Public Service Commission releases an Overview of the Implementation of the Financial Disclosure Framework: Financial Year 2015/2016

14 June 2017

1. BACKGROUND
   
   The Financial Disclosure Framework (the Framework) was introduced to the South African Public Service in 1999 as a necessary step to safeguard the confidence that the public bestows on the Public Service. Through this Framework, all members of the Senior Management Services (SMS) in the Public Service are required to disclose all their registrable interests annually to their Executive Authorities (EAs) by no later than 30 April of each year. The EAs are required to submit copies of those forms to the Public Service Commission (PSC) by no later than 31 May of that particular year.
   
   Accordingly, the PSC has compiled an Overview of the Implementation of the Financial Disclosure Framework for the 2015/2016 Financial Year. The Overview provides, amongst others, the extent to which SMS members and EAs complied with the requirements to submit the financial disclosure forms by the above-mentioned due dates; findings of the scrutiny that was conducted on the financial disclosure forms received for the 2015/2016 financial year and to point out the extent to which SMS members are involved in activities that can be construed as posing conflicts of interest; actions taken by EAs with regard to identified cases of potential conflicts of interest and non-compliance by SMS members with the Framework; and recommendations for the proper management of conflicts of interest in the Public Service.
   
   

2. KEY FINDINGS  

1. Submission of financial disclosure forms by national and provincial departments as at 31 May 2016

Table 1: Submission of financial disclosure forms by national and provincial departments for the 2015/2016 financial year as at 31 May 2016

NATIONAL DEPARTMENT/ PROVINCE	NO. OF DEPARTMENTS	NO. OF SMS MEMBERS	NO. OF FORMS SUBMITTED MANUALLY	NO. OF FORMS SUBMITTED VIA eDISCLOSURE	NO. OF FORMS OUTSTANDING	PERCENTAGE RECEIVED
National Departments	48	5983	523	5317	143	98%
Eastern Cape	13	706	11	670	25	96%
Free State	12	364	34	330	0	100%
Gauteng	14	803	1	799	3	99.6%
Kwazulu-Natal	14	616	0	616	0	100%
Limpopo	12	488	6	482	0	100%
Mpumalanga	12	313	2	247	64	80%
Northern Cape	12	263	0	263	0	100%
North West	12	318	0	317	1	99.7%
Western Cape	13	383	0	383	0	100%
OVERALL PROVINCIAL TOTAL	114	4254	54	4107	93	97.8%
COUNTRY TOTAL	162	10237	577	9424	236	98%

As illustrated in Table 1, the overall compliance rate by the due date in respect of the submission of financial disclosure forms by national and provincial departments was 98% in the 2015/2016 financial year. Furthermore, the PSC found that out of 10237 SMS members in national and provincial departments, a total of 10001 financial disclosure forms were submitted by the due date of 31 May 2016. The national departments submitted 5317 forms through eDisclosure and 523 were submitted manually. The number of forms submitted by provincial departments was 4107 submitted through eDisclosure and 54 were submitted manually by the due date. Five (5) Provinces namely, Free State, KwaZulu-Natal, Limpopo, Northern Cape and Western Cape achieved the required 100% submission rate by the due date.

The PSC has noted that some of the SMS members who did not submit their financial disclosure forms were on precautionary suspension during the disclosure period. This was despite the persistent insistence by the PSC that EAs must ensure that all SMS members including those that are on precautionary suspension or on leave must submit their financial disclosure forms as required by the Framework.

The Report reveals that the State Security Agency and Office of the Chief Justice are the only departments that did not submit a single financial disclosure form to the PSC by the due date of 31 May 2016. The PSC has noted that this is the second consecutive year that the State Security Agency failed to submit their financial disclosure forms by the stipulated due date. To this end, the State Security Agency is the only department that is regarded as a repeat offender, as it failed to submit financial disclosure forms by the due date for both 2014/2015 and 2015/2016 financial years. All SMS members in the Office of the Chief Justice complied with the requirement to disclose their financial interests to the EA by due date but the EA did not submit the copies of the forms to the PSC on time.



2. Submission of financial disclosure forms by Directors-General

The PSC has noted that the compliance rate by the due date of 31 May 2016 in respect of Directors-General (DGs) of national departments has improved tremendously in the 2015/2016 financial year. Non-compliance with the requirement to submit the financial disclosure forms on time was experienced in only three (3) departments. The DG of the Department of Justice and Constitutional Development submitted her financial disclosure form on 17 May 2016 to the EA, who released it to the PSC on 20 May 2016. The PSC has noted that the Acting DG of the Office of the Chief Justice submitted his financial disclosure form on time (15 April 2016) to the EA, but the EA only submitted the copy thereof to the PSC on 29 June 2016. The financial disclosure form of the DG of the State Security Agency was not submitted at all to the PSC. The DG’s post at the Department of Military Veterans was vacant as at the due date for the submission of financial disclosure forms. The relevant disclosure form was, therefore, not expected.



3. Findings relating to Non-disclosure of Registrable Interests and Conflicts of Interest

During the scrutiny process, the PSC established that some of the SMS members did not comply with the requirements to disclose all their registrable interests. In terms of the repealed Public Service Regulations of 2001, failure to disclose all financial interests was regarded as misconduct. In total, 828 SMS members (of which 20 are on the level of DG and HoD and 52 on DDG level) concealed their involvement in companies during the 2015/2016 financial year. Full disclosure of property ownership was lacking in respect of 297 SMS members of both national and provincial departments.

Of concern to the PSC is that during the 2015/2016 financial year (17%) of all SMS members in the Public Service were involved in activities that could be construed as posing potential conflicts of interest. The SMS members on Director level make the biggest number (1243) of this percentage. They are followed by Chief Directors (345) and Deputy Directors-General (117). Only seventeen (17) SMS members on the level of DG and HoD were found to be having potential conflicts of interest.



4. Findings relating to engagement in remunerative work outside the Public Service (RWOPS)

Performance of other remunerative work outside the normal employment in the Public Service is regulated by the Act. In terms of section 30(1) of the Act, public servants can only perform or engage themselves to perform such work with the written permission of the executive authority of the department. The PSC found during the scrutiny process that there are SMS members who engage in RWOPS. Some of these SMS members provided evidence of approval by EAs to engage in RWOPS and others did not. The EAs were, therefore, advised to consult with the SMS members concerned to determine if they engage themselves in RWOPS without approval; and if so, consider taking appropriate steps in terms of section 31 of the Act.

Table 2: Officials who engaged in RWOPS and amount of remuneration generated during the 2015/2016 financial year

NATIONAL DEPARTMENT/ PROVINCE	NO OF SMS MEMBERS WHO WERE ENGAGED IN RWOPS				TOTAL NUMBER OF OFFICIALS ENGAGED IN RWOPS	INCOME GENERATED FROM RWOPS
	DGs/HoDs	DDGs	CDs	Ds
National Departments	0	11 officials	29 officials	100 officials	140	R9 517 762.47
Gauteng	0	0	7 officials (R417 500)	19 officials (R427 240)	26	R844 740
Mpumalanga	1 official (R500 000)	0	2 officials (R60 000)	7 officials (R533 000)	10	R1 093 000
Northern Cape	0	0	1 official	6 officials	7	R68 000
North West	1 official (R480 000)	1 official (R50 000)	4 officials (R524 432)	13 officials (R2 277 074)	19	R3 353 106
Western Cape	0	1 official (R18 000)	2 officials (R370 000)	10 officials (R1 169519)	13	R1 557 519
OVERALL TOTAL BY PROVINCES	2	2	16	55	75	R 6 916 365
GRAND TOTAL	2	13	45	155	215	R16 434 127.47

As illustrated in table 2 above, 215 SMS members in both national and provincial departments were engaging themselves in RWOPS during the 2015/2016 financial year. Of this number, two (2) are on the level of DG and HoD in two (2) provinces. SMS members on Director level had the highest number (155) of SMS members who were found to be engaging themselves in RWOPS. The majority of these were found in national departments (100). The national departments also have the highest number of SMS members across the levels (140), who were found to be engaging in RWOPS.

The reported total amount of income generated from engaging in RWOPS during the 2015/2016 financial year was R16 434 127.47. This is a combined figure which was derived from calculating the amounts that were disclosed by SMS members in their financial disclosure forms. The SMS members in provincial departments generated R6 916 365 and those in national departments generated R9 517 762.47.



5. Findings relating to receipt of gifts from sources other than family members

The Code of Conduct for the Public Service prohibits public servants from receiving or accepting any gifts from any person in the cause and scope of their employment other than from a family member, to the cumulative value of R350.00 per year, unless approval has been obtained from the relevant EA. The PSC found that some of the SMS members have been receiving gifts, the value of which far exceeds the threshold set by the Code of Conduct. For instance, a total of 493 SMS members received gifts to the combined value of R6 339 431.07. The PSC is of the opinion that at the heart of the legislative provision referred to above is the need to ensure that gifts are not offered and accepted in a manner that contributes to the abuse of the position of authority which senior managers hold in the Public Service. In essence, the offering and acceptance of gifts should not serve as a springboard for improperly influencing officials in the performance of their public duties.

3. RECOMMENDATIONS

• EAs should conduct assessments within their respective departments to determine the extent to which the SMS members are engaging themselves in RWOPS. In cases where RWOPS is conducted without approval granted in terms of section 30 of the Act, EAs must take appropriate remedial steps as stipulated in terms of section 31 of the Act.
• Where permission to conduct RWOPS has been granted in terms of section 30 of Act, the EA must sensitize the official not to perform such work during official working hours; or use official equipment and/or state resources for such work.
• EAs should also assess the extent of receipts of gifts and whether the acceptance of gifts has been in accordance with Regulation 13(a) and (h) of the PSR of 2016. Where the regulatory provisions have been contravened, the necessary disciplinary actions must be taken in terms of section 16A(2) of the Act.
• EAs must ensure that all SMS members including those that are on precautionary suspension or on leave submit their financial disclosure forms as required by the Framework. This will ensure improvement in the submission rate of financial disclosure forms by the stipulated due date.

4. CONCLUSION
   

Issued by the Public Service Commission

For enquiries, please contact: Mr Humphrey Ramafoko; Tel: (012) 352 1196; Cell: 082 782 1730; Email: humphreyr@opsc.gov.za.

National Anti-Corruption Hotline: 0800 701 701