Erasibo

A nation and a health system under extra pressure from a  quadruple health burden, requires extraordinary effort. South Africa has many of the essential ingredients in place  to save hundreds of thousands of lives –  will we act in time?

That is the opening statement on the cover of the Executive Summary of the “Health in South Africa” series released by one of the worlds leading medical journals; The Lancet. Contributors to this series include some of the most progressive South African health experts. The series does not make for happy reading.

Some of the major outcomes (our shortcomings)  of the series are diagrammed in the image below (click to view in full):

The series notes:

• what is in essence a systematic breakdown in the health provision structure in South Africa.
• that incompetence and political loyalty has been rewarded as opposed to the ability to deliver, and
• Unprofessional behaviour in state facilities through rudeness, uncaring and even physical assault

The authors of the series are supportive of:

• a back to basics approach to primary health care
• investment at the foundation of health care
• the proposed National Health Insurance

Below is the National Department of Healths Strategic Plan, worth viewing.

A recent Mail & Guardian investigation claims that almost half of all Director Generals in government have private business interests.

There is no law that prohibits them or any other government officials from having active private business interests. However let us reflect on the following:

• The recent election if anything has highlighted how the quality and pace of service delivery is not meeting citizens expectations. This begs the question, can those charged with driving transformation (and who are remunerated handsomely) afford the time to reflect on anything other than the mandates embedded in their job descriptions?
• Fraud and Corruption is eating away at our democratic state, it takes state resources away from those who need it the most and it creates a disharmonious environment in which communities are angered.
• The departments under the stewardship of these officials are not the best running organisations. Qualified Auditors General reports, failed project implementations, chronic underspending, maverick spending and disjointed policy implementations are just some of the aliments these officials have not cured in their departments, but we must trust they can manage both their private business interests and these complicated institutions of state in their stride?

On a promising note the new government does appear to moving on removing senior officials who are not operating as they should. In recent months Director Generals Njabulo Nduli (Forestry and Fisheries), Director General Pam Yako (Water Affairs) who apparently heavily escalated an IT project budget to Arivia,Kom and arts and culture’s acting deputy director-general Tale Motsepe.

Below is a press release from the Public Service Commission on this very issue dated 16th July 2009, the release is damning.

On the Public Service Commission Report: “Overview of the Implementation of the Financial Disclosure Framework: Financial Year 2007/2008”.
16 July 2009

A.  BACKGROUND

The predominant mode of service delivery in the public service is through private sector service providers and while at law nothing prohibits public officials from having private interests, the PSC, in order to minimize the risk of corruption developed a Financial Disclosure Framework which was made mandatory for all Senior Managers to abide by. This Framework requires all members of the Senior Management Service (SMS) in the Public Service to disclose all their registerable interests annually to their Executive Authorities, i.e., Ministers and MECs. The political heads of departments are in turn required to ensure the submission of the financial disclosure forms to the PSC exactly a month after the beginning of each financial year, i.e., by 31 May of each year.

However, since 1999/2000 when the Financial Disclosure Framework was introduced, compliance with it by many members of the SMS in the public service has been far from satisfactory. This in essence means that every financial year many senior managers fail to disclose their financial interests. Because of the mode of service delivery predominantly used by the public service, involving the outsourcing of the functions of the state with vast amounts of taxpayers’ money spent on this, the risk posed by this lack of commitment to a key instrument for inculcating financial probity and combating corruption cannot be overstated.

For example, for the first financial year (1999/2000) the PSC received 61% of disclosures. For the last three financial years i.e. 2004/2005, 2005/2006 and 2006/2007 there was a steady increase in the submission of the financial disclosure forms with a submission rate of 77%, 80% and 87% respectively. However, this improvement in the compliance rates has only been achieved after the due date. The inability to reach the 100% mark remains a serious indictment on the SMS members in the Public Service, and their Executive Authorities, because failure by even one public official can result in significant losses of taxpayers’ money channeled corruptly to private enrichment

As well as being responsible for the custody of the Financial Disclosure forms, the PSC now scrutinizes and verifies the information contained in these forms and periodically overviews the entire Framework to see if it is working as it was intended to. Key findings of the Scrutiny and Verification of a sample of forms for the Financial Year 2007/2008 and an Overview of the Framework as contained in the Report by the PSC show disturbing trends.

B.  KEY FINDINGS OF THE OVERVIEW OF THE IMPLEMENTATION OF THE FINANCIAL DISCLOSURE FRAMEWORK: FINANCIAL YEAR 2007/2008

1. Continued lack of commitment to instrument as indicated by persistent non compliance: The mandatory cut-off date for submission of the disclosure forms to the PSC is 31 May of each year. However for 2007/2008, the PSC only received 48% of the disclosure forms by the prescribed date. For the financial year 2006/2007 only 10% of disclosure forms were received by the due date. This breaks down as follows between the national and provincials departments:
   1. Only 38% of the forms of national departments and 59% of the forms of provincial departments were received by the PSC by the due date of 31 May, meaning that 2791 SMS members at national level and 1663 of the SMS members in the provinces did not submit their disclosure forms by the due date
   2. Of the thirty-seven (37) national departments, twenty (20) submitted their disclosure forms by the due date. Although this is a significant increase from the previous financial year (2006/2007) when the forms of only eight (8) national departments were received by the due date, of key concern to the PSC is that the departments which exhibit laggardly compliance by the nature of their service delivery mandates are those involved in big programmes and therefore having to issue massive tenders. The North West Province with 90% is comparatively the best performing province in terms of submitting the disclosure forms of their SMS members by the due date. The Free State with 29% is the worst performing province. The low level of compliance by the due date especially by the Free State and Gauteng (47%) raised serious concerns about their commitment, transparency and accountability.
   3. As at December 2008, 3188 disclosure forms (74%) of designated officials of national departments were lodged with the PSC.
   4. Only three national departments namely, the Departments of Arts and Culture, Correctional Service and Land Affairs had not by the end of December 2008 submitted any disclosure forms.
   5. Thus for 2008 only Six (6) national departments managed to submit all the disclosure forms of their SMS members by 31 May 2008 with an additional ten (10) national departments managing to submit all disclosure forms by 31 December 2008. A key concern for the PSC with the late conclusion and submissions of disclosure forms is that with the officials concerned there is no way of determining the risk of potential or actual conflict of interests and managing this in the intervening period between the prescribed deadline and when they eventually sign and submit their forms to the PSC.
   6. For the provincial departments, the overall submission rate as at 31 December 2008 was 89% which is significantly better than that of national departments which stood at 74%. Because the provincial level of government is responsible for the actual delivery of basic services, the interaction between the public and private sectors does tend to be more intense and with it potential conflicts of interests are more likely to occur. Given the risks associated with the interaction between the public and private sectors in terms of bribery and collusion, it is important that potential conflicts of interest be identified and addressed before actual conflicts of interest occur. The compliance rate at provincial level is therefore a cause for concern.
   • The North West (100%) and the Northern Cape (100%) are the two best performing provinces.
   • KwaZulu-Natal performed the worst (76%).
2. Unsatisfactory Disclosure by Directors-General and Deputy Directors-General:
   1. As at 31 December 2008 there were 105 officials designated as Directors-General at provincial and national departments of which 78 (74%) had submitted their disclosure forms.
   2. For the same period there were 419 officials designated as Deputy Directors-General at national and provincial departments of which 295 (70%) had submitted their financial disclosure forms.
   3. In terms of national departments there were 38 officials designated as Heads of Departments (HoDs) as at 31 December 2008. Only 29 submitted their financial disclosure forms to the PSC. This represents a submission rate of 79% by the HoDs.
   4. For the same period there were 236 officials at the level of Deputy Director-General attached to national departments. Of these officials, only 153 (65%) had submitted their disclosure forms to the PSC.
   5. As at 31 December 2008 there were 67 officials designated as Directors-General at provincial, level of which 49 (73%) had submitted their disclosure forms. For the same period there were 183 officials designated as Deputy Directors-General at provincial level of which 142 (78%) submitted financial disclosure forms.The low level of compliance by Directors-General and Deputy Directors-General at both national and provincial departments is of concern to the PSC. At this level better compliance is expected because these officials take the lead in decision-making within their departments. Moreover, the major government contracts are also signed at this level and therefore transparency and accountability with regard to the Financial Disclosure Framework is of utmost importance.
3. Repeat Offenders:
   1. The PSC found 249 senior managers to be repeat offenders who failed to submit their disclosure forms for two successive financial years.
   2. Only two provinces i.e. the North West and Northern Cape have no identified repeat offenders.
   3. At national level there were 179 senior managers who failed to submit their financial disclosureforms for two financial years in succession.
4. Potential or Actual Conflicts of Interest based on the assessment of the Financial Disclosures forms :A sample of thirty percent (30%) of the disclosure forms, totaling 2038 forms, received for the 2007/2008 financial year which included Limpopo, Western and Eastern Cape provincial departments was assessed for the purpose of identifying potential conflicts of interest. The PSC found as follows:
   1. 434 senior managers may have potential conflicts of interest between their private interests and their official duties. Although this represents 21% of senior managers that formed part of the sample, it is a very significant and real number.
   2. The highest number of potential conflicts of interest at provincial level was identified in the Limpopo Province at 121 officials
   3. The highest number at national level i.e., 20 was identified at the Department of Social Development.
   4. d. Of the Seven-hundred-and-sixty-nine (769) disclosure forms of ten (10) national departments scrutinized by the PSC, 151 or 19% of the sample may have a potential conflict of interest between their private interest and official responsibilities.

   That 434 out of 2038 senior managers (21%) who formed part of the sample may experience potential conflicts of interest if extrapolated to the entire SMS could mean that over 1700 managers in the Public Service (20%) could be experiencing potential conflicts of interest. This again underscores the importance of the Financial Disclosures Framework and the need for Executive Authorities to use the information provided through the financial disclosures to manage potential conflicts of interest and the risks associated therewith.

5. Potential Conflicts of Interest According to Category:
   1. Of the sample scrutinized, 341 Senior Managers have interests in private companies whose core businesses are closely related to the core mandates of their departments.
   2. Another 51 senior managers have directorships or shares in multiple companies raising concerns about the extent to which these officials can devote their full time and attention to the Public Service.
   3. The PSC could not conclusively identify whether a potential conflict of interest exists in respect of 32 of the senior managers that formed part of the sample due to the fact that insufficient information was available on the financial disclosure forms of certain senior managers, and that not enough information concerning the company was available from the CIPRO database.
6. Non-disclosure of Directorships/Partnerships in Private Companies and Close Corporations:
   1. The PSC found that 210 SMS members in the sample did not disclose their interests in some companies or closed corporations.
   2. A total of 112 senior managers from national departments and 98 senior managers from provincial departments did not disclose their interests.
   3. At national level 11 of these senior managers are employed by the Department of Science and Technology and 10 at the Department of Agriculture.
   4. At provincial level the highest number of such senior managers are employed by the Limpopo Province (43) followed by the Eastern Cape (34). The PSC’s scrutiny of the disclosure forms found that in many cases the companies that were not disclosed by the SMS members, actually poses a potential conflict of interest.
7. Scrutiny of properties:
   1. a. 182 SMS members did not disclose their properties. The registration dates of the properties were checked a nd it was found that registration occurred well before the date on which the disclosures were due.
   2. b. A total of 54 senior managers in the Limpopo Province did not disclose all of their properties.

C. RECOMMENDATIONS:

The PSC recommends the following to improve the compliance with the Financial Disclosure Framework:

1. Executive Authorities must prioritize this issue – The PSC has on numerous occasions advised and reminded Executive Authorities of the requirement that all senior managers in their departments must comply with the Framework by submitting the financial disclosures. It appears that such reminders are not followed up by Executive Authorities in all instances and members of the SMS may easily become complacent with regard to the submission of the disclosure forms.
2. Non-Compliant SMS Members Must be charged with misconduct - Chapter 3, Section H of the public Service Regulations clearly stipulates that any designated official who fails to disclose his/her financial interests, or willfully provides incorrect or misleading details, is guilty of misconduct. The PSC recommends that Executive Authorities charge transgressing Heads of Departments with misconduct and ensure that other members of the SMS are charged with misconduct for failing to disclose an interest by instructing their Heads of Departments to do so in terms of the Disciplinary Code and Procedures, as contained in the SMS Handbook.
3. Repeat offenders should be charged with misconduct and the Executive Authorities should obtain the outstanding forms of these repeat offenders and submit them to the PSC as soon as possible.
4. Dedicated Staff to Manage the Process of the Conclusion of Financial Disclosure Forms by Senior Managers must be appointed within departments: This will ensure that the forms are submitted timely to the PSC.
5. Disclosures of private companies and close corporations – Executive Authorities should ensure that members of the SMS are made aware that they need to disclose all companies, including dormant and non-profit making companies.
6. Updating information pertaining to companies on the CIPRO website - SMS members should take personal responsibility for their resignations from companies by following up and making sure that their details are removed and the CIPRO data base is accordingly updated.
7. Departments must put in place mechanisms for management of conflicts of interest as required to by the PFMA, National Treasury Regulations and Risk Management prescripts: At provincial level, departments should consider strategies to deal with persons who have been identified, through the disclosure of their financial interests, as having a potential interest by reassigning the duties of the official if this can be effected in the interest of the state. If this is not possible, a transfer to another component should be considered. If the reassignment 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.
8. Interaction by Portfolio Committees - 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.

CONCLUSION

The management of potential conflicts of interest forms an integral part in the Public Service’s desire to become integrity driven. The PSC is concerned that financial disclosure forms are not submitted timeously to the PSC. The timely submission of disclosures places the PSC in a position to identify potential conflicts of interest and inform the Executive Authorities timeously. In doing so, the PSC is enabled to assist Executive Authorities and senior managers in preventing a potential conflict of interest becoming an actual conflict of interest. The PSC has, through the scrutiny of the sample of financial disclosure identified 434 managers who may have potential conflicts of interest. Of concern is that some of these senior managers have already been reported to the NACH and allegations of corruption have been leveled against the relevant individuals.

If these potential conflicts of interest had been identified proactively, Executive Authorities would have been in a position to introduce measures to ensure that there are no actual conflicts of interest. It is therefore incumbent on the Executive Authorities to introduce measures for the effective management of conflicts of interest in their respective departments. The PSC trusts that the findings and recommendations contained in this report will assist departments and Executive Authorities to improve the management of the Financial Disclosure Framework and that a greater level of compliance to the Framework will be achieved.

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