Public servants getting away with doing business with the state
While it is a criminal offence, loopholes mean the deals are not always detected
It is criminal for public service workers to do business with the state, but the number of those caught doing so seems not to scratch the surface of the extent of corruption in the state.
It is a criminal offence for public servants to conduct business with organs of the state or be a director of a company conducting business with any organ of the state. If found guilty, they can be liable to a fine or imprisonment for up to five years or both a fine and imprisonment.
The offence is regarded as serious misconduct and may also result in the termination of employment.
Corruption involving public servants has become a burning issue for the government and the ANC, particularly with regard to the procurement of personal protective equipment (PPE) to deal with Covid-19, which has caused a public outcry. Allegations have been made about politically well-connected individuals winning contracts to supply PPE at hugely inflated prices.
A number of senior public servants have been placed on suspension pending investigations into their roles in such malfeasance.
The government has been battling for decades to curb the practice of its employees doing business with the state, with few ending up in the courts.
As at the end of April, the department of public service & administration found that of the about 1.3-million public servants (excluding local government), 1,539 were possibly conducting business with the state, 428 from national departments and 1,111 from provincial departments.
According to the department’s acting chief director, Salomon Hoogenraad-Vermaak, this represented an increase of 471 over the 1,068 employees found to be possibly conducting business with the state as at February 2019.
Hoogenraad-Vermaak provided the figures in a presentation to parliament’s public service & administration portfolio committee on Wednesday.
Deputy minister of public service & administration Sindisiwe Chikunga stressed the department’s commitment to taking employees suspected of conducting business with the state to court to send a strong message.
The department can pick up public sector employees doing business with the state from data submitted to the central supplier database operated by the Treasury that records all companies and individuals providing services to the government. This is matched with the department’s data base of employees.
Commissioner of the Companies and Intellectual Property Commission (CIPC) Rory Voller told the committee a loophole existed in terms of identifying government employees doing business with the state in that the CIPC only registered the details of directors and not shareholders of companies.
A public servant could be the ultimate beneficiary of a contract but not be registered as a director.
Voller said an amendment had been proposed to the Companies Act that would require the disclosure of all beneficial owners or holders of shares to the CIPC during the incorporation of the entity, as well as annually when annual returns are submitted. Keeping such a data set was a worldwide trend, he added.
He said the CIPC was working closely with the Financial Intelligence Centre, the SA Revenue Service and the Master’s Office to conclude a governance framework and system to record beneficial owners.
He recommended that the central supplier database be expanded to include the department of public service & administration and the data on government employees “to ensure optimum screening of directors prior to the awarding of tenders”.
The Treasury, through its central supplier database, has access to CIPC records to verify the existence of entities, but this does not include verification of directors and whether they are public servants.
Hoogenraad-Vermaak noted that the ministers of police, justice and correctional services and public service & administration met in July and agreed to establish a multidepartmental team to be co-ordinated by the directors-general of their departments.
The team aims to ensure that allegations about employees possibly conducting business with the state be investigated and those found guilty be prosecuted.
On August 24, the team adopted a multidisciplinary plan of action, focusing on 10 priority cases and on dealing with the list of 1,539 public service employees identified to be possibly conducting business with the state.
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