The Auditor-General briefed the Committee on the performance audit results dealing with Government employees who undertook business with other national departments. He referred to incidents reported in 2006 where members of the Department of Education were involved in unlawful business dealings with private companies. The audit also reported upon the disclosures of financial interests that should be made by Ministers, Deputy Ministers and senior managers, as well as the limited numbers of approvals that would be given to government employees to perform other remunerative work. The audit found, however, that 64% of officials undertaking extra work without approval were from the Department of Education, and of them, only 1.56% had obtained approval. During 2005-6, the “unapproved” business conducted by government employees from all departments amounted to R321.7 million, with 1 473 employees involved. The provincial departments had also failed in many cases to follow up on declaration of registrable interests, although only one National Department of Education employee had failed to make the required declaration. In 2008/09 this Department achieved full completion of all declaration forms. One official had no approval to conduct work, and failed to disclose shares, and the other company, when bidding on a tender, had failed to disclose the connection to a departmental employee. Another official not granted approval had resigned. Other findings were outlined. The Auditor-General commented that there were inconsistencies in actions taken across the various departments, although many employees had resigned directorships and membership of other companies, and the misconduct would be followed up through the Public Service Regulations, and Special Investigative Unit.
Members asked what the likely sanctions were for failure to disclose, and the Department of Education detailed what had been done in their specific cases. A distinction was drawn between, for instance, acting as an external examiner for universities, which was likely to be approved as it would further the general principles of education, and writing a textbook for personal gain, which was unlikely to be approved. It was indicated that some transgressors had been required to pay back remuneration earned without permission, to the revenue account. Members also asked how the Department monitored the tendering evaluation process, heard what the current process would achieve, enquired as to the position of the National department in relation to wrongdoings by the provincial departments, whether the Department had set a standard sanction for non-disclosure, and asked specific questions on an amount paid to a particular official by Naspers. The scope of the 2006, as compared to the 2007/08 audits, was explained, and the Department stressed that it had reached full compliance on all declarations for the past financial year.
Government Employees doing business with
Mr W Wentzel, Senior Manager: Audit Performance, Auditor-General of SA, briefed the Committee on the performance audit done in relation to government employees who were doing business with national departments. This audit emanated from incidents reported to Parliament in 2006 that certain members of the Department of Education (DOE) were involved in unlawful business dealings with private companies. The audit report also sought to highlight those instances where disclosures of financial interests should be made by Ministers, Deputy Ministers and senior managers, and also the instances where approval should be sought for government employees to perform other remunerative work. The audit focused on the National and Provincial Departments of Education. It tabled findings on the approval to perform other remunerative work, declaration of registrable interests, responses from the government about inconsistencies in actions taken and disciplinary steps that could not be taken, and recommendations from the Department, based on hearings and briefings held.
Mr Wentzel noted that approval to perform other remunerative work was granted only to a limited number of employees. However, thousands of Government employees had done business with other government departments. 64% of these officials were from the DOE, and only 1.56% of that number had approval. The audit highlighted that during the 2005-2007 financial years, business conducted with government departments amounted to R321,7 million, whilst the total number of employees at the various Departments of Education doing business with government stood at 1 473.
Mr Wentzel also noted that the audit had shown that there was no focus on declaration of registrable interests at provincial level. Verification was only done when employees had approval to perform other remunerative work. However, at the National Department of Education there was only one designated employee who made no declaration of interest on the financial disclosure form. On the positive side, the Department achieved 100% completion of declaration forms for the financial year 2008/2009.
Mr Wentzel turned to the specific findings. One designated official had no approval to conduct other remunerative work and failed to disclose shares in a subsidiary, or directorship of the company, and the company had failed to declare that there was a person connected with the company, when bidding on a tender, who was employed by the Department. It was also found that a non-designated official had not been granted approval to conduct other remunerative work, but that person had resigned from the Department after the transaction took place. Other findings indicated that there was extensive business that was done with the government, collusive tendering by employees and many deviations from Supply Chain Management (SCM) processes in the awarding of tenders and quotations.
Mr Wentzel said that there were inconsistencies in actions taken by the departments, as some employees were charged for misconduct and later discharged, whilst other departments issued final warnings, and with some, disciplinary steps could not be taken because employees were not made aware that they should have obtained approval.
As a result of an audit report undertaken for the financial year 2004/05 many employees resigned as directors and members of companies. Many hearings were held and action was taken on condoned activities. He noted that misconduct was going to be dealt with according to the Public Service Regulations, and certain cases would also be acted upon by the Special Investigative Unit
The Chairperson asked what the sanction was for failure to disclose.
Mr Wentzel explained that paragraph 4 of the Department of Education disclosure forms dealt with non-disclosure by the designated employee. It stipulated that any manager who failed to disclose interests in terms of Chapter 3, Regulation C, of the Public Service Regulations or who, when disclosing the interest, wrongfully provided incorrect or misleading details, would be guilty of misconduct.
Mr Duncan Hindle, Director-General, Department of Education, added to the points made by Mr Wentzel. He advised that both the designated and non-designated officials mentioned by Mr Wentzel, who were found to have no approval to do other remunerative work, were fired from the Department. A fair number of employees who requested permission to do other remunerative work were granted permission. Much of this work was in the area of external examinations, since many universities liked to use the Department’s officials as external examiners in their programmes and courses. The Department had no problem with this kind of work. However, if officials undertook work that generated remuneration, but did so outside of the regulations, then the official has to pay that remuneration into the revenue account.
Mr Hindle also advised the Committee that it was possible to earn money without undertaking any other work on a day-to-day basis, such as a person who was a director of a company, who might not be involved in daily work or even in regular board meetings, but who might still be paid. That type of situation did not require prior approval, but the interest would have to be declared.
He noted also that a person could earn money without working full time in a situation – such as a person who might be a director of a company, and be paid for this, without having to attend the offices of the company or necessarily even attend all board meetings. That would not require prior approval, but only a declaration. However, if actual presence and work was required, then permission would be required. This was so that the public service was protected, to ensure that officials did not give their attention to moonlighting activities that would detract from their public service work. He noted that one of the officials, Ms Mphathi, did not work as such, but may have received profits or other income without being required to perform any extra tasks.
Ms A Mashishi (ANC) asked the Director-General to explain how the Department monitored the tendering evaluation process.
Mr Hindle replied that there were three steps. The first step was the pre-evaluation committee. This would look at the viability of the project and then decide whether to pursue or not pursue the matter. This scrutiny would occur before any advertisements were done. The second step involved evaluation of the proposals received, when the evaluation committee would look at functionality, price, the status of any historically disadvantaged individuals, capacity and experience, and some other technical aspects. It would then make a recommendation to the Departmental Standing Tendering Committee (DSTC). In the third stage the DSTC would make a recommendation to the Director General. In the case of Ms Mphathi, the declaration was signed, and this was approved by the then-Minister of Education, Hon Naledi Pandor.
Mr Theuns Tredoux, Acting Chief Financial Officer, Department of Education, added that the current process was embarked upon not only to test the interests of the employees of the Department, but would also, when tenders were advertised, draw the profiles of companies who had previously submitted proposals to check if any employees had an interest in those companies, and check this back against declarations made.
Mr D Smiles (DA) wanted to know the position of the National department in relation to wrongdoings by the provincial departments. He noted that the audit report cited rife corruption at provincial level, whereas only two National department officials were cited. He asked if the National department provided any coordinating and cooperative work to avoid recurrence of the incorrect process.
Mr Hindle said he only took responsibility for service delivery related matters and that he worked with both the national and provincial departments. The Provincial Forum of Chief Financial Officers dealt with accountability in the provincial departments. Each provincial department had its own Chief Financial Officer and it was the responsibility of that individual to look at the issues. The national Department had no legally standing to interfere. National and provincial colleagues would meet to discuss financial matters but there was a legal framework that had to be observed.
Mr Z Makhubele (ANC) asked if the Department had a standard sanction for non-disclosure.
Mr Hindle responded that the criminal justice system would interrogate each matter on its own merits, deciding the seriousness of the case and the appropriate sanction. He emphasised that repayment of any remuneration earned was one of the options where officials had been paid for work that was not approved. This had already been applied to two officials, who were repaying R150 000 each for a tender misconduct.
Mr M Steele (DA) asked the Director General to explain if the R30 000 paid to an official per annum by Naspers was a dividend, or payment for a service rendered. If it was for a service, then he wanted to hear what kind of service was rendered. If it was a dividend, then it implied that the official was one of the major shareholders in the company, which called into question whether he would be able to exercise substantial influence.
Mr Hindle replied that Naspers was not awarded a tender. The person who received the R30 000 had interests in Naspers that were not relevant to this tender. The tender was awarded to another completely separate company. The employee’s interests in relation to Naspers were completely legitimate, and whether or not she was a shareholder was of no interest or relevance to the Department.
Dr J Kloppers-Lourens wanted to know the conditions and circumstances where employees were likely to get approval for remunerative work.
Mr Hindle explained that the criteria used included whether the person would be doing something that would benefit education. If it was in the interests of education in the broad sense he would be likely to encourage it, but it would be refused if, for instance, it involved writing of textbooks.
Mr Smiles asked if the numbers of those transgressing had increased or decreased and if there was a decrease, where the interventions had emanated.
Mr Wentzel replied that the scope of the 2006 audit report was different from the 2007/2008 report, which made it difficult for him to comment whether there had been a decrease or increase. It was anticipated that the Auditor-General would audits measures taken by the Public Service Commission and National Treasury to rectify the problems.
Mr Hindle noted there was 100% compliance on declarations for the 2008/2009 financial year. He also assured the Committee that the DOE had taken the necessary steps around these incidents, and that the legal framework should be revised and strengthened.
The meeting was adjourned.
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