PSC releases the Factsheets on Monitoring Compliance with the Financial Disclosure Framework for the 2012/2013 Financial Year as well as the Actions Taken by the Executive Authorities

02 October 2014

A. BACKGROUND
The Public Service Commission (PSC) has produced a factsheet on monitoring compliance with the Financial Disclosure Framework (FDF) to provide an overview of the extent of compliance with the Framework in respect of the 2012/2013 financial year. The factsheet provides a statistical analysis of the financial disclosure forms that were received by the PSC by the due date of 31 May 2013. It also reflects on the extent of senior managers’ involvement in private interests, such as directorships and partnerships in private companies and close corporations. The PSC relied on the Companies and Intellectual Commission (CIPC) database when assessing the involvement of senior managers in private business interests. This study follows a similar exercise conducted by the PSC on Actions Taken by the Executive Authorities (EAs) with regard to Identified Cases of Potential Conflicts of Interest and Compliance with the FDF. It also provides an overview of the extent to which the EAs have implemented the recommendations of the PSC.

B. KEY FINDINGS
1. Overall submission of financial disclosure forms by National and provincial departments by May for 2012/2013 financial year
 

NATIONAL DEPARTMENT/ PROVINCE	NO. OF SMS MEMBERS	NO. OF FORMS RECEIVED	NO. OF FORMS OUTSTANDING	PERCENTAGE RECEIVED
National Departments	5425	4413	1012	81%
Eastern Cape	636	568	68	89%
Free State	354	299	55	84%
Gauteng	700	645	55	92%
Kwazulu-Natal	549	284	265	52%
Limpopo	494	492	2	99%
Mpumalanga	310	310	0	100%
Northern Cape	250	250	0	100%
North West	318	278	40	87%
Western Cape	391	391	0	100%
OVERALL PROVINCIAL TOTAL	4002	3517	485	88%
COUNTRY TOTAL	9427	7930	1497	84%

The PSC found that during the period under review, the overall compliance rate as at 31 May 2013 stand at 84%. The national departments had 5 425 Senior Management Services (SMS) members who were required to submit their financial disclosure forms for the 2012/2013 financial year. Of this total, the PSC received disclosure forms of only 4 413 (81%) SMS members of national departments and 1 497 (16%) were outstanding by the due date of 31 May 2013. The total number of SMS members who were compelled to disclose their financial interest within the provincial departments during 2012/2013 financial year was 4 003. Out of this total, only 3 517 (88%) SMS members submitted their financial disclosure forms that were received by the PSC by 31 May 2013. Financial disclosure of 485 (12%) SMS members were outstanding by the due date of 31 May 2013.

The PSC found that only three provinces (Mpumalanga, Northern Cape and Western Cape) have complied with the Framework by recording a 100% submission rate by the due date of 31 May 2013. Despite significant improvement in the submission rate by the due date in the current reporting period, there are some of the departments both at national and provincial level that did not submit a single financial disclosure form to the PSC by the due date of 31 May 2013. This has drastically affected the overall submission rate that has been recorded nationally.

2. Submission of financial disclosures by Directors-General of National Departments
The study shows that the PSC received the financial disclosure forms of 34 Directors-General from national departments. The financial disclosure forms of seven (7) Directors-General from the Departments of International Relations & Cooperation; Justice & Constitutional Development; National Treasury; Science & Technology; South African Police Service; Independent Police Investigative Directorate and Transport were not submitted to the EAs by 30 April 2013 as required by the Framework. As a result, the afore-mentioned Directors-General did not comply with the Framework.

3. Observations made by the PSC during the compilation of the factsheet
The following observations were made when compiling the factsheet:

• There is unwillingness on the part of certain SMS members to declare their registrable interest as required by the Framework. To this end, a total of 1 497 financial disclosure forms are outstanding. The above-mentioned figure also includes SMS members who have been placed on suspension and those who are on sick leave.
• Some departments did not make concerted efforts to obtain completed financial disclosure forms from officials who were either on suspension or sick leave. Failure to submit financial disclosure form impact negatively on the integrity of the Framework. As a result it undermines the fight against corruption in the Public Service.

C. ACTIONS TAKEN BY THE EXECUTIVE AUTHORITIES WITH REGARD TO IDENTIFIED CASES OF POTENTIAL CONFLICTS OF INTEREST AND COMPLIANCE WITH THE FDF
The PSC found that during the period sampled in the study (2008/09, 2009/10 and 2010/11), out of twenty-five (25) national departments and seventy-five (75) provincial departments that were scrutinised, only twenty-nine (29) EAs complied with the requirement to report back to the PSC in terms of Regulation G.4 of the Public Service Regulation (PSR). The findings showed that almost all EAs who reported back to the PSC on actions taken were satisfied with the explanation provided by the affected employees. The explanations that were provided by the officials were that they did not disclose some of the companies that are registered in their names because their companies were dormant or deregistered by the CIPC. In some cases, reasons provided were that the officials resigned as Directors of the companies identified and the CIPC records were not updated.

Despite the PSC’s intervention, there is seems to have been little progress in the number of disciplinary actions taken by EAs against the perpetrators. Five (5) EAs had instituted disciplinary actions against the SMS members who failed to disclose their registrable interests i.e. one (1) EA of a national department and four (4) EAs of provincial departments. A total of 23 officials were found guilty of misconduct related to non-disclosure during the 2008/09, 2009/10 and 2010/11 financial years. At the provincial level, a total of 22 officials were found guilty of misconduct for not fully disclosing companies and properties whilst only one (1) official in a national department was found guilty of misconduct for non-submission of financial disclosure forms.

The following is a breakdown of sanctions that were issued against officials, who were charged and found guilty of misconduct during the 2008/09, 2009/10 and 2010/11 financial years:

• In the Free State Province, five (5) officials at the Department of Economic Development, Tourism & Environmental Affairs were issued with written warnings for failing to disclose companies in the 2009/10 financial year. One (1) official at the Provincial Treasury was issued with a written warning for failing to disclose a company and properties in the 2008/09 financial year; and
• In the North West Province, twelve (12) officials at the Department of Agriculture, Conservation & Rural Development were issued with written warnings for failing to disclose companies and properties in the 2009/10 financial year. Four (4) officials at the Department of Social Development, Women, Children & People with Disabilities were issued with a written warning for failing to disclose companies and properties in the 2009/10 financial year.
• There are instances where employees/managers submit their financial disclosure forms by 30 April to their respective EAs, but the EAs delayed the submission of such financial disclosure forms to the PSC.
• There are departments that have improved on the submission of the financial disclosure forms by the due date from 49% in 2008/2009 financial year to 84% in the 2012/2013 financial year. This is still not adequate because only 100% is expected from the departments with regard to the submission of the financial disclosure forms.

D. RECOMMENDATIONS
In order to enhance the effective management of the FDF, the PSC recommends the following:

• In compliance with Regulation H of Chapter 3 of the PSR, EAs must take appropriate disciplinary action against all officials who, without valid reasons, fail to submit their financial disclosure forms on time.
• Departments must devise some means to enable officials who are on leave or on suspension to complete and submit their financial disclosure forms.
• EAs must note and sign financial disclosure forms only after the required oath or affirmation has been administered by the Commissioner of Oath/Justice of the Peace.
• Departments must indicate the names of the officials who could not submit their financial disclosure forms due to suspension and/or long leave.
• Officials on sick leave must, unless if circumstances dictate otherwise have the forms delivered to them, preferably by a departmental official who is also a Commissioner of Oath, and be assisted with the completion and submission of the form.
• Portfolio Committees must closely monitor the status of compliance with the Framework by SMS members in the respective government departments and call defaulting EAs and employees to account.
• Portfolio Committees should assist in ensuring that recommendations made by the PSC are implemented.
• EAs must establish special units (Ethics Officers) within their departments to assist with the administration of the Financial Disclosure Framework
• Guidelines on minimum sanctions for specific offenses related to non-compliance with the Financial Disclosure Framework should be issued by the Minister for Public Service and Administration. The guidelines should make provision for minimum sentences to be imposed by departments on acts of misconduct.

E. CONCLUSION
There was poor compliance rate by the EAs to implement the PSC’s recommendations with respect to SMS members who did not disclose their registrable interests. The PSC also noted with concern that certain EAs did not take actions against the SMS members who failed to submit their financial disclosure forms and those who failed to make full disclosures of their registrable interests as required in terms of Chapter 3 H of the PSR of 2001 as amended and the Disciplinary Code of Procedures as contained in the SMS Handbook.

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