PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC SERVICE AND ADMINISTRATION AN UPDATE ON THE IMPLEMENTATION OF THE FINANCIAL DISCLOSURE FRAMEWORK FOR THE FINANCIAL YEAR 2010/2011 DATE: 21 SEPTEMBER 2011 VENUE: PARLIAMENT
OUTLINE OF THE PRESENTATION • INTRODUCTION • COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK • COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK: FINANCIAL YEAR 2010/2011 • COMPARATIVE ANALYSIS OVER THE LAST FOUR FINANCIAL YEARS • NUMBER OF FINANCIAL DISCLOSURE FORMS RECEIVED FOR THE FINANCIAL YEAR 2010/2011, AS AT 1 SEPTEMBER 2011 • NATIONAL DEPARTMENTS OUTSTANDING • RECOMMENDATIONS • CONCLUSION
INTRODUCTION • The Public Service Commission (PSC) has since the 1999/2000 financial year been responsible for the management of the Financial Disclosure Framework (FDF) for senior managers in the Public Service. The FDF was initially only applicable to Heads of Department but since 2000/2001 it has applied to all senior managers. • The objective of the FDF is to manage the potential conflicts that may exist between a senior manager’s private interests and public responsibilities in order to ensure that actual conflicts of interest do not occur. The PSC has since the inception of the Framework placed major focus on ensuring compliance with the submission of financial disclosures which is a regulatory requirement in terms of Chapter 3 of the Public Service Regulations. • All members of the Senior Management Service should submit their disclosure forms by 30 April to their Executive Authorities (EAs) and EAs should submit copies of the forms to the PSC by 31 May.
COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK • Since the implementation of the FDF, the PSC has consistently reminded EAs to submit the outstanding financial disclosures of the senior managers and advised them to institute disciplinary measures against defaulting senior managers. • Reminders were also on several occasions forwarded to EAs by the Minister for Public Service and Administration at the request of the PSC. • Despite such reminders, a 100% compliance rate has not yet been achieved and there has been no evidence of senior managers being charged with misconduct for failing to comply with the FDF. 4
COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK: FINANCIAL YEAR 2010/2011 • The PSC has indicated on numerous occasions that the submission rate by the due date is unsatisfactory. There was, however, a 20% increase in the 2010/11 financial year as compared with the 2009/2010 financial year and it is the highest submission rate in the past 4 years. The disclosures forms received by the due date of 31 May for the last four financial years are as follows: • 2007/2008 - 48% • 2008/2009 - 49% • 2009/2010 - 47% • 2010/2011 - 67% • The submission of the financial disclosure forms received by the due date of 31 May 2011 is reflected in the following Table. In this Table, it is shown that the PSC received 62% of the disclosure forms of national departments and 74% of the disclosure forms of provincial departments. Only the Western Cape Province submitted 100% by the due date. The country total received by the due date is 67%.
CURRENT UPDATE: COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK: FINANCIAL YEAR 2010/2011 SUBMISSION OF FINANCIAL DISCLOSURE FORMS FOR THE FINANCIAL YEAR 2010/2011 BY THE DUE DATE OF 31 MAY 2011
CURRENT UPDATE: COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK: FINANCIAL YEAR 2010/2011 • The following National Departments did not submit their disclosure forms to the PSC by the due date of 31 May 2011.
CURRENT UPDATE: COMPLIANCE WITH THE FINANCIAL DISCLOSURE FRAMEWORK: FINANCIAL YEAR 2010/2011 • During the financial year 2010/2011 the PSC took pro-active steps to remind both EAs and Senior Managers to submit the financial disclosure forms. These include: • Reminding EAs to submit the financial disclosures of the senior managers and recommending to them to institute disciplinary measures against defaulting senior managers. • Advertising the submission of the disclosure forms in the media. • Ensuring that a message be placed on the salary advices reminding Senior Managers to submit their disclosure forms. • Forwarding a message via the Short Message Service (SMS) to HoDs advising them to ensure that the disclosure forms of the Senior Managers in their respective departments are submitted to the PSC timeously. • Despite such reminders, a 100% compliance rate for the 2010/2011 financial year, was not achieved. 8
COMPARATIVE ANALYSIS OVER THE LAST FOUR FINANCIAL YEARS • The rate of compliance over the last four (4) financial years after the due date is shown in the following table: • It can be seen that the rate of compliance has stabilized around the 80% mark. However, the PSC is of the view that only a 100% compliance rate would be acceptable by the due date of 31 May. The responsibility of ensuring that disclosures are submitted to the PSC timeously rests with the respective Executive Authorities (EAs). • By 1 September 2011 the disclosure forms of 86% Senior Managers i.e. 84% from national departments and 89% from provincial departments were received. This is reflected in the following Table:
NUMBER OF FINANCIAL DISCLOSURE FORMS RECEIVED FOR THE FINANCIAL YEAR 2010/2011, AS AT 1 SEPTEMBER 2011.
NATIONAL DEPARTMENTS OUTSTANDING • The Financial Disclosure Forms of the following National Departments were still outstanding by 1 September 2011: • It would appear that the above-mentioned national departments did not take heed to the pro-active steps taken by the PSC. Therefore, strong action should be taken against the SMS members and EAs of these departments.
RECOMMENDATIONS • EAs should put effective systems in place to ensure submissions of the forms on time: Regulation C of Chapter 3 of the PSR clearly stipulates that SMS members must submit their financial disclosure forms to their Executive Authorities not later 30 April of each year. After the Executive Authority has signed the forms, copies of the disclosure should then be submitted to the PSC by not later 31 May of each year. To this end, it is recommended that EAs should put effective systems in place, such as appointing Ethics Officers, to enforce and monitor compliance with the Financial Disclosure Framework within their respective departments. Such systems should be geared towards the timely submission of financial disclosures by the stipulated due date. • EAs should ensure that the disclosure forms are submitted to the PSC on time: The scrutiny has also found instances where SMS members had submitted their disclosure forms on time to the EAs, but the latter had delayed in signing the forms and sending copies to the PSC by the due date. It is recommended, therefore, that EAs should prioritize the checking of disclosure forms by senior managers in their respective departments so as to meet the stipulated submission deadline. Parliament should consider taking action against EAs who fail to comply with the Financial Disclosure Framework by not submitting the Financial Disclosure Forms to the PSC by the stipulated due date, and those who fail to take the necessary disciplinary actions against transgressing senior managers within their respective departments.
RECOMMENDATIONS • Disciplinary action should be taken against transgressing HoDs and other senior managers: Failure to fully and honestly disclose the financial interests is misconduct. Therefore, EAs should ensure that disciplinary action is taken against transgressing officials for non-compliance with the Financial Disclosure Framework, as provided for by Regulation H of Chapter 3 of the PSR. Such officials are HoDs and other members of the SMS whose forms are submitted late and those who fail to submit at all. • Scrutiny of the forms should be conducted at departmental level: The PSC recommends that the management of conflicts of interest should take place at departmental level. In this regard, EAs should assess and scrutinize disclosure forms of SMS members within their respective departments. Depending on the outcome of such scrutiny, EAs should take appropriate actions and inform the PSC on how the identified conflicts of interest of the SMS members within their departments have been addressed. The Ethics Officers would be instrumental in the scrutiny of financial disclosure forms of their respective departments. HoDs and EAs, as the case may be should take step geared at ensuring that potential conflicts of interest do not become actual conflicts of interest.
CONCLUSION • The management of potential conflicts of interest forms an integral part in the Public Service’s initiatives to become integrity driven. Through the identification and management of potential conflicts of interest honest public servants are kept honest and professional ethics is promoted within the workplace. Compliance to the Framework should therefore not be seen purely as a mandatory requirement but as an ethical obligation of each and every senior manager. • Moreover, a disclosure framework should be regarded as part of a larger effort to regulate conflicts of interest situations 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 conflict 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.