South Africa's Financial Disclosure Regime: Time for Review
The financial disclosure regime in South Africa needs to be reviewed in order to streamline roles, strengthen local structures and utilise proactive measures more systematically.
A recent report by South Africa’s Public Protector entitled ‘On the Point of Tenders’, regarding the Limpopo Department of Transport, indicated that proactive investigation might have been beneficial in the early detection of fraudulent and corrupt behaviour. It recommended that institutions relook their methods of preventing corruption. The same may be said in respect of local government structures. The system of disclosure and declaration of financial interests by elected representatives is intended to offer some opportunity for the early detection of conflicts of interest or corruption connected to the affairs of the structures in which they serve. The key impediment to early detection of fraud and corruption at that level is that officials either do not know what their functions are or do not have the power to investigate matters.
At a capacity-building workshop conducted by the Institute for Security Studies (ISS) with local government representatives in September 2012, it emerged that no clear directives have been issued regarding the different roles that office-bearers ought to play in processes of financial disclosure. Perhaps in this sense, what may need to be addressed is the role of bureaucracy in local government.
A successful state bureaucracy relies on a structured system in which instructions are filtered downwards towards lower levels of the bureaucracy. Officials’ responsibilities are clearly outlined. In a perfect bureaucracy one would assume that the Municipal Manager (MM) issues directives to facilitate the implementation of policy. This appears not to be the case in the financial disclosure system in South Africa. The Municipal Systems Act (MSA) provides that the MM is responsible for receiving financial disclosure forms. Beyond that, there is very little information on what should be done with the information in terms of oversight and the proactive detection of potential conflicts of interests. In fact, most municipal managers could not provide information pertaining to the financial disclosure process.
As a result of this, questions have arisen regarding the roles that officials play. Who is meant to take charge of the process, and to issue directives regarding the adequacy of financial disclosures? Many municipalities think that the South African Local Government Association (SALGA) ought to perform that function. Bureaucratically, SALGA’s existence is an anomaly. In its mandate, SALGA is seen as an autonomous organisation whose role it is to represent and offer advice to local municipalities. While SALGA does not have the power to issue formal directives, it interprets legislation. The Department of Cooperative Governance and Traditional Affairs (COGTA) and high-level officials at the local municipality ought to monitor the financial disclosure process. Research has shown that municipalities do not conduct any form of proactive investigation to verify or assess the adequacy of declarations by elected officials. However, this should not be left to third parties or research institutions such as the ISS, as these often cannot get access to the necessary information without resorting to the Promotion of Access to Information Act (PAIA).
On requesting access to the financial disclosure forms of elected officials of 75 local municipalities, the ISS received a response from only 47% of the institutions. More than 50% of the local municipalities could not refer us to the appropriate contact person from whom forms could be obtained.
In its quest to establish an efficient financial disclosure system, South Africa should adopt a streamlined process. Local government officials should be more clearly instructed regarding the processes that need to be followed. The system needs to be less rigid in making information available. Effectiveness should be regularly monitored, if possible independently. Oversight is needed to ensure the job is being done.
SALGA was created to guide local municipalities and assist them to perform their responsibilities. SALGA therefore has a role in strengthening the financial disclosure system. It is suggested that SALGA should assist municipalities to interpret and implement financial disclosure legislation, in the interests of promoting independent and functional local municipalities.
Jamy Felton and Shireen Mukadam, Consultant and Researcher for the Governance and Corruption Division, ISS Cape Town
