Lindiwe Sisulu. Picture: BUSINESS DAY

Lindiwe Sisulu. Picture: BUSINESS DAY

Public service & administration minister Lindiwe Sisulu has published a draft law that aims to make it illegal for civil servants to be involved in companies that benefit from state tenders.

This new regime will include a 12-month cooling-off period for officials who have awarded tenders. It is supposed to stop officials manipulating tenders in favour of a company that they join once it has secured the state's business.

Sisulu's Public Administration & Management Bill (PAM) will apply in national, provincial and municipal government, which will make implementing it a vast and complex administrative task. Getting all civil servants to disclose their business interests is one thing; verifying these is quite another, especially considering that the law also requires officials to declare the business interests of their close family members. Wives, partners and children won't be prohibited from doing business with the state but the idea is to pick up any conflicting interests in tender bids.

The success of Sisulu's system will rest on disclosure and verification. Former national director of public prosecutions Menzi Simelane, who is now special adviser to Sisulu, says the strength of the system will lie in "government's ability to punish those who don't comply".

PAM proposes punishments that include a one-year jail sentence, fines and the cancellation of the tenders in question. PAM also proposes a new anticorruption bureau that will investigate non compliance. But, as the bill stands, the bureau can't investigate cases of its own accord. Heads of department or government institutions have to instruct it to do so. This could prove to be a weakness because it offers these chiefs an opportunity to protect civil servants.

But before Sisulu can worry about setting up systems to enforce her law, there's already simmering opposition to it in the state bureaucracy because she isn't simply trying to enforce what's already supposed to be prohibited, she's outlawing something that's currently perfectly legal, hugely lucrative and an easy way to corrupt the state's procurement system.

The auditor-general's last state audit revealed that about R600m in state tenders was awarded to suppliers linked to the families or employees of the department that was awarding the tender. In 75% of these cases, the conflict of interest was not disclosed. This figure doesn't include officials who are employed by one department but do business with another.

The Special Investigating Unit (SIU) has also flagged how lucrative this game is. In a probe of the national department of health, the SIU found 9000 employees to be active company directors. While about 1000 of these do business with the department, 235 of them had benefited from health tenders worth R42,8m.

The department of basic education also revealed how more than 3000 of its employees had engaged in business with the state in the 2010/2011 and 2011/2012 financial years. They earned a combined sum of R152m. Of these employees, 2485 were teachers. In the Eastern Cape's embattled education department, the public service commission found that 90% of the department's senior managers had outside business interests.

Eastern Cape premier Noxolo Kiviet is feeling the heat from what she admits is a groundswell of anger over this "insider trading". Kiviet declared war on this practice in August 2011 and promised to ban it. But her bid to do so has stalled in the face of opposition from civil servants who are also political powerbrokers in the province.

Rhodes University's Public Service Accountability & Monitor (PSAM) expects Sisulu's bill will face similar opposition. PSAM's monitoring & advocacy programme head, Jay Kruuse, says: "The bill in its current form contains a range of encouraging improvements but it's early days. I envisage a lot of opposition and delay in the adoption of the bill ."

DA chief whip in the Eastern Cape Bobby Stevenson has tried unsuccessfully to introduce a bill similar to PAM in the provincial legislature. He says: "Sisulu's legislation will go to the heart of a culture that's gripped the ANC in this province, a culture that rewards friends, family and factions. Changing it cuts to the core of the ANC's ability to dispense patronage."

Parliament's public accounts committee (Scopa) chairman and leader of the African People's Convention, Themba Godi, says though there are questions about the state's ability to implement this legislation, Sisulu's bill is a "critical step forward". It will provide Scopa, parliament and government with a much firmer legal footing to act against officials.

But Godi makes the point that cracking down on the business interests of civil servants isn't enough. It must go hand in hand with a similar prohibition for elected representatives. Senior civil servants to whom the FM spoke agreed that it wouldn't be fair to ban civil servants from a practice that so many politicians also benefit from.

Politicians and their business interests aren't included in PAM because they aren't state employees. But they do have business interests. When President Jacob Zuma took office in 2009, the Institute of Security Studies revealed that 42% of his cabinet, including Zuma, were registered with the Companies & Intellectual Property Registration Office (Cipro) as having business interests in 184 companies and close corporations. Politicians in provincial and municipal government are also benefiting from state contracts. For example, the AG reports for the past financial year show how the Free State provincial government awarded 50% of its contracts to politicians and their families.

Though finance minister Pravin Gordhan has promised to complement Sisulu's ban with a clampdown on "politically exposed individuals", Zuma has made no bones about the fact that loyalty to the ANC pays off. He told guests at a dinner ahead of the ANC's 101st birthday celebration in January this year that their businesses would flourish and "everything you touch will multiply" in return for backing the governing party financially.