Experts highlight gaps in legislation to clamp down on public servants doing business with the state
Experts call for stronger legislation to prevent public servants from doing business with the state, as new amendments fail to address all potential loopholes.
- The Portfolio Committee on Public Service and Administration is currently dealing with legislation to overhaul the public service.
- One of the key elements of the legislation is to curtail public servants from doing business with the state.
- But experts believe not enough is being done and there are still gaps.
As government looks to crack down on public servants doing business with the state, experts believe new legislation does not address employees, who may not be directors of companies receiving tenders, but nonetheless are the ultimate beneficiaries.
Parliament’s Portfolio Committee on Public Service and Administration has been tasked with amendments to the Public Administration Management Act of 2014, to overhaul the public service.
The amendments provide for the transfer and secondment of employees and provide clarification regarding the prohibition against employees conducting business with an organ of the state.
While the government’s intentions are clear, several organisations believe not enough is being done to prevent state employees from doing business with the state.
Clause 5 of the bill seeks to make amendments to clarify the definitions of words or expressions of “organ of state”, instead of state, and the definition of a director of a company.
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Three organisations, the Public Affairs Research Institute (PARI), Public Service Accountability Monitor, The Ethics Institute (TEI) & Corruption Watch, believe the section should be strengthened to better safeguard the public administration from corruption.
In motivating the reasons, the organisations said:
Section 8 does not adequately address situations where employees might not be directors of companies but are nonetheless the ultimate beneficiaries of such contracts. To close such gaps, information regarding beneficial owners of companies that do business with the state should also be taken into consideration. The amendment should be expanded to state that employees who are not only directors, but also beneficial owners are not allowed to do business with the state, and failure to comply with such provision constitutes a criminal offence and an act of misconduct.
Furthermore, PARI proposed closing existing gaps such as “silent partners” where public servants benefit indirectly from business although not registered as director of a company doing business with an organ of state.
“As part of harmonising the legislations, propose insertion that Section 8 be finalised with reference of Public Procurement Bill which disallow person related or spouse to any employee working for such government entity from making bids in procurement in the institution in which such relatives serve,” it said.
In April 2020, News24 reported that the Department of Public Service and Administration found 1 539 government employees were conducting business with the state, of which 1 111 were working at provincial and 428 at national departments.
The National Treasury started a process in 2017 to identify government employees doing business with the state.
In KwaZulu-Natal, employees at 13 provincial departments were possibly doing business with an organ of state.
The Western Cape Government proposed that the term “ex-officio” includes employees who are nominated to serve on boards of state-owned companies by Cabinet.
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“It is further recommended that all potential consequences of this clause be investigated; intended and unintended and that problematic unintended consequences are addressed,” it said.
In response to this proposal, the committee said there are no established unintended consequences of the “ex officio” status in the board of directors of public entities.
“The official represents the Executive Authority as the sole shareholder of Government. The Financial Disclosure Framework safeguards corrupt activity by such official,” the committee’s response read.
The National Education, Health and Allied Workers’ Union (Nehawu) rejected the notion of merely amending the act to prevent public servants from conducting business with state “without addressing concern or elements that give rise to corruption and malfeasance”.
Nehawu has more than 200 000 members across all sectors of the public service.
