disclosure Framework for senior managers. The Framework requires all members of the Senior Management Service (SMS) in the Public Service to disclose all their registrable interests annually to their Executive Authorities (EAs). The EAs in turn, are required to submit copies of the Financial Disclosure Forms (FDF) to the PSC by 31 May of each year. In line with this constitutional mandate, the PSC has accordingly compiled an overview on the implementation of the financial disclosure framework focusing on the 2008/2009 financial year. The Report not only provides an assessment of the rate of the submission of the FDF but also presents findings emanating from the scrutiny of a sample of 2628 SMS members. Furthermore, it provides insight into the extent of senior managers’ involvement in private interests, such as directorship and partnerships in private companies and close corporations. When assessing the involvement of senior managers in private interest, the PSC relied on the Companies and Intellectual Property Registration Office (CIPRO) database. During the data collection, the PSC noted that the respective companies and senior managers do not always take the necessary steps to ensure that CIPRO’s database is updated on a regular basis. As a result, the PSC is cognisant of the fact that the information obtained from the database for purposes of this assessment may not always be up to date.

The PSC made numerous findings pertaining to the submission of the disclosure forms and the identification of potential conflicts of interest. Below are some of the findings of the overview:

B.  KEY FINDINGS

1. A total of 542 (21%) senior managers out of the sample of members of the SMS (2 628) may have potential conflicts of interest between their private interests and their official duties. Out of this total 228 were from national departments and 314 from provincial departments.

2. 576 (22%) senior managers out of the sample of 2 628 did not disclose some of their directorship/partnerships in private companies and close corporations. This figure includes 338 senior managers from national departments and 238 from provincial departments.

3. 276 senior managers did not disclose their properties as required in terms of Chapter 3 of the Public Service Regulations. Of these, 103 were from national departments and 173 were from provincial departments.

4. Out of the sample of 2 628, the PSC found that 101 senior managers received gifts whose collective value was R740 000.00. This indicates that the issue of the provision of gifts to public servants is real and should thus be subjected to appropriate controls.


With regard to the assessment that was conducted in respect of Heads of Department (HoDs), the PSC found the following:

5. As at 05 February 2010, 150 HoDs (National and Provincial) were assessed. Of these, only 122 submitted their financial disclosure forms. The 28 that did not submit their FDF were assessed on the basis of information obtained directly from the CIPRO database and the Deeds Registration Office’s database.

6. The PSC found that the financial interests of fifty (50), i.e. 33% of HoDs, present a potential conflict of interests to their departments.

7. Forty-eight (48), i.e. 32% of HoDs did not disclose some of their directorships and/or partnerships in private companies/close corporations.

1. Charging Members of the SMS with misconduct – The PSC is concerned that a total of 28 HoDs did not disclose their financial interest, i.e. they did not submit their FDF to the PSC. In addition, 576 SMS members, who submitted their FDF to the PSC, did not disclose some of their directorship/partnerships in private companies and close corporations. The PSC discussed the outcome of the assessment with various Premiers and indicated the importance of managing conflicts of interest identified and compliance with the Financial Disclosure Framework. The PSC recommends that Executive Authorities should ensure that transgressing HoDs and other members of the SMS are charged with misconduct for failing to disclose their financial interests in terms of the Disciplinary Code and Procedures, as contained in the SMS Handbook for not complying with the Financial Disclosure Framework. Similarly, Executive Authorities should inform the PSC of any steps taken in this regard and if no steps were taken state the reason thereof. The PSC further recommends that members of the SMS be made aware of the fact that they need to disclose all companies, including dormant and non-profit making companies. Companies for which senior managers are performing work but are not receiving remuneration must also be disclosed.





2. Addressing the Management of Conflicts of Interest – Departments should consider strategies in dealing with persons who have been identified, through the disclosure of their financial interests, as having a potential conflict of interest. In this regard, the following could be considered:
   
   

   • Re-assigning the duties of the official if this can be effected in the interest of the state

   • If it is not possible to re-assign the duties of the official, the feasibility of a transfer to another component should be considered if it is in the interest of the state

   • If the re-assignment of duties or a transfer is not possible, consideration should be given to request the official to resign from the private interest that is causing the conflict of interest.

   
   
   

3. Strengthening Conflicts of Interest Regulations – The PSC has noted a gap in the regulations regarding the participation of SMS members in government contracts. In this overview, the PSC found that SMS members have companies which regularly interact with government departments by obtaining contracts. However, there is no provision that regulates such interaction. In this regard, the PSC recommends that the Public Finance Management Act (PFMA) should be amended to provide for the regulation of private companies linked to public officials and doing business with government.





4. Conducting of Lifestyle Audits – The PSC is of the opinion that the management of conflicts of interest could further be strengthened by conducting lifestyle audits. This implies that if an Executive Authority is of the opinion that there has been incomplete disclosure of financial interests by a senior manager, he/she may embark on a lifestyle audit.





5. Monitoring by Portfolio Committees – The PSC further recommends that given their Legislative and Parliamentary oversight role, Portfolio Committees should call departments and Executive Authorities to account where there has been non-compliance as well as low levels of compliance to the Financial Disclosure Framework.

D. CONCLUSION

The analysis contained in this report provides comprehensive detail on the level of compliance to the Financial Disclosure Framework during the 2008/2009 financial year and should provide valuable information for oversight purposes as well as to address emerging trends. The management of potential conflicts of interest forms an integral part in the Public Service’s initiatives to become integrity driven. Through the identification and management of potential conflicts of interest honest public servants are kept honest and professional ethics is promoted within the workplace. Compliance with the Framework should therefore not be seen purely as a mandatory requirement but as an ethical obligation of each and every senior manager.

Issued by the Public Service Commission

For enquiries, please contact:
Mr Humphrey Ramafoko; Director: Communication and Information Services; Tel: 012- 352 1196; Cell: 082 782 1730; Email: humpreyr@opsc.gov.za Or Mr Ricardo Mahlakanya; Deputy Director: External Communication; Tel: 012 352 1070; Cell: 079 769 7955; Email: RicardoM@opsc.gov.za