Gazetting of Business Interests of Employees Bill
It has long been recognised that the absence of restrictions on state employees doing business with the state is a key driver of corruption. State employees with an interest in companies that tender for goods and services have a clear conflict of interest, yet this has never been regulated.
In August 2008, the Auditor-General issued a performance audit of entities that are connected with government employees and do business with the state. The A-G found that between April 2005 and January 2007 more than R540 million worth of business was conducted between provincial governments and businesses owned or part-owned by provincial employees. At national level, between August 2007 and July 2008, 49 state employees were identified as directors of companies that do business with national departments to the tune of R35.7 million.
President Zuma acknowledged the problem in both the 2009 and 2010 State of the Nation addresses, but nothing has been done about it at national level.
When we assumed office in the Western Cape in May 2009, we began studying the options available to stop this practice in the provincial administration. The result is the draft legislation that I am presenting today.
The Draft Western Cape (Business Interests of Employees) Procurement Bill, gazetted this morning, introduces new rules that will restrict provincial government employees from doing business with the provincial government (including provincial public entities) and require every employee to disclose their business interests.
There is currently no restriction on the business interests of state employees in the Western Cape or anywhere else in the country. Only senior staff members (SMS) are required to disclose their business interests, but there are no restrictions on which companies they can have an interest in.
This legislation will change this. In terms of the Bill:
- Provincial government employees and their families will be prohibited from directly or indirectly holding more than 5% of shares, stock, membership or other interests in an entity that does business with the provincial government, unless in certain circumstances.
- Before the provincial government enters into any contract with an entity for the sale, lease or supply of goods and services, the entity must provide an affidavit disclosing whether or not it is owned or part-owned by employees of the Western Cape government.
- All provincial government employees will be required to disclose their business interests at prescribed intervals, in the same way that members of Cabinet already do so.
Once the legislation is passed, the Director-General will compile and maintain a database of all employees' business interests disclosed in terms of the legislation. All provincial government employees will be given three months to disclose. If employees fail to disclose their business interests, disciplinary action will be initiated against them.
Employees with a greater than 5% stake in a company currently doing business with the provincial government will be exempt from the legislation until the completion of the contract.
We believe this Bill is long overdue in the Western Cape and nationally. It will go some way to curb the corruption and cronyism that is spreading like a cancer in the public service. We hope that other provinces and the national government follow our lead in this regard.