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PRESENTED BY COMMISSIONER S NKOSI 14 JUNE 2017

OVERVIEW OF THE IMPLEMENTATION OF THE FINANCIAL DISCLOSURE FRAMEWORK FOR THE 2015/2016 FINANCIAL YEAR. PRESENTED BY COMMISSIONER S NKOSI 14 JUNE 2017. OUTLINE OF THE PRESENTATION. INTRODUCTION COMPLIANCE WITH THE REQUIREMENT TO SUBMIT FINANCIAL DISCLOSURE FORMS

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PRESENTED BY COMMISSIONER S NKOSI 14 JUNE 2017

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  1. OVERVIEW OF THE IMPLEMENTATION OF THE FINANCIAL DISCLOSURE FRAMEWORK FOR THE 2015/2016 FINANCIAL YEAR PRESENTED BY COMMISSIONER S NKOSI 14 JUNE 2017

  2. OUTLINE OF THE PRESENTATION • INTRODUCTION • COMPLIANCE WITH THE REQUIREMENT TO SUBMIT FINANCIAL DISCLOSURE FORMS • SCRUTINY OF THE FINANCIAL DISCLOSURE FORM • ACTIONS TAKEN BY EXECUTIVE AUTHORITIES WITH REGARD TO IDENTIFIED CASES OF CONFLICTS OF INTERESTS • CONCLUSION

  3. INTRODUCTION • The PSC has a constitutional mandate to promote the democratic values and principles enshrined in the Constitution of the Republic of South Africa, 1996, including the values and principles set out in section 195 of the Constitution, throughout the Public Service. • One of those principles is that a high standard of professional ethics must be promoted and maintained. • As part of promoting a high standard of professional ethics in the Public Service, the PSC manages the Financial Disclosure Framework (FDF). • Prior to 1 August 2016, the FDF was contained in Chapter 3 of the Public Service Regulations (PSR), 2001. • The PSR, 2001 were repealed by the PSR, 2016 with effect from 1 August 2016.

  4. INTRODUCTION (2) • In terms of the repealed PSR of 2001 all SMS members in the Public Service were required to disclose all their registrable interests annually to their EAs by no later than 30 April each year. • EAs were required to submit copies of those forms to the PSC by no later than 31 May of that particular year. • Any person who assumed duty as an SMS member (or a designated employee) after 1 April in a year was required to make such a disclosure within 30 days after assumption of duty in respect of the period of twelve (12) months preceding his/her assumption of duty. • The above provisions have been retained in the PSR, 2016

  5. COMPLIANCE WITH THE REQUIREMENT TO SUBMIT FINANCIAL DISCLOSURE FORMS BY 31 MAY 2016

  6. COMPLIANCE WITH THE REQUIREMENT TO SUBMIT FINANCIAL DISCLOSURE FORMS • Out of 10237 SMS members in national and provincial departments, a total of 10001 (98%) financial disclosure forms were submitted by the due date of 31 May 2016. • The national departments submitted 5317 (91%) forms through eDisclosureand 523(9%) were submitted manually. • The number of forms submitted by provincial departments was 4107 (99%) submitted through eDisclosure and 54(1%) were submitted manually by the due date. • Five (5) Provinces achieved the required 100% submission rate by the due date (FS, KZN, Limpopo, NC and WC)

  7. NATIONAL DEPARTMENTS THAT DID NOT ACHIEVE 100% SUBMISSION RATE BY THE DUE DATE • Thirteen (13) national departments did not achieve the required 100% submission rate by the due date. • EAs have been advised individually to consider taking disciplinary actions against the transgressors who failed to comply with the Framework.

  8. NATIONAL DEPARTMENTS THAT DID NOT ACHIEVE 100% SUBMISSION RATE BY THE DUE DATE (2)

  9. *Explanation regarding State Security Agency • The State Security Agency (SSA) informed the PSC that - • they are regulated by the Intelligence Services Act, 65 of 2002(ISA); • they implement the Public Service prescripts for consistency, but only to the extent that the prescripts do not contradict the ISA. • they have incorporated Chapter 2 of the PSR, 2016 into their own policies. As a result thereof, all SSA members disclose their financial interests by the 30 April each year, to the Minister of State Security. • The financial disclosure forms are checked by the Inspector-General for possible conflicts of interests. • The identity of the SSA members is a security issue and, therefore, cannot be released to anybody outside the confines of the SSA. • In view of the above, it is not desirable for the financial disclosure forms of members of the SSA to be submitted to the PSC along with those of the rest of the SMS members in the Public Service.

  10. SCRUTINY OF THE FINANCIAL DISCLOSURE FORMS • In terms of the PSR, the PSC must assess compliance with the requirement to disclose all financial interests and also to establish whether the involvement of SMS members in any activities of the companies could lead to conflicts of interest. • The scrutiny revealed that there are SMS members who did not disclose all their registrable interests, and those whose financial interests could be construed as posing potential conflicts of interest. • This assertion is based on the likelihood that these SMS members could use state resources to further their private interests. • The PSC, therefore, advised EAs to consult with the SMS members concerned to discuss the steps to remove the conflicts of interest.

  11. SCRUTINY OF THE FINANCIAL DISCLOSURE FORMS(2) • EAs were further advised that in instances where the affected SMS members fail to take appropriate steps to remove the conflicts of interests after such consultation has taken place, disciplinary action should be taken against the officials concerned. • In previous years, the PSC consulted with selected SMS members within departments, and the PSC was satisfied with the explanations given regarding their involvement in companies. • The PSC advised EAs to ensure that the involvement of these SMS members in the companies is closely and tightly monitored so that it does not lead to conflicts of interest. • EAs were also advised that should it transpire that such involvement poses potential conflicts of interest, appropriate actions should be taken.

  12. FINDINGS RELATING TO NON- DISCLOSURE OF REGISTRABLE INTERESTS • 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. • Failure to disclose all financial interests is regarded as misconduct. • The PSC advised EAs to consider taking appropriate disciplinary action against the official who did not comply with the Framework, in terms of the Disciplinary Code and Procedures of the SMS Handbook. • A total of 827 SMS members failed to disclose their involvement in companies during the 2015/2016 financial year. • 19 are on the level of DG and HoD and 52 on DDG level. • Full disclosure of property ownership was lacking in respect of 297 SMS members of both national and provincial departments.

  13. FINDINGS RELATING TO NON- DISCLOSURE OF REGISTRABLE INTERESTS (2)

  14. IDENTIFICATION OF CONFLICTS OF INTEREST • The scrutiny of the financial disclosure forms revealed no cases of actual conflicts of interests. • Actual conflicts of interest arises in instances of direct clashes between the private interests of an individual and their official responsibilities as public servants. For example, where the SMS members’ private-capacity interests could influence them to improperly discharge their official duties and responsibilities. • Cases of potential conflicts of interest were identified in almost all the departments whose financial disclosure forms were scrutinised. • For example, where there is a likelihood that an official could use State resources to further their private interests. • EAs were advised to consult with the officials concerned to discuss steps to remove the conflicts of interests. Should officials fail to take appropriate steps to remove the conflicts of interests after such consultation had taken place, the EAs must, cause disciplinary action to be taken against the officials concerned.

  15. IDENTIFICATION OF CASES OF POTENTIAL CONFLICTS OF INTEREST IN RESPECT OF THE 2015/2016 FINANCIAL YEAR: OVERALL FINDINGS

  16. IDENTIFICATION OF CASES OF POTENTIAL CONFLICTS OF INTEREST IN RESPECT OF THE 2015/2016 FINANCIAL YEAR: OVERALL FINDINGS(2) • 17% of all SMS members in the Public Service were involved in activities that could be construed as posing potential conflicts of interest. • 17 SMS members on the level of DG and HoD were found to be having potential conflicts of interest. • The Limpopo Province has the highest percentage of SMS members involved in activities that could be construed as potential conflicts of interests (42%), while the Western Cape is the only Province where no instances of potential conflicts of interest were found. • Other provinces with the high prevalence of potential conflicts of interest are – • North West (34%) • Northern Cape (33%) • Gauteng (25%) and • Eastern Cape (21%)

  17. OFFICIALS WHO ENGAGED IN RWOPS AND AMOUNT OF REMUNERATION GENERATED • The performance of the remunerative work outside the normal employment in the Public Service is regulated by the Public Service Act. It provides that public servants can perform or engage themselves to perform such work with the prior written permission of the EA 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. • EAs were advised to consult with those SMS members who did not provide evidence of approval to determine if such approval was granted; and if not, to consider taking appropriate steps. • Where the permission has been granted, EAs were advised to sensitize the SMS members not to perform RWOPS during official working hours; and not to use State equipment and/or resources for such work.

  18. OFFICIALS WHO ENGAGED IN RWOPS AND AMOUNT OF REMUNERATION GENERATED (2) • EAs were further advised to sensitize the SMS members of the provisions of the PSR of 2016, which, among others, forbids officials to conduct business with any organ of state. • 215 SMS members in both national and provincial departments were engaged in RWOPS during the 2015/2016 financial year. Out of this total, two (2) are on the level of HoD in two (2) provinces. • The highest number of the SMS members who were found to be engaging themselves in RWOPS were those on Director level (155). The majority of these were found in national departments (100). • The reported total 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. • SMS members in provincial departments generated R6 916 365 and those in national departments generated R9 517 762.47.

  19. SMS MEMBERS WHO RECEIVED GIFTS AND SPONSORSHIPS 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. This provision should be read with Section 4 of the Prevention and Combating of Corrupt Activities Act, 2004, which provides for offences of corrupt activities relating to public officers. • At the heart of the 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.

  20. SMS MEMBERS WHO RECEIVED GIFTS AND SPONSORSHIPS FROM SOURCES OTHER THAN FAMILY MEMBERS (2) • Some 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. • SMS members in national departments received gifts to the total value of R4 930 383.56. • SMS members in provincial departments received gifts to the total value ofR1 409 047.51. • The situation in provincial departments is disconcerting considering the levels of SMS members who received gifts and the values thereof. Particularly in KwaZulu-Natal, where three (3) SMS members on the level of HoD received gifts to the combined value of R255 900. • The highest concentration of SMS members who received gifts during the 2015/2016 financial year was at Director level (280).

  21. ACTIONS TAKEN BY EXECUTIVE AUTHORITIES WITH REGARD TO IDENTIFIED CASES OF CONFLICTS OF INTERESTS • EAs were requested to revert to the PSC within 30 days of receipt of the letters with an indication whether any steps were taken regarding the PSC’s findings. • At the time of compiling its report the PSC had received feedback from six (6) EAs of national departments regarding the actions taken emanating from the findings made when scrutinizing the financial disclosure forms. • Two (2) EAs in national departments and twenty-seven (27) in provincial departments were satisfied with the explanation provided by SMS members regarding their involvement in private business entities. In view thereof, no actions were taken against the SMS members.

  22. ACTIONS TAKEN BY EXECUTIVE AUTHORITIES WITH REGARD TO IDENTIFIED CASES OF CONFLICTS OF INTERESTS (2) • Other EAs in four (4) national departments and ten (10) in provincial departments sensitised the affected SMS members of their duty to avoid conflicts of interest and to always disclose registrable interests. • Two (2) EAs in national departments and eight (8) in provincial departments took disciplinary action by issuing written warnings to SMS members who did not fully disclose their registrable interests. • Forty-nine (49) EAs of provincial departments did not provide any feedback to the PSC and this is worrying.

  23. RECOMMENDATIONS • EAs should conduct assessments 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 the PSR of 2016. Where the regulatory provisions have been contravened, the necessary disciplinary actions must be taken. • EAs must ensure that all SMS members including those that are on precautionary suspension or on leave submit their financial disclosure forms. This will ensure improvement in the submission rate of financial disclosure forms by the stipulated due date.

  24. CONCLUSION • The PSC has noted that it is difficult for the departments to obtain financial disclosure forms from officials who have been put on suspension. Often these officials are barred form entering the premises of the departments for the duration of the suspension periods. For security reasons, the eDisclosure system is only accessible on Government network. • Despite the difficulties in obtaining forms from suspended officials, EAs are encouraged to do everything possible to get these officials to submit their financial disclosure forms. • There has been a significant improvement in the submission of financial disclosure forms by the due date. • There are still instances where designated officials submit their financial disclosure forms on time to their respective EAs, but EAs delay in submitting the forms to the PSC. • The PSC cannot overemphasise the fact that if some departments can achieve a 100% compliance rate by the due date, then it is possible for all provincial and national departments to do the same.

  25. CONCLUSION (2) • Despite the PSC’s interventions, there seems to have been little progress regarding the feedback provided to the PSC by the EAs. • The obligation to submit the financial disclosure forms to the PSC rests with EAs. The PSC is, therefore, of the opinion that the National Assembly and Provincial Legislatures should intervene and assist the PSC in ensuring that EAs comply with the requirements of the Framework. • Failure to fully implement the Framework undermines the promotion of professional ethics. • The Framework should be regarded as part of a larger effort to regulate conflicts of interest in the Public Service. While it is a crucial tool for preventing and controlling abuse of office by public servants, it cannot deal with the full range of conflicts of interest situations that emerge at departmental level. However, the Framework has assisted in raising awareness among public servants for the need to be transparent and accountable in the execution of their official duties.

  26. CONCLUSION (3) • The management of conflicts of interest forms an integral part in the Public Service’s initiatives to become integrity and ethically driven. Through the identification and management of conflicts of interest honest public servants are kept honest and integrity 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 public servant, especially at SMS level.

  27. THANK YOU!

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