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

LOCAL GOVERNMEMENT IN THE 21ST
CENTURY
PROGRAMME FOR THE FRAUD,
CORRUPTION AND ETHICS SESSION
12-14 June 2012
Panel Discussion:
Corruption in Global and National
Context
MR T MTHETHWA
PUBLIC PROTECTOR OF THE REPUBLIC OF
SOUTH AFRICA
12 JUNE 2012
1
“The public sector, like all of society and the world, is a mixed bag of
humanity. This mixed bag contains persons of little virtue and
persons of virtue. The reality is such that the public sector is no more
and no less unethical than the rest of society. But because the public
sector is constituted of people and institutions that hold public trust...
(it) must and does make that extra effort to maintain the integrity of
its internal operations. “
Report on proceedings of the THIRD ANTI-CORRUPTION SUMMIT
2
Outline of Presentation
1.
Introduction: Public Protector part of National Integrity Framework
1.1 Constitutional mandate
1.2 Public Protector’s Key Mandate areas
2.
Corruption as a Global Concern
2.1 International corruption perceptions and transparency map
2.2 National perceptions on Local Govt Fraud and Corruption
2.3 AG Consolidated Local Government audit outcomes -2009/10
2.4 Service delivery and governance problems in municipalities
2.5 Major reasons for fraud and corruption
2.6 The impact of fraud and corruption
3.
International and Regional Anti-Corruption Standards/ Responses
3.1
–
–
3.2
3.3
3.4
4.
A comprehensive policy and regulatory framework is in place:
GENERIC INTEGRITY FRAMEWORK
SPECIFIC INTEGRITY FRAMEWORK FOR LOCAL GOVERNMENT
Policy and regulatory framework: Implementation gaps
National Anti-corruption Forum
Local Government Anti-Corruption Strategy
Role of the Public Protector in promoting Integrity as the Foundation of
Good Governance
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, and the Rule of Law
And quality of life.
• A civil law innovation in a common law
legal system, its enforcement powers
are non-judicial.
•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
Supreme Court Judge rank with stringent appointment and impeachment
procedures, which include an open Parliamentary process culminating in
presidential appointment for a 7 year fixed term following a 60% majority vote in
Parliament and impeachment similar to judiciary.
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.
•
INSTITUTIONS WITHIN JURISDICTION
The Public Protector’s oversight jurisdiction covers more than 1000 organs of
state and government agencies operating at all three levels of government,
including local government. Public institutions and bodies performing a public
function are also included.
National Government
• 40 National Depts
Provincial Government
• Northern Cape (11 Depts)
• North West (11 Depts
• Western Cape (13 Depts)
• Mpumalanga (12 Depts)
• Kwazulu-Natal (11 Depts)
• Gauteng (11 Depts)
• Eastern cape (12 depts)
• Free State (11 Depts)
• Limpopo (11 Depts)
Local government
Other Organs of State/
Public Bodies
• 6 Metropolitan
• Statutory Bodies
Municipalities
• 231 Local
Municipalities
• 47 district
Municipalities
•Institutions
performing a public
function
• 533 Public Entities
•9 Institutions/
commissions/
Authorities
•21 Universities
Corruption as a Global Concern
• “Corruption Is World’s Most Talked About Problem” (together with
environmental issues, global economy, unemployment, poverty and
terrorism) (BBC World Service Poll)
• Since the mid-1990s the General Assembly of the United Nations has
expressed serious concern about the problems and threats posed by
corruption to the stability and security of societies, undermining the
institutions and values of democracy, ethical values and justice, and
jeopardizing sustainable development and the rule of law.
• Corruption in public procurement is the primary cause of poverty in Africa,
fostered by poor governance and weak legislation. According to World
Bank and African Union surveys, public procurement corruption costs
Africa $148-billion a year and worldwide it is estimated to be $390-400
billion per year. (Preventing Corruption in African Procurement, Professor Awadi Sadiki Mawenya, Number 9,
August 2008)
• Corruption has enormous negative consequences. It diverts public funds
into unnecessary, unsuitable, uneconomic and actually, “undemocratic”
projects with the primary objective to serve the interests of a few
individuals at the expense of the country and its citizenry.
Corruption as a Global Concern
AlixPartners 2012 Global Anti-Corruption Survey
The corruption map of the world
•
Transparency International's transparency
index
11
National perceptions on Local Government
fraud and corruption
2009 Good Governance Survey Consolidated Report (Nkangala DM)
• (73.2%) reported nepotism most common form of corruption
–
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
outcomes -2009/10
• Only five of the 283 municipalities had a completely clean audit
– this was up from 2 in 2008/09. 110 qualified audits (with 53 of
those issued with a disclaimer.) 120 with matters of emphasis
• non-compliance with laws and regulations for municipalities
were:
▪ Transversal material misstatements
▪ Expenditure was not paid within the parameters set by legislation
▪ Supply Chain Management (SCM) resulting in irregular expenditure
▪ Mayor/Accounting Officer / Officials not adhering to statutory
responsibilities
▪ The Audit Committee was not properly established or functioning
▪ The Internal Audit Unit was not properly established or functioning
• unauthorized expenditure - R5 billion in 2009/10- (-R3,03 billion 2008/09).
• irregular expenditure - R4,14 billion In 2009/10 (R2,4 billion in 2008/09).
• Fruitless and wasteful expenditure -R128 In 2009/10 (R189 million
2008/09).
Service delivery and governance problems in
municipalities
• Service delivery and backlog challenges, e.g. housing,
water and sanitation;
• Poor communication and accountability relationships
with communities;
• Corruption and fraud;
• Poor financial management, e.g. negative audit
opinions;
• Number of (violent) service delivery protests;
• Weak civil society formations;
• Intra - and inter-political party issues negatively
affecting governance and delivery; and
• Insufficient municipal capacity due to lack of scarce
skills.
Source: 2009 - National State of Local Government Assessments
Major reasons for fraud and corruption
• 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 of fraud and corruption
• 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.
•
Source: Corruption at the local government level: Time to crack the whip by Nontando Guwa-Ngamlana
A comprehensive policy and regulatory framework is in place:
GENERIC INTEGRITY FRAMEWORK
• International:
– United Nations Convention against Corruption (UNCAC)
– Global Programme against Corruption designed by the Centre for
International Crime Prevention (CICP), in collaboration with the United
Nations Interregional Crime and Justice Research Institute (UNICRI),
• National: Properness, maladministration or integrity violations ethical
violations in local government tested against:
 Transversally applicable constitutional provisions of the Constitution
such as fundamental rights (Bill of Rights, etct) founding values in
section 1, principles of public administration in section 195,
procurement regulation under section 217 and fiscal prudence
guidelines.
 Transversal legislation and directives including•
•
•
•
•
Preferential Procurement Policy Framework Act
Promotion of Access to Information Act
Promotion of Administrative Justice Act
the Protected Disclosures Act
the Prevention and Combating of Corrupt Activities Act
17
Policy and regulatory framework
SPECIFIC INTEGRITY FRAMEWORK FOR LOCAL GOVERNMENT
•
•
•
•
•
•
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
18
Policy and regulatory framework
SPECIFIC INTEGRITY FRAMEWORK FOR LOCAL GOVERNMENT
• Codes of Conduct for Municipal Councillors and Staff Members prescribed
by Municipal Systems Act
• The Code of Conduct for Councillors similar to EMEA Code covers, among
others integrity issues, such as councillors :
– To perform the functions of office in good faith, honestly and a
transparent manner; and at all times act in the best interest of the
municipality and in such a way that the credibility and integrity of the
municipality are not compromised.
– To disclose personal or private business interests.
•
– Not allowed to benefit from any contract awarded by the municipality.
.
19
Policy and regulatory framework:
Implementation gaps
• 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
RESPONSE: National Anti-corruption Forum (NACF)
• South Africa has an anti-corruption coalition comprised of the
Business, Civil Society and Public Sectors. The purpose of the
NACF is:
 To contribute towards the establishment of a national consensus
through the co-ordination of sectoral strategies against corruption;
 To advise Government on national initiatives on the implementation
of strategies to combat corruption;
 To share information and best practice on sectoral anti-corruption
work;
 To advise sectors on the improvement of sectoral anti-corruption
strategies.
RESPONSE: Local Government Anti-Corruption
Strategy
• Focus on the Organisation( Effective implementation of Codes
of Conduct, systems, policies and procedures, sound internal
controls to prevent and detect unethical conduct, fraud and
corruption, risk assessment and management, Internal and
External Audit; and physical and information security
management).
• 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 that includes communication on the anticorruption work)
Other responses to improve Governance in Local
Government
• Govt’s 12 outcomes: OUTCOME 9: A Responsive, Accountable,
Effective and Efficient Local Government System
• Local Government Turnaround Strategy: Implementation
Framework: ‘Local Government is Everybody’s Business”
• 13 immediate pre 2011 priorities
• 13 medium term 2011- 2014 priorities
• To be managed through establishment of arrangements for
–
Institutional Structures
–
Mobilisation of resources and stakeholders
–
Support for LGTAS priorities
–
Monitor, report and learn
• Operation Clean Audit 2014 -launched on August 2009
– The goal is that by 2011, no municipality or provincial government
department will have a disclaimer or an adverse audit opinion; and by
2014 none should have those or a qualified audit
Focus Areas to Address Fraud and
Corruption
• Training of management & staff
• Implement and enforce Risk Management and Fraud
Policies
• Implement and enforce of IT Policy (Internet Use)
• Promotion of ethical conduct and good business
Practices- corporate code of conduct/ethics
• Whistleblower policy
• Review and/or improve internal controls
• Segregation of duties
• Improve security measures
• Organisational culture
• Senior management commitment
Role of the Public Protector in promoting Integrity as
the Foundation of Good Governance
• 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
- May also resolve PAIA disputes
- Investigate and resolve allegations of improper or
dishonest acts or omissions or offences ito
Prevention and Combating of Corrupt Activities Act
Investigation/ Intervention Triggers
Investigation in terms
of EMEA only from
Investigation in
terms of PPA and
other statutes
President/ Legislature/
Premier
Complaints/
Requests/Repor
ts to the PP
Anyone (does
not need to be
victim)
Own
initiative
National
Assembly/MPL/
Member of the
Executive
Individual/ groups/
organisation/
political parties/
civil society/
communities
Service
delivery
failures
undue delay
Systemic
deficiencies/
Trends from
existing
complaints
Conduct
failures
Information in
public Domain,
including print
and electronic
media
corruption
fraud
service
delayed or
service
abuse of
resources
denied
violation of
a human
right
Review in terms of Housing
Protection Measures Act
Public debate/ display
of dissatisfaction or
grievances
(e.g. .Local
government protests)
receipt of
improper
advantage
unfair,
capricious or
discourteous
behaviour
improper
enrichment
abuse of power
unethical behaviour
dishonesty
or improper
dealings in
respect of
public
money
Approach to Investigations?
•
•
To pronged approach which seeks to verify and remedy maladministration
and injustice at hand while acting as a catalyst for change to entrench
good governance thus ensuring that organs of state habitually get things
right the first time. Promptness and rigor balanced.
Options include case resolution or investigation, latter may be simple,
complex and/or systemic. Integrity matters are investigated>
•
27
Approach to Investigations?(cont)
• What happened?
 Proof on a balance of probabilities achieved through
document and explanation requests and interviews or
hearings. Forensic investigation and expert opinions, where
appropriate.
• What Should have happened (Proper)?
 Legal and regulatory framework used as benchmarks for
standard that should have been complied with
 Constitutional provisions (NB entitlements and ethical ethical
governance provisions), legislation(including Public
regulations and Public Service and Treasury
Directives/Guides), policies and other prescripts.
 Sector and international good practice
28
Approach to Investigations?(cont)
• Is there a discrepancy between the two?
 Proper conduct test transcends lawfulness
 Gap evaluated to ascertain if constitutes
maladministration, unethical conduct or corruption.
 Room for genuine mistakes.
 Prejudice suffered assessed/quantified.
• What is the remedy
 In service failure civil remedies underpinned by quest to
place complainant or victim of maladministration as close as
possible to where s/he would have been but for wrongful
state action
 In integrity violations disciplinary directives to appropriate
authorities and criminal referrals to NPA in terms of section 6
of PPA. Commitment to claw back abused state funds.
29
Typical Integrity Violations Investigated in 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
Specific allegations typically involve:
The South African government has
a) Bribery: promise, offering or giving of a benefit invested over ZAR60bn (7,1bn
that improperly affects the actions or decisions USD) of public funds into the
provision of an estimated 2,8m
of a public official.
subsidised housing units for lowb) Fraud: actions or behaviour by a public official, income beneficiaries. A large
number of the cases reported
other person or entity that deceive others
involve the fraudulent allocation of
these subsidised houses
into providing a benefit that would not
normally accrue to the public official, other persons or entity.
KIND OF CASES UNDER INVESTIGATION BY THE PUBLIC
PROTECTOR
c)
Abuse of power public officials using entrusted power or authority to
improperly benefit another public official, person or entity
d) Conflict of interest: financial or other private interest or undertaking that
could directly or indirectly compromise the performance of a public
servant’s duties
e) Corruption: Entrusted power used for own benefit or gratification,
bearing in mind that crruption is a bilateral integrity violation.
KIND OF CASES UNDER INVESTIGATION BY THE PUBLIC
PROTECTOR
e) Favouritism:
the
provision of services or
resources according to
personal affiliations of a
public official.
f) Nepotism: public officials
ensuring that family
members are appointed
to
public
service
positions or that family
members benefit form
procurement processes
•
•
•
•
•
Workload Tackled Through Collaboration with Local
Ombudsman Offices and Integrity Structures
Over 26 000 cases processed per year comprising 20 000 received and about six
thousand carried over from previous year.
Population of about 50 million people spread over a vast country with 47 district
municipalities and 6 metropolitan districts making up 53 districts serviced by 20
offices of the Public Protector backed by toll free line and mobile office outreach
services. Staff compliment of over 300 persons.
Local Ombudsman structures
encouraged to be first port of
call for complaints.
Integrity and complaints structures
for municipal police included.
Collaborative work with fellow
integrity institutions such as
the Auditor General, Hawks,
SIU and PSC employed where
deemed appropriate.
Conclusion
•
•
•
•
•
•
•
Local government is at frontline of public service delivery and essential for
fulfillment of constitutionally promised quality of life for all people, particularly
through delivery on socio-economic rights and Millennium Development
Goals(MDGs);
Maladministration and corruption key factors derailing service delivery thus
delaying fulfillment of constitutional dream, which includes redressing apartheid
imbalances, gender inequalities and other inequalities; with peace undermined
hence public protests;
Public Protector’s impact due to sound constitutional foundations, comprehensive
legal framework and rule of law ethos, including independence of the judiciary and
constitutionally entrenched public accountability;
Integrity efforts form part of national anti-corruption strategy
Role of civil society facilitated by an active media enjoying constitutionally
entrenched right to freedom of expression, incorporating freedom of the media
has been
Good governance and anticorruption movements, including annual national Good
Governance Week.
Institutionalization of principles of accountability, integrity and responsiveness in
public service anchored in stewardship service ethos.
34
How Does the Public Protector Get Involved
How do you initiate a case?
1) Cal Toll-free line: 0800 11 20 40;
2) Visit any of the Public Protector. 20 offices exist across the
country divided into :
• 1 National Office
• 9 Provincial Offices and 10 Regional Offices
3) Participate in any outreach activity e.g. Mobile Office, clinics,
TV or radio programme
4) Write to the Public Protector
5) Complete a form on the website: www.publicprotector.org or
6) Send an email to [email protected]
. THANK YOU
Regardless of the above, your initiative gives me and many South Africans
hope that local government in this country 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
Utat’ u Madiba, our former President Nelson Mandela stated that -
“
Our hope for the future depends on our resolution as a nation in dealing with the scourge of
corruption. Success will require an acceptance that, in many respects, we are a sick society. It
is perfectly correct to assert that all this was spawned by apartheid. No amount of selfinduced amnesia will change the reality of history. But it is also a reality of the present that
among the new cadres in various levels of government you will find individuals who are as
corrupt as, if not more than, those they found in government. When a leader in a provincial
legislation siphons off resources meant to fund services by legislators to the people; when
employees of a government institution that was set up to help empower those excluded by
apartheid, defraud it for their own enrichment, then we must admit that we have a sick
society. This problem manifests itself in all areas of life.”
THANK YOU
www. pprotect.org