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Peter Allwright
 
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The real state of the nation: ethical and moral degeneration

20 January 2014, 09:52

Overview

Financial misconduct in the public service cost tax payers R932 million in 2010/2011, 99% which was not recovered! The most startling revelation is that financial misconduct grew from R100 million in 2008/2009 by 346% to R346 million in 2009/2010 and then soared another 269% to R932 million in 2010/2011!

The findings confirm the widespread belief that financial misconduct has become an established practice within the public service and that dedicated mechanisms and law enforcement entities established to combat white-collar crime have largely been unsuccessful.

Overview on Financial Misconduct for 2010/2011

The Public Service Commission publishes annual findings on the extent of financial misconduct in the public service. The report titled “Overview on Financial Misconduct for the 2010/2011 Financial Year” was published this morning and reveals staggering statistics.

The report provides a partial insight into the ethical and moral regeneration of the public service because only finalised cases of financial misconduct cases were reported by national and provincial departments. Most concerning is that 12 departments issued a “nil” return” because no financial misconduct cases were finalised during the financial year. We therefore don’t know how many incidents of financial misconduct actually took place in national and provincial departments. The more important concern is that we are only seeing part of the problem. The Public Service Commission believes that the reported cases of financial misconduct are underreported becaue national and provincial departments are failing to report incidents of financial misconduct . So the real extent of the problem is really unknown and most probably much worse than anyone can imagine! So what do we know?

1,035 incidents of financial misconduct were finalised during the financial period. The most common types of financial misconduct were fraud (40%), theft (15%), misappropriation and abuse (12%) and gross negligence (10%). An assessment of the incidents has shown a dramatic drop in fraud, down from 53%, to simpler crimes such as theft. The shift to theft may indicate that its become easier to steal assets from the public service than to form syndicates to defraud and corrupt the public service. A continuing concern is the low level of corruption reported in the public service. Incidents of corruption have remained in single digits with the current 3% masking the real extent of corrupt practices.

Its commonly acknowledged that corruption is rampant in the public sector: the problem is that most law enforcement officials shy away from corruption because its harder to prove than theft. My experience has shown that most law enforcement officials try to “convert” a corrupt offence to a “theft” offence because they don’t comprehend the key elements of corruption and find the simple “take and run” concept of theft simpler to comprehend, investigate and prosecute.

Worst performing national department

The Department of Justice and Constitutional Development continues to report the highest incidents of financial misconduct for a national department. Over the last 3 years (2008/2009, 2009/2010, 2010/2011) the department has reported 46%, 33% and 25% of incidents of financial misconduct. The declining growth in incidents of financial misconduct may be masked by lower levels of reporting, longer periods of suspensions or a slowing in the finalisation of disciplinary hearings.

Worst performing provincial department

Similarly, Kwazulu-Natal continues to rpeort the highest incidents of financal misconduct for a provincial department. Over the last 3 years (2008/2009, 2009/2010, 2010/2011) the department has reported 27%, 31% and 33% of incidents of financial misconduct. The increasing growth in incidents of financial misconduct appears to indicate that there is a slow decline in ethical and morale fibre of the officials.

Simplication of offences

There is a substantial growth in incidents in financial misconduct from officials that form the rank-and-file of the public service. Officials in salary levels 1 to 8 has grown from 54% in 2008/2009 to 61% in 2009/2010 to 81% in 2010/2011. The growth in financial misconduct correlates somewhat to the simplication of financial misconduct to theft, misappropriation and abuse and gross negligence (gross negligence has doubled over the most recent 2 year-period: 2009/2010 and 2010/2011).

No consequences

The most troublesome finding is that there appeared to be no meaningful consequence to financial misconduct. Although 84% of officials were found guilty of misconduct in the cases, the most common sanction for financial misconduct was a final written warning (35%). Only 23% of officials found guilty of financial misconduct were discharged from the public service! The situation is exacerbated by officials spending extended periods of time on suspension with little progress made to investigate and discipline officials.

Suspensions

58% of officials serve suspensions greater than 91 days, whilst 16% serve suspensions between 61 and 90 days, and 26% serve suspensions less than 60 days. The majority of officials in public service have notice periods of one calendar month which means that a considerable amount of time and money is spent on precautionary suspensions which are often wasted and lost to the public service when the officials resign without facing disciplinary sanctioning or resign during disciplinary hearings before sanctioning is announced.

Once the officials have served out their notice periods, the public service usually abandons disciplinary, criminal and civil proceedings allowing implicated officials to move to other institutions to commit financial misconduct. The situation often results in corrupt officials moving to other institutions thereby avoiding sanctioning and finding a new hunting ground for unlawful behaviour

The majority of perpetrators remain in their positions and often continue to commit financial misconduct. The losses from the finalized cases of financial misconduct has mushroomed with similar worrying statistics being recorded year-on-year.

Dedicated entities and mechanisms

The problem has become so severe that Government has established dedicated entities and mechanisms to combat widespread commercial crime in the public service. Unfortunately, the Directorate for Priority Crime Investigation (the Hawks), the Special Investigating Unit (SIU), the Asset Forfeiture Unit (AFU), the Multi-Agency Working Group and the Public Service Anti-Corruption Unit are fighting a losing battle to stop financial misconduct in the public service. The Code of Conduct, Financial Disclosures Framework and anti-corruption strategies, forums, databases have had minimal impact on financial misconduct. The establishment of anti-corruption hotlines to report financial misconduct in the public service have largely been unsuccessful. Forensic investigations have found that significant numbers of officials are unaware of these anticorruption mechanisms, and this low level of awareness exacerbates a very problematic situation.

Solving the current impasse of financial misconduct

The public service should implement a multi-pronged strategy that combats financial misconduct across the public sector. The strategy should incorporate the following components:

  • The commitment of leadership to combat financial misconduct;
  • Strict enforcement of the legislative framework;
  • Define a common and consistent definition of financial misconduct across the public service;
  • Strengthening risk management practices and procedures;
  • Implementation of fraud prevention and fraud response plans;
  • Appoint independent experts to conduct serious financial misconduct investigations so that the periods of the precautionary suspensions and investigations can be substantially shortened;
  • Improving the investigative capacity of the public service;
  • Issue guidelines to ensure the consistent management of disciplinary hearings and sanctions;
  • Institution of criminal and civil proceedings against officials found guilty of financial misconduct;
  • Blacklisting of officials found guilty of financial misconduct within the public service;
  • Active recovery of unauthorised, irregular, fruitless or wasteful expenditure; and
  • Implementation of monitoring and reporting mechanisms.


The road ahead

The public service is facing a daunting mission to overcome financial misconduct. The leadership of the public service needs to set the appropriate ethical tone from the top stating that unlawful behaviour of financial misconduct is unacceptable. The tone needs to be supported by a statement of commitment to combat financial misconduct across national and provincial departments. The multi-pronged strategy needs to be implemented and constantly measured to ensure its achieving the desired aims and objectives. This is a fight worth winning.

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