Sisulu aims to stop civil servants doing business with state

Rhodes>Perspective>2013 Archive

Public service & administration minister Lindiwe Sisulu has published a draft law that aims to make it illegal for civil servants to be involved in companies that benefit from state tenders.

This new regime will include a 12-month cooling-off period for officials who have awarded tenders. It is supposed to stop officials manipulating tenders in favour of a company that they join once it has secured the states business.

Sisulus Public Administration & Management Bill (PAM) will apply in national, provincial and municipal government, which will make implementing it a vast and complex administrative task. Getting all civil servants to disclose their business interests is one thing; verifying these is quite another, especially considering that the law also requires officials to declare the business interests of their close family members.

Wives, partners and children wont be prohibited from doing business with the state but the idea is to pick up any conflicting interests in tender bids.

The success of Sisulus system will rest on disclosure and verification. Former national director of public prosecutions Menzi Simelane, who is now special adviser to Sisulu, says the strength of the system will lie in "governments ability to punish those who dont comply".

PAM proposes punishments that include a one-year jail sentence, fines and the cancellation of the tenders in question. PAM also proposes a new anticorruption bureau that will investigate non compliance. But, as the bill stands, the bureau cant investigate cases of its own accord. Heads of department or government institutions have to instruct it to do so. This could prove to be a weakness because it offers these chiefs an opportunity to protect civil servants.

But before Sisulu can worry about setting up systems to enforce her law, theres already simmering opposition to it in the state bureaucracy because she isnt simply trying to enforce whats already supposed to be prohibited, shes outlawing something thats currently perfectly legal, hugely lucrative and an easy way to corrupt the states procurement system.

The auditor-generals last state audit revealed that about R600m in state tenders was awarded to suppliers linked to the families or employees of the department that was awarding the tender. In 75% of these cases, the conflict of interest was not disclosed. This figure doesnt include officials who are employed by one department but do business with another.

The Special Investigating Unit (SIU) has also flagged how lucrative this game is. In a probe of the national department of health, the SIU found 9000 employees to be active company directors. While about 1000 of these do business with the department, 235 of them had benefited from health tenders worth R42,8m.

The department of basic education also revealed how more than 3000 of its employees had engaged in business with the state in the 2010/2011 and 2011/2012 financial years. They earned a combined sum of R152m. Of these employees, 2485 were teachers. In the Eastern Capes embattled education department, the public service commission found that 90% of the departments senior managers had outside business interests.

Eastern Cape premier Noxolo Kiviet is feeling the heat from what she admits is a groundswell of anger over this "insider trading". Kiviet declared war on this practice in August 2011 and promised to ban it. But her bid to do so has stalled in the face of opposition from civil servants who are also political powerbrokers in the province.

Rhodes Universitys Public Service Accountability & Monitor (PSAM) expects Sisulus bill will face similar opposition. PSAMs monitoring & advocacy programme head, Jay Kruuse, says: "The bill in its current form contains a range of encouraging improvements but its early days. I envisage a lot of opposition and delay in the adoption of the bill ."

DA chief whip in the Eastern Cape Bobby Stevenson has tried unsuccessfully to introduce a bill similar to PAM in the provincial legislature. He says: "Sisulus legislation will go to the heart of a culture thats gripped the ANC in this province, a culture that rewards friends, family and factions. Changing it cuts to the core of the ANCs ability to dispense patronage."

Parliaments public accounts committee (Scopa) chairman and leader of the African Peoples Convention, Themba Godi, says though there are questions about the states ability to implement this legislation, Sisulus bill is a "critical step forward". It will provide Scopa, parliament and government with a much firmer legal footing to act against officials.

But Godi makes the point that cracking down on the business interests of civil servants isnt enough. It must go hand in hand with a similar prohibition for elected representatives. Senior civil servants to whom the FM spoke agreed that it wouldnt be fair to ban civil servants from a practice that so many politicians also benefit from.

Politicians and their business interests arent included in PAM because they arent state employees. But they do have business interests. When President Jacob Zuma took office in 2009, the Institute of Security Studies revealed that 42% of his cabinet, including Zuma, were registered with the Companies & Intellectual Property Registration Office (Cipro) as having business interests in 184 companies and close corporations.

Politicians in provincial and municipal government are also benefiting from state contracts. For example, the AG reports for the past financial year show how the Free State provincial government awarded 50% of its contracts to politicians and their families.

Though finance minister Pravin Gordhan has promised to complement Sisulus ban with a clampdown on "politically exposed individuals", Zuma has made no bones about the fact that loyalty to the ANC pays off. He told guests at a dinner ahead of the ANCs 101st birthday celebration in January this year that their businesses would flourish and "everything you touch will multiply" in return for backing the governing party financially.

By: Troye Lund

Photo caption: Lindiwe Sisulu Will face opposition

Source: Financial Mail