Transcript Presentation to the CDW cluster by Mr Themba Mthethwa, CEO in

Public Protectors role
– Service delivery
failures due to bad
practices
MR T P MTHETHWA
CHIEF EXECUTIVE OFFICER
PUBLIC PROTECTOR SA
IMFO CONFERENCE
2 OCTOBER 2013
1
“The
state came into
existence for the sake of
mere life, but continued
for the sake of good life.“
Aristotle
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Outline of Presentation
1.
2.
3.
4.
Introduction
Qualities of a good government
National perceptions on Local Government “bad practices”
AG Consolidated Local Government audit Overview and root causes 2010/11
5. Major reasons for “bad practices”
6. The impact affecting both public and private sectors
7. Specific integrity framework and strategy for local government
8. Challenges
9. Role of the Public Protector: Strengthening Constitutional Democracy,
Constitutional mandate and key mandate areas
10. Typical violations investigated by PP in respect of Local Government
11. Case Studies
a) Ga-Magara local municipality
b) Nala Municipality
c) Dipaleseng Municipality
d) Ehlanzeni District Municipality
12. Embedding a compliance culture: Top down strategy
13. Leveraging of existing controls
14. Talk the Talk, walk the walk
15. We need awareness, intolerance for bad governance and fearless
reporting
16. Conclusion
Introduction
• “Even the most benevolent of governments are made up of people with all
the propensities for human failings. The rule of law as we understand it
consists in the set of conventions and arrangements that ensure that it is
not left to the whims of individual rulers to decide on what is good for the
populace. The administrative conduct of government and authorities are
subject to scrutiny of independent organs. This is an essential element of
good governance that we have sought to have built into our new
constitutional order. (Nelson Mandela)
• An essential part of that constitutional architecture is those
state institutions supporting constitutional democracy.
Amongst those are the Public Protector, the Human Rights
Commission, the Auditor General, the Independent Electoral
Commission, the Commission on Gender Equality, the
Constitutional Court and others.”
•
Qualities of a good Government
• It is a government that is democratically organised within a
democratic culture and with efficient administrative
organisations, plus the right policies, particularly in the
economic sphere.
• Governance is the centre of democracy in South Africa, driven
by constant transformation and continuity
• Transformation of Democracy into the Constitutional promise
of a better life for all South Africans, requires governance that is
dependent on mechanisms, processes and institutions through
which citizens and groups can articulate their interests, exercise
their legal rights, meet their obligations, mediate their
differences and a develop tolerance to accept the things that
we cannot change.
5
National perceptions on Local Government
“bad practices”
2009 Good Governance Survey Consolidated Report (Nkangala DM)
• nepotism most common form of corruption(73.2%)
– Other forms of corruption include tender irregularities
– Maladministration and signing of cheques without appropriate
controls
– mal-administration or misuse of council property
• 50% believe that cases of corruption go unreported - lack of faith in the
municipalities’ ability and willingness to act on reports of corruption
• 44.1% of members cited fear of reprisals as reason for not reporting
• 48.4% of the members believe that there are no consequences for those
convicted of corruption
• Only 37% of the members believe that councillors are committed to
improving the quality of life of the residents – 47, 2% believe put party
interests before the interests of the community. 53.9% of the members
hold the view that councillors abuse their positions for personal gain
AG Consolidated Local Government audit
Overview -2011/12
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Only 9 local municipalities and 8 municipal entities received clean audit reports.
Audit outcomes regressed in the Eastern Cape, KwaZulu-Natal, Limpopo and
Mpumalanga, but improved in the Free State.
94% per cent of auditees had findings on material non-compliance with laws and
regulations.
94 auditees (30%) (2010-11: 82 [25%]) did not provide sufficient, appropriate audit
evidence that awards had been made in accordance with the requirements of SCM
legislation
Contracts (with a value of at least R118 million) awarded to employees, councillors or
other state officials. as well as uncompetitive or unfair procurement processes and
inadequate contract management.
Unauthorised expenditure of R9 788 million was incurred by 181 municipalities
(70%) -nearly double than in the previous financial year (R4 937 million), while the
number of municipalities increased by 28 (18%).
Irregular expenditure of R9 824 million was incurred by 266 auditees (84%). This
amount increased by R2 874 million (41%)
Fruitless and wasteful expenditure of R568 million was incurred by 202 auditees
(64%). More than double (R320 million) from the previous year, while the number of
auditees increased by 49 (32%).
Unfair or uncompetitive procurement processes were followed at 75 %of the
auditees (up from 61%)
AG Consolidated Local Government audit
outcomes -2011/12: Root causes
• Slow response by the political leadership to poor audit findings had a
negative impact at 76% of the auditees (83% of municipalities and 49% of
municipal entities)- significant increase from the 57% in the previous year.
• Vacant key positions and key officials lacking appropriate competencies at
73% (up from 70%) of the auditees (76% of the municipalities and 58% of
the municipal entities).
• The ineffective use of consultants -. 75% of the auditees that had material
misstatements in their submitted financial statements were assisted by
consultants at an estimated R378 million
• At least 71% of the auditees showed signs of a general lack of consequences
for poor performance – perception that such performance and its results
are acceptable and tolerated.
• 164 municipalities (64%) did not record any allegations of financial
misconduct (60%) did not record any allegations of misconduct in their SCM
processes. 155 municipalities (60%) did not take the necessary steps to
recover or approve and certify unauthorised, irregular as well as fruitless
and wasteful expenditure
Major reasons for “bad practices”
• The Auditor-General’s report has identified a lack of controls,
mismanagement and lack of governance principle as the key
reasons for the state of despair in municipalities.
• Other reasons include• Override of internal Controls
• The improper political and administrative interface
• Collusion b/w Employees and 3rd Parties
• Poor Internal Controls
• Lack of Accountability/ Weak accountability frameworks
• Poor physical security
• Poor ethical culture and poor values
• Poor hiring practice (Filling of vacant positions, nepotism,
Cronyism
• Weak national and provincial oversight of local
government
The impact affecting both public and private
sectors
• Lost revenue from, and high expenditure as a result
of corruption regarding tax and custom levies,
licensing fees, traffic fines and fronting on state
contracts.
• Reduction in productive investment and growth.
Widespread corruption provides a poor environment
that does not attract foreign investment.
• Costs to the public and the poor - diversion of
resources from their intended purposes
• Loss of confidence in public institutions: erodes
stability and trust and it damages the ethos of
democratic government- a loss in confidence in
public institutions - sometimes leading to violent
protests
•
Source: Corruption at the local government level: Time to crack the whip by Nontando Guwa-Ngamlana
Specific integrity framework and strategy for local
government:
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Policy and regulatory framework
– Municipal Finance Management Act, 2003
– The Constitution – sections 53, 152, 195 Chapt 3 & 7
– Local Government: Municipal Structures Act, 1998
– Local Government: Municipal Systems Act, 2000
– Local Government: Municipal Demarcation Act, 1998
– Codes of Conduct for Councillors and Municipal Employees
• Investment of significant resources
– The Special Investigation Unit (SIU), Asset Forfeiture Unit (AFU), Scorpions, Specialised
Commercial Crimes Unit, The Anti-corruption Coordinating Committee (ACCC), AuditorGeneral, Public Protector, New Anti-Corruption Bureau, Well functioning criminal justice
system.
• Local Govt Anti-corruption strategy
– Focus on the Organisation( Effective implementation of Codes of Conduct, systems, policies
and procedures, sound internal controls, risk assessment and management, Internal and
External Audit)
– Focus on Employees (Vetting, Induction Programmes, Obligatory Leave Periods, Exit
Procedures, Control Assets)
– Focus on other Stakeholders
– Enforcement (Reporting and monitoring of allegations of unethical conduct, fraud and
corruption, Whistle-blowing)
– Implementation (Ongoing maintenance and review, Ensuring a coordinated implementation
effort, Raising awareness on good governance
Challenges
• Non Reporting/ Ineffective implementation of the Protected
Disclosures Act
• Limited implementation and adherence to the Codes of
Conduct
• Non-compliance with the Financial Disclosure Framework
• Non-compliance with the Minimum Anti- corruption Capacity
Requirements
• Supply chain management prescripts are not adhered to
• Weak enforcement and inconsistent application of disciplinary
measures
• Resignation and transfer before disciplinary processes
finalised
Source: Public Sector Integrity Management Framework
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Role of the Public Protector: Strengthening Constitutional
Democracy
• The Public Protector represents an evolution of a modern
democratic oversight institution -moved away from a “mere
complaints department” to an “architect of good governance.”
• In terms of its mandate to strengthen constitutional democracy
the Public Protector has a reactive and a proactive mandate
regarding ensuring that state affairs are conducted with
integrity and general good governance.
- Investigates on the basis of a specific complaint regarding
service failure and conduct failure
- Has the power to conduct own initiative investigations
- May conduct systemic investigations, resolve PAIA disputes
- Investigate and resolve allegations of improper or dishonest
acts or omissions or offences ito Prevention and Combating of
Corrupt Activities Act
The Public Protector is part of the broader National
Integrity Framework
• The Public Protector South is national Ombudsman like institution , established under section 181
of the Constitution, which forms part of the national integrity framework.
• Part of a network of oversight and accountability bodies that include the Auditor-General, Public
Service Commission, the Judiciary,
Financial Intelligence Centre, Legislature,
media and society.
•Important role in enforcing Democratic
values of good governance, the Rule of Law
and quality of life.
•Swedish origins (202 years)with national
resonance with traditional institutions
such as the Venda Makhadzi (see cover page).
Constitutional Mandate
• Established under chapter 9 of the Constitution, the Public Protector has
the power under section 182 of the Constitution to strengthen and
support constitutional democracy by:
– investigating any conduct in state affairs, or in the public
administration in any sphere of government, that is alleged or
suspected to be improper or to result in any impropriety or prejudice;
– to report on that conduct; and
– to take appropriate remedial action.
• Mandate covers all organs of state at national, provincial and local levels,
including local government and extends to state owned enterprises,
statutory bodies and public institutions. Court decisions are excluded.
• Section 182(4) enjoins the Public Protector to be accessible to all persons
and communities
• Nationals and non-nationals may approach. No need for direct
prejudice/injustice>
Six(6) Key Mandate Areas
The Constitution anticipates mandate expansion through legislation, and
legislation passed since establishment 15 years ago has resulted in the Public
Protector being a multiple mandate agency with the following 6 key mandate
areas:
• Maladministration and appropriate resolution of dispute the Public
Protector Act 23 of 1994(PPA). The maladministration jurisdiction
transcends the classical public complaints investigation and includes
investigating without a complaint and redressing public wrongs(Core);
• Enforcement of Executive ethics under by the Executive Members' Ethics
Act of 1998(EMEA) and the Executive Ethics Code (Exclusive):
• Anti-corruption as conferred by the Prevention and Combating of Corrupt
Activities Act 12 of 2004 (PCCAA) read with the PPA(Shared);
• Whistle-blower protection under the Protected Disclosures Act 26 of 2000.
(Shared with the Auditor General and to be named others;
• Regulation of information under the Promotion of Access to Information
Act 2 of 2000;(PAIA) and
• Review of decisions of the Home Builders Registration Council under the
Housing Protection Measures Act 95 of 1998.
OTHER MANDATE AREAS
Transversal investigative powers acknowledged in sector specific
legislation, including the following:
• Promotion of Equality and Prevention of Unfair Discrimination Act 4 of
2000;
• National Energy Act 40 of 2004;
• Special Investigation Units and Special Tribunals Act 74 of 1996;
• National Environmental Management Act 108 of 1999;
• Gauteng Petitions Act.
Non-investigative functions conferred by legislation such as:
• Public Finance Management Act 1 of 1999;
• Lotteries Act 57 of 1997;
• National archives and Record Service Act 43 of 1996; and
• Electoral Commission Act 51 of 1996.
•
Typical violations investigated by PP in respect of Local
Government
• Over 1000 cases investigated each year with over 180 cases relating to
allegations of unethical conduct, financial mismanagement, abuse of
power or corruption in Municipalities under PPA, PCCAA and PDA.
• Key issues involve corruption, abuse of power and abuse of resources in
procurement management, allocation of social housing, licencing and
traffic regulation, employment opportunities, including Extended Public
Work Programmes(EPWP), theft of electricity and municipal billing
malpractices as well as enforcement of by-laws
• Systemic issues -alleged maladministration in the delivery of RDP housing,
Billing in JHB
The South African government has
invested over ZAR60bn (7,1bn USD) of
public funds into the provision of an
estimated 2,8m subsidised housing
units for low-income beneficiaries. A
large number of the cases reported
involve the fraudulent allocation of
these subsidised houses
KIND OF CASES UNDER INVESTIGATION BY THE PUBLIC
PROTECTOR
Specific allegations typically involve:
a) Bribery,
b) Fraud;
c) Abuse of power;
d) Conflict of interest;
e) Corruption;
f) Favouritism
g) Nepotism
Case Studies: Ga-Magara local municipality
• Public protector made damning findings
• against Ga-Magara local municipality ,
• which has been rocked by a series of
• community protests led to schools closing for almost
six months, costing learners a year’s education.
• Systemic governance failure at the municipality and
systemic violations of the law and policies.
• PP found many of the community’s grievances were
valid - caused by failed leadership on a number of levels
• Municipality failed to deliver on roads, housing projects and electricity,
and confirmed a catalogue of governance failures against the now late
mayor and senior leadership in the municipality.
• Findings include R46-million in irregular expenditure over the past two
financial years.
• This includes R16,000 spent on alcohol for employees and R25,000 on
calendars with spelling errors.
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Case Studies: “Pipes to nowhere”: Nala Municipality
• PP found that a R70 million flush toilet system was
not connected even though the contractor had been
Paid - fruitless, wasteful expenditure, and financial
misconduct
• a bucket system supposed to work in its
place was dysfunctional, leading to sewage being
spilled “all over the place”, which was against the
right to healthy and safe services;
• there were unfinished houses in Maranatha,
• the Mabana School had a sewage spillage problem,
• a report by KPMG detailing problems in the
municipality was not tabled in time
• there was “manipulation of supply chain processes”
and “abuse of process”;
• poor communication between the mayor and municipality culminated in
protests;
• a sewage plant was incomplete and non-operational because of
maladministration;
• Most of the findings were violations of the Municipal Finance Management
Act and the Constitution.
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“A GLIMMER OF HOPE”
THE INTERVENTION AT DIPALESENG
• Poor service delivery and governance
by Dipaleseng Municipality in the
Mpumalanga
Province,
approximately 70 kilometers from
Johannesburg, were the cause of
several public protests in 2009.
• It appeared that the lack of service
delivery related directly to poor
governance and integrity failures.
• Issues such as the procurement of
goods and services, improper
conduct by municipal officials and
Councillors, corruption and theft
were prominent causes for concern.
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THE INTERVENTION AT DIPALESENG
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The intervention by the Public Protector at the Municipality resulted in several of
the complaints, such as a lack of housing and poor workmanship being addressed.
Ongoing concerns:
Most roads in the town are lattice works of potholed tar.
Rubbish removal is inadequate.
There are frequent dips in the electricity supply because the town has inadequate
transformer capacity;
Municipal services bills are often not sent, and tariffs seem to be set on an
arbitrary basis
The municipal fire service has a staff of three, with three fire trucks — but it does
not operate after normal working hours.
Water has often not been available for days at a time.
Karan Beef's the largest abattoir
in the southern hemisphere,
slaughters more than 2 000 cattle a day.
The company has tarred the road to its
Factory, installed a generator and set up a
water purification plant. But it still draws its
water from the municipality and when water is not available it cannot slaughter.
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Dipaliseng Case study: Things went wrong from the Top
down
• MEC for Cooperative Governance and Traditional Affairs of the
Mpumalanga Provincial Government did not in terms of section 105 of the
Municipal Systems Act, assess the support needed by the Municipality
• The Municipal Manager, as accounting officer of the Municipality failed his
responsibilities in terms of the MFMA, for ensuring the effective collection
of revenue for the Municipality through effective credit control and debt
collection
• Some of the key officials involved in the process had to be charged with
financial misconduct.
• Officials of the Municipality issued fraudulent credit notes to write off
accounts in return for bribes and that accounts were closed after which
payments were “taken for personal use.”
• Accounting officer is required to take serious action against officials in
respect of financial misconduct, including reporting the matter to the
SAPS, in appropriate circumstances. Serious charges were brought against
the three officials involved. However, the Municipality was satisfied to
accept guilty pleas on a lesser alternative charge and to issue written
warnings as a sanction.
. Dipaliseng case study: Existing controls were ignored
• Budget and Treasury Office of the Municipality was deficient
• Credit Control Policy of the Municipality was not complied with
in respect of the recovering of debts and revenue.
• Requirements of the Municipal Systems Act were not met in
respect of the preparation and implementation of its Integrated
Development Plan
• Resource and capacity constraints that hampered complaince,
were not addressed
• Non compliance with Supply Chain Policies –delays in the
conclusion of the sale of land, were not dealt with
• The Municipal Manager failed to report his knowledge and/or
suspicion of credit note fraud amounting to approximately R 1,5
million by officials of the Municipality
• The Municipal Manager failed to report the findings of the
Municipal Finance Unit of the Mpumalanga Department of
Cooperative Governance and Traditional Affairs
Dipaliseng Case study: Culture of non compliance
affected every aspect of service delivery
Violence in Siyathemba
houses without a toilet
Poor infrastructure
Dangerous pothole on R51
Embedding a compliance culture: Top down strategy
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In a Top Down Strategy,
– Leadership models the behaviours they demand of others
– Leadership communicates the importance of integrity when making
difficult decisions
– Leadership understands the circumstances that drive unethical
behaviour
– Leadership develops processes to identify and remedy those areas
where pressure points occur
– Employees feel a sense of responsibility and accountability for their
actions and for the actions of others
– Employees freely raise issues and concerns without fear of retaliation
•
The executive management effectively oversees a number of key
business processes:
•
• Strategy and operation planning
• Risk management
• Ethics and compliance
• Performance measurement and monitoring
• Management evaluation, compensation and succession planning
• Communication and reporting
(Governance, Risk and Compliance. Complex Issues, one Clear Solution, 2009 SAI Global
Limited)
Leveraging existing controls
• Municipalities operate in a highly regulated environment,
especially on the standards that are expected in terms of
financial management, good administration and governance, as
well as service delivery.
• Starting with the Constitution, Constitutional Legislation such as
PAJA, and legislation of general application such as the MFMA,
the Municipal Systems and Structures Acts, PPPFA, Treasury
Regulations, Supply Chain Polices, Batho Pele Principles, Codes
of conduct, and guidelines and directives – establish controls for
all aspects of management and performance in terms of
Governance, Risk and Compliance.
• Yet, there are high levels of non-compliance
• Leveraging more than just awareness and knowledge of controls.
Talk the talk, walk the walk
• Many of the problems investigated by the PP in respect of Municipalities
started with Councillors, leaders, and in people in position of power in the
Municipality who did not own up to the commitments and responsibilities
entrusted upon as public servants
• Many organisations have set expectations for ethical conduct and are
working towards maintaining a strong ‘tone from the top’.
• Many of these same organisations really don’t know whether their
employees and managers will demonstrate integrity in their actions when
they are under pressure, experience challenges and immediate strategic
objectives loom large in front of them.
• One of the major reasons why institutions fail to build a strong ethical
culture is because leaders do not take the first responsibility to personally
set the example for integrity and compliance.
• Not enough to provide employees with policy guide or “code of conduct.”
Employees to receive training on all aspects of integrity & compliance to
reinforce employee awareness, knowledge and commitment
• Leaders must communicate. Communication should focus on raising
awareness of compliance and creating a robust integrity culture.
• (Lazarus Angbazo GE President & CEO for East, West & Central Africa)
We need awareness, intolerance for bad governance
and fearless reporting
• PP recent said we need to “inculcate a culture of
revulsion at acts of corruption and bad governance.
All such acts should be accompanied by opprobrium
and a sense of duty to bring such acts to light where
known. “
• Whistle-blowing without fear of reprisals is a very
important factor. Currently we are also battling as a
society to encourage whistle blowing and to assure
potential whistle blowers that they will not be
victimised.
• Without the active participation of society, the fight
will not be effective.
CONCLUSION
• The concept of integrity systems also supports the very
important notion that there is no single institution or
oversight body that would be able to take the responsibility
to instil the principles of integrity in public administration
• In order to deal with the challenges effectively, we need the
public and private sectors to a shared responsibility of a
cohesive approach to the building of integrity for a
Responsive, Accountable, Effective and Efficient Local
Government System
• Regardless of the above, your initiative gives me and many
South Africans hope that we will turn the corner and deliver
the service that our Constitution promises the people. This
gathering indicates that there are leaders in this important
sphere of government who are committed to democracy by
ensuring meaningful service delivery and good governance,
and rooting out corruption
THANK YOU
www. pprotect.org