Whose conflict is it anyway? - Addressing conflicts of interest in South Africa's public sector - RESEARCH P APER
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Issue 24 | September 2021
Whose conflict is it anyway?
Addressing conflicts of interest in South Africa’s
public sector
Richard Chelin
RESEARCH PAPER
Summary
Conflicts of interest are situations rather than actions; as such, they do not constitute corruption
in and of themselves. However, if left unmanaged and unregulated, conflicts of interest have the
potential to result in corruption. The various corruption scandals reported in the media on a daily
basis are often manifestations of conflicts of interest which were mismanaged and unregulated.
Against this background, this paper delves into the notion of conflict of interest and argues
that similarly to corruption, conflicts of interest cannot be eradicated. Rather, these conflicts
should be managed and regulated. An effective conflict of interest system is crucial in not only
managing these conflicts but also as a preventative anti-corruption tool.
Key findings
• A key challenge is the lack of understanding by those involved of what constitutes a conflict
of interest and how to address it.
• An efficient system to monitor possible conflicts of interest is required in the public sector.
Even when legislation and regulations prohibit conflicts of interest, the systems necessary
to monitor conflicts are missing and enforcement is weak.
• Adapting new technology, such as blockchain, can streamline and strengthen the
management of conflict of interest situations in the public sector.
• Conflicts of interest cannot be eradicated but with clear policies on disclosure, monitoring
and enforcement, they can be managed.
Introduction In the past few months, the notion of conflict of interest
has been thrust into the spotlight especially in regard
Given the plethora of corruption scandals reported to two high profile cases. The first one involved the
daily in the media, it is easy to assume that corruption president’s former spokesperson who failed to declare
is endemic in South Africa. State capture has become her spouse’s interest in a company which obtained a
the topic of conversation among the general public contract with a provincial government.3 The individual
when referring to corruption in the country and more would later be cleared of any wrongdoing by her
specifically in the public sector. A commission of inquiry political party. The other case involved the former
– The Judicial Commission of Inquiry into Allegations of health minister’s former spokesperson and his personal
State Capture,1 more commonly known as the Zondo assistant whose company obtained a tender with the
Commission – was set up to investigate the scope and health department. The minister publicly denied any
extent of grand corruption which has taken place over knowledge that a conflict of interest existed in the
the past few years. awarding of the contract.4
The commission has provided a glimpse into ways that
state officials, often with the help of the private sector, Aim and objective
enabled a network of criminality and the facilitation
It is against this background that this paper seeks to
of grand corruption in the form of state capture. It has
provide a better understanding of the concept of conflict
further demonstrated how corruption permeates all
of interest with a focus on the public sector. This paper is
levels of governance in South Africa, at local, provincial
divided into four sections.
and national, and that it even has transnational
dimensions. As such, corruption is a mechanism 1. The first section provides an in-depth look at the
occurring at different levels with different actors but concept of conflict of interest by examining the
achieves the same result – the looting of public funds definition, factors and typologies giving rise to the
for private gain. concept and its relationship to corruption.
2. Section two contextualises the concept within
three case studies drawn from the South African
The notion of conflict of interest public sector.
3. Section three presents the key findings emerging
has been thrust into the from the research.
spotlight especially in regard to 4. The final section concludes by suggesting some
recommendations on how to address the challenge.
two high profile cases
Background and context
Through the testimony of various individuals at the
In October 2019, the United Nations Office on Drugs and
Zondo Commission, it emerged that at the heart of
Crime (UNODC) in partnership with the UK government
much of the corruption was the conflict of public
held a regional conference in Livingstone, Zambia on
officials between their public and their private
dealing with the implementation of the United Nations
interests. The numerous cases of grand corruption
Convention Against Corruption (UNCAC).5 Entitled
revealed at the Zondo Commission and in daily media
Fast-tracking UNCAC Implementation in Southern
reports indicate that these are a manifestation of
Africa, it highlighted the key corruption challenges the
conflicts of interest. More recently, various protective
governments of the region were facing in implementing
personal equipment (PPE) corruption scandals in
the UNCAC. Conflict of interest in the public sector was
the aftermath of the coronavirus pandemic in South
one of the key challenges states identified in addressing
Africa involved conflicts of interest. In 2020, the
corruption in their countries.
Auditor General noted that the value of tender awards
in which bidders did not declare their interests as As the meeting progressed, participants’ limited
prescribed by the National Treasury amounted to understanding of the concept of conflict of interest
R1 049,21 million and R13,11 million in Gauteng and and the lack of effective systems at national
KwaZulu-Natal respectively.2 level to address the challenge became evident.
2 Whose conflict is it anyway? / Addressing conflicts of interest in South Africa’s public sectorFurthermore, as participants related their experience of To this end, this policy brief has a threefold objective:
combatting public sector corruption in their countries,
1. Defining the concept of conflict of interest in the
it became clear that conflict of interest was an
public sector and the driving factors exemplified
underlying factor in each of these corruption scandals
through case studies.
but was often underestimated. This gap in research on
2. Assessing the legal instruments and frameworks
the topic it was important to examine the concept of
aimed at addressing conflicts of interest at an
conflict of interest in the Southern African region and
international, continental, regional and national level.
more specifically how to address the challenge in the
3. Providing recommendations on how to manage the
public sector.
challenge of conflict of interest in the public sector.
Initially, this study sought to cover the whole Southern
African region in a comparative study but it was
deemed that such an endeavour would place some Section 1: Defining the problem
countries in an unfair position over others. Some of and its link to corruption
the key factors were that a lack of harmonisation of
legislation, frameworks and systems in addressing Definition
conflicts of interest were limited in some countries
in the Southern African Development Community In general, conflict of interest occurs when an individual
(SADC) region. 6 has a private or personal interest which seems to
influence the objective and impartial discharge of the
Thus, the decision was made that the study would individual’s official duties; the individual can be a public
focus on South Africa as the country had one of the official, an employee or professional. While conflict of
most comprehensive legislation and mechanisms in interest applies to individuals in the private, public and
place to address conflicts of interest in the region. It is non-profit sector, this paper will focus on conflict of
anticipated that the findings and recommendations of interest in the public sector and adopts the definition
this study on South Africa will provide some lessons to of conflict of interest published by the Organisation for
other countries facing similar challenges in the region Economic Co-operation and Development (OECD):
and/or continent.
A conflict of interest involves a conflict between
the public duty and the private interest of a
Problem statement and objectives
public official, in which the official’s private-
The 2020 Corruption Perception Index (CPI) ranks South capacity interest could improperly influence
Africa at 69 globally, indicating a drop of 14 places since the performance of their official duties
2009, and indicates that South Africans perceive public and responsibilities.10
sector corruption as a major challenge. 7
Three key features emerge from the above definition,
It is important to note that focusing on corruption in namely 1) private interest, 2) official duties and 3) the
government does not negate private sector corruption influence of the private interests upon the performance
as a problem. In South Africa, for instance, there have of public duties. Private interests are not limited to
been instances where several high-profile corporate financial and economic interests but other forms of
companies such as Bain & Co, SAP, McKinsey and KPMG interests such as personal benefits, affiliations with
have been complicit in corruption scandals and proved public and private sector organisations, political
key role players in enabling public sector corruption.8 institutions, religious or ethnic groups, trade unions
Hence, until public sector corruption is addressed, and other personal interests and relationships.11
corruption in the private sector will continue to thrive. 9
Official duties are the responsibilities entrusted to a
Furthermore, it is essential to note that anti-corruption public official who is obligated to discharge them
measures have predominantly focused on a criminal objectively in the public interest. As defined in the
justice response, such as prosecution. This paper UNCAC, a public official refers to ‘any person holding a
advocates for a more holistic approach to addressing legislative, executive, administrative or judicial office of a
corruption with a combination of both preventative and State Party…’ or any person defined as a ‘public official’ in
reactive measures. the domestic law of a state.12
Research Paper 24 / September 2021 3The third element underlines the point at which nonetheless may result in a situation where a public
personal and public interests result in a conflict. In official may use their official position for private gain.13
this regard, the personal interest of the public official
Conflict of interest situations are not corruption per se
influences or appears to influence the individual from
but do result in an ethical issue. Public officials have
discharging their duties in an objective manner, thus
an obligation to the public to discharge their duties
failing to fulfil their institutional obligations. While it is
objectively, which becomes increasing difficult when
normal for public officials to have or pursue private or
personal interests are involved. Therefore, it is only when
personal interests, the issue arises when these interests
conflicts of interest are not managed adequately or
conflict with the public duty of the official.
are left unaddressed that they result in corruption. This
is evidenced in the State of Capture report where the
Categories of conflicts of interest former South African Public Protector exposed how the
various conflicting interests in government departments
1. Actual/real conflict of interest – This occurs and state-owned entities (SOEs) resulted in grand-
when a direct conflict exists between the public scale corruption.14
official’s private or personal interest and the
individual’s public duty and those of the public
body. For instance, a company belonging to a
Conflicts of interest and corruption
senior public official is competing for a tender Conflicts of interest involve public officials possessing an
to provide services to the department which the
interest which could affect the execution of their public
individual oversees.
duties while corruption regards the abuse of power or
2. Apparent/perceived conflict of interest – This trust for personal gain. For instance, a public official who
is a situation whereby a public official’s private neglects the public interest in favour of their private
interests appear to have improperly influenced interest may use their position for personal gain and
the individual’s decision or performance of their engage in corrupt activities such as extortion, bribery and
public duties but it is not actually the case. For fraud to achieve their goal.15 A conflict of interest provides
example, the spouse of the official heading the
the individual with an opportunity to take advantage
housing department submits a bid for a tender to
of their position for personal gain, and corruption is the
build low-cost houses in a province. Even though
the official has disclosed the conflicting interests active seizing of the opportunity to obtain that benefit.16
and is not part of the bid evaluation committee, to
the outside parties and the public it appears as a
conflict of interest. This further highlights how an The relationship between
apparent conflict of interest can be as detrimental
to the public’s confidence in a public official/ corruption and conflict of
interest can be described at
department as it would have been in the case of
an actual conflict of interest.
3. Potential conflict of interest – This arises best as a continuum
when a public official’s personal interests may
conflict with their public duties in future. For
example, a senior public official in the provincial As such, although corruption and conflict of interest are
department of health owns shares in a company intimately related and may quite often overlap, they are
which manufactures PPE. The company may in two distinct phenomena. As aptly captured by Francesco
future bid for a tender in supplying PPE to the Kjellberg, ‘Conflict of interest is not a sufficient condition
same department. for corruption, nor can it be considered as a necessary
prerequisite for it’.17 However, as evidenced in the State of
Capture report, testimony at the ongoing Commission
Differentiating between actual, apparent and potential
of Inquiry into Allegations of State Capture and various
conflicts of interest provides an understanding of the
procurement corruption scandals in South Africa,
types of conflict of interest, assists in their identification
conflicts of interest are the common denominator.18
when such conflicts exist and determines the different
approaches to manage them. While situations of conflict In such situations, it can be stated that conflict
of interest do not necessarily involve any offence, they of interest is the beginning phase of corruption.
4 Whose conflict is it anyway? / Addressing conflicts of interest in South Africa’s public sectorThe relationship between corruption and conflict of the same time assist in building integrity in the public
interest can be described at best as a continuum with sector while enhancing public trust in government.20
conflicting interests on one extremity and corruption at Realising the importance of addressing conflict of
the other end. It is for this reason that corruption and interest situations in the public sector, governments
conflict of interest can be confused. at international, continental and regional levels have
incorporated aspects related to conflict of interest in
Unlike corruption, conflicts of interest are situations and
their instruments, policies and legislation as elaborated
not actions. There are two conditions which need to be
in Table 1.
met under which conflicts of interest result in corruption:
Government and policymakers are aware of and
1. A public official has to make a choice between
concerned about corruption resulting from conflict of
their private and public interests, which are
interest situations and have developed instruments and
mutually exclusive;
legislation to regulate and manage such conflicts in the
2. The official decides to negate the public interest to
public sector. In fact, South Africa has among the most
pursue their private interests.19
comprehensive legislation and frameworks to manage
conflicts of interest in the Southern African region.
It is for this reason that effective systems should be put
But it is still faced with numerous corruption scandals
in place to address such situations and provide public
and breaches of the public official code of conduct
officials with guidance on how to resolve these conflicts
resulting from conflict of interest situations which will be
when they occur. Such systems not only reduce the risk
examined in the next section.21
of corruption resulting from conflicts of interest but at
Table 1: International, regional and national instruments/legislation
International instruments
United Nations Convention Against Corruption (UNCAC)22
Art 7 (4): Each State Party shall, in accordance with the fundamental principles of its domestic law, endeavour to adopt,
maintain and strengthen systems that promote transparency and prevent conflicts of interest.
Art 8 (5): Each State Party shall endeavour, where appropriate and in accordance with the fundamental principles of its
domestic law, to establish measures and systems requiring public officials to make declarations to appropriate authorities
regarding, inter alia, their outside activities, employment, investments, assets and substantial gifts or benefits from which a
conflict of interest may result with respect to their functions as public officials.
Regional instruments
African Union Convention on Preventing and Combatting Corruption23
Article 7 (1): State parties commit themselves to require all or designated public officials to declare their assets at the time of
assumption of office, during and after their term of office in the public service.
SADC Protocol on Corruption24
Article 4 (1) (a) Each State Party undertakes to adopt measures, which will create, maintain and strengthen standards
of conduct for the correct, honourable and proper fulfilment of public functions as well as mechanisms to enforce
those standards.
National legislation and policies (South Africa)
Prevention and Combating of Corrupt Activities Act 12 of 2004 (PCCA)25
Section 17: Any public officer who, subject to subsection (2) acquires or holds a private interest in any contract, agreement
or investment emanating from or connected with the public body in which he or she is employed or which is made on
account of that public body, is guilty of an offence.
The Public Service Act of 199426
Section 30 (1): No employee shall perform or engage himself or herself to perform remunerative work outside his or her
employment in the relevant department, except with the written permission of the executive authority of the department.
Research Paper 24 / September 2021 5The Public Service Regulations 2016 (PSR)27
Section 7: Provides measures on how to deal with cases of conflict of interest.
Section 13
(b): [An employee shall] not engage in any transaction or action that is in conflict with or infringes on the execution of his or
her official duties.
(c): [An employee shall] not conduct business with any organ of state or be a director of a public or private company
conducting business with an organ of state, unless such employee is in an official capacity a director of a company listed in
Schedule 2 and 3 of the Public Finance Management Act.
(f): [An employee shall] refrain from favouring relatives and friends in workrelated activities and not abuse his or her authority
or influence another employee, nor be influenced to abuse his or her authority.
Section 17: Establishment of a register of designated employees’ interests.
Section 18 (1); (2): All members at levels of senior management service need to disclose their financial interests to the
relevant executive authorities by 30 April each year.
Section 19: Provides information on the details of interests that need to be disclosed.
Code of Conduct for Public Service28
Section 4.2.7: An employee does not abuse his or her position in the Public Service to promote or prejudice the interest of
any political party or interest group.
Section 4.5.5: An employee does not, without approval, undertake remunerative work outside his or her official duties or use
office equipment for such work.
Public Administration Management Act 11 of 2014 (PAMA)29
Section 8 (2): An employee may not
(a) conduct business with the State;
(b) be a director of a public or private company conducting business with the State.
Section 9 (1): An employee must, in the prescribed manner, disclose to the relevant head of the institution all his or her
financial interests and the financial interests of his or her spouse and a person living with that person as if they were married
to each other.
Public Finance Management Act 1 of 199930
Section 3 (a): A member of an accounting authority must disclose to the accounting authority any direct or indirect personal
or private business interest that that member or any spouse, partner or close family member may have in any matter before
the accounting authority.
Section 2: Case studies of conflict of and relationships vulnerable to conflicts of interest.
These include but are not limited to: outside interests
interest in the public sector of public officials, interests and activities of the official’s
Given the various manifestations of conflict of interest spouse or partner, private interests in government
situations in the public sector, selecting which case contracts, favoritism, nepotism, gifts and relationship
studies to highlight can prove a challenging endeavour. to private organisations. This method provides a more
concentrated approach to evaluating situations of
Choices can be based on the highlighting of high-risk conflict of interest and hence the one adopted in the
areas such as public procurement, state-owned entities selection of the case studies below.
and public-private partnerships, the awarding of permits,
regulations, the appointment of public officials and One of the limitations of this paper is the number of
law enforcement. 31 case studies and typologies which could be examined.
To this end, three typologies were selected, namely, 1)
Another approach to the selection of case studies is private interest in government contracts, 2) relationship
to choose according to the typologies of conflict of to private organisations and 3) gifts.32
interest situations which focus on the activities, interests
6 Whose conflict is it anyway? / Addressing conflicts of interest in South Africa’s public sectorCase 1: T he South African Strategic Position held during the
Defence Acquisition – Conlog’s Name acquisition process
Johannes Modise Minister of defence and chairperson
private interest of the Armament Acquisition Council
In 1999, the South African government finalised Major-General Ian Chairperson of state-owned defence
its military acquisition project, then worth around Deetlefs manufacturer Denel
R29,9 billion, known as the Strategic Defence Package Ronald Haywood Chairperson of Armscor and member
(SDP).33 Since then, the SDP – more commonly known of the Armament Acquisition Council
as the Arms Deal – has become one of the most Seshi Chonco Managing director of Denel
controversial procurement processes ever undertaken by
the South African post-apartheid government, not only It should be noted that the deal between Conlog
in terms of its cost to the economy but in the rationale and BAE never materialised. After the proposed deal
behind the acquisition of the defence equipment in was reported in the media, BAE distanced itself from
the first place in that South Africa faced no immediate
Conlog, noting that the latter was removed from
military threats at the time, as emerged from a Defence
its offset programmes once it became aware that
Review process undertaken a few years earlier.
the then minister of defence was a shareholder in
the company.39 Later, BAE would deny ever doing
The Arms Deal has become business with Conlog.40 Yet, according to the National
Industrial Participation (NIP) Defence Summary Project
one of the most controversial Description published in 1999 (a few months after BAE
was selected as the preferred suppliers of the Hawk and
procurement processes ever Gripen), feasibility studies and implementation plans
undertaken by the South African were completed for Conlog as an offset programme. 41
post-apartheid government From the above, it is clear that a distinct conflict of
interest situation existed due to the position of the
individuals concerned. The Armament Acquisition
BAE Systems, or British Aerospace, as it was known back Council is the highest level in the procurement process
then, together with SAAB (Svenska Aeroplan Aktie Bolag) where acquisition of arms is approved. Denel is the
emerged as the principal winners in the Arms Deal. state-owned company responsible for the manufacture
While the former was contracted to supply Hawk fighter of arms and stood to benefit from sub-contracts from
trainers, the latter was to deliver the Gripen fighter the arms acquisition process. 42 Applying the conflict
jets jointly with BAE under contracts worth around of interest definition, one can notice the clear conflict
R15,77 billion.34 To execute one of its offset projects, BAE of interest that existed between the public duties
chose two companies which would form a joint venture, (members of the acquisition council, senior executives of
namely, ABB-SA (which at that time was a partner Denel) and private interests (Conlog) where the benefits
of SAAB and BAE) and Conlog.35 The spin-off for this from the Conlog–ABB-SA deal would no doubt have a
programme would have been the ‘manufacture of new bearing on the discharging of their official duties.
pre-payment solar home electricity systems for local and
export markets’.36
Case 2: The conflicting case of the Black
The fact that Conlog (previously Log-Tek Holdings Group) Management Forum and the
was a company that ‘designed, manufactured and director general43
marketed pre-payment revenue systems, automotive
security electronics, contract manufacturing and other Benefits accrued from conflict of interest situations
related products’37 was not the issue but rather who are not only financial but can extend to non-pecuniary
the shareholders in Conlog were at the time and stood benefits that apply not only to paid but also to unpaid
to benefit from the procurement process should BAE activities. For instance, a public official serving as a
win the contract. These included Johannes Modise, board member of an organisation and who interacts
Major-General Ian Deetlefs, Ronald Haywood and with government agencies or does business with the
Seshi Chonco.38 departments whom the official is employed by can be
Research Paper 24 / September 2021 7said to undertake activities that may create conflicts of organisation, it was alleged that Manyi remarked
interest with their duties. The following case illustrates that there was a gap between the Constitution and
this point. transformation and stated that certain provisions of
the Constitution should be redrafted.47 At the same
Mwzanele Manyi was appointed as director general meeting, he further criticised the Constitution’s freedom
(DG) of the Department of Labour (DoL) in 2009. At the of expression clause because of the media’s criticism of
time of his appointment, Manyi was also the president then president Jacob Zuma.48 Despite the fact he was
of the Black Management Forum (BMF) – a post he held addressing the audience in his capacity as president of
from 2006 until 2012. As an organisation, the BMF aims the BMF, Manyi was still an employee of the government
to develop and empower managerial leadership at and such statements would have been contradictory
senior level among black professionals and executives in to his oath of office of promoting the interests of
South Africa.44 His responsibilities for each position are government and maintaining good relationships with
illustrated in the table below. government stakeholders.
Another incident highlighting Manyi’s conflicting
Responsibilities as director general of labour
interests occurred in 2010 in a meeting with the then
• Contributing to employment creation in both the Norwegian ambassador to South Africa in a discussion
public and private sectors; on employment-creation projects in South Africa.
• Promoting equality in the labour market through
According to the ambassador, during the meeting Manyi
the enforcement of the Employment Equity (EE) Act,
amendment of the Employment Equity (EE) Bill tried to solicit private business deals, one of which was
• Reviewing companies listed on the Johannesburg offering services as a BEE consultant, although Manyi has
Stock Exchange; consistently denied the allegations.49
• Protecting vulnerable workers through the enforcement
of compliance with labour legislation, implementation After the meeting, the ambassador lodged a
of the Decent Work Agenda and working on the
complaint with the minister of international relations
draft Bills of the Labour Relations Act (LRA) and Basic
Conditions of Employment Act (BCEA) and cooperation regarding Manyi’s conduct during
• Strengthening the institutional capacity of the DoL.45 the meeting. Shortly afterwards, the DG of the
DoL was suspended and disciplinary proceedings
Responsibilities as president of the BMF
were instituted; the encounter with the Norwegian
• Transformation in the workplace; ambassador was among the list of charges.50 In
• Drafting and implementation of Affirmative Action February 2011, Manyi was transferred to the Government
policies;
• Implementation of Black Economic Empowerment Communication and Information System (GCIS) as
(BEE) policies; chief executive officer while still serving as president of
• Analysing constitutional provisions and their limitation the BMF.51
with regards to transformation;
• The adaptation of the EE Act and other labour This case exemplifies how conflict of interest situations
legislation to advance the interests of black managerial do not always result in a financial benefit. When asked
leadership.
by the Public Protector whether he understood that
his position as DG and president of the BMF posed a
At a glance, one notices the striking similarities conflict of interest, Manyi responded that no conflict of
between the duties of the DG of the DoL and the interest existed as the position of the BMF was a non-
president of the BMF pointing towards a potential remunerative one.52
conflict of interest for an individual expected to
discharge both duties. It is nonetheless possible to This indicates a failure on Manyi’s part to understand
avoid such a situation if the conflicting interests are that the definition of conflict of interest includes non-
managed accordingly. Yet, according to the Public remunerative positions, as acknowledged by the Public
Protector’s report on the investigation of this case, it Service Commission in its 2007 report on managing
is alleged that Manyi failed to manage the conflict of conflicts of interest through public disclosure.53 To
this end, it is crucial to include provisions that deal
interest appropriately.46
with such instances when developing frameworks
In 2010, while addressing the BMF constitutional to address and manage conflicts of interest in the
symposium in his capacity as president of the public sector.
8 Whose conflict is it anyway? / Addressing conflicts of interest in South Africa’s public sectorCase 3: T o Dubai with love – a minister actual conflict of interest situation, mainly due to the
and a conflicted loan fact that the person from whom he accepted the loan
was conducting business with the department that the
Between December 2016 and January 2017, while he minister was in charge of.
was still minister of sports and recreation, Fikile Mbalula
There are disputed claims as to whether the money
and his family flew to Dubai on a family vacation. It
which Dockrat deposited into the travel agent’s
would later be revealed by the Public Protector that the
account can be termed a loan. The Public Protector
trip cost R684 620.39.54 It was further alleged that at the
disagreed that the arrangement between Dockrat and
time the minister and his family travelled to Dubai, he
Mbalula consisted of a loan while the minister argued
had no means to pay for the trip. However, the minister
that the loan agreement was verbal.61 Of importance
released a statement denying that his and his family’s
in this case is that a public official taking a loan from a
trip was sponsored, claiming that the vacation was paid
friend to pay for their vacation does not constitute any
for from the minister’s ‘family financial resources’.55
wrongdoing. However, if the person from whom the
It later emerged from the Public Protector’s report that loan is taken is conducting business with the state or
upon his return, Mbalula borrowed around R300 000 with an organisation (in this case SASCOC) which falls
through a loan agreement with a ‘lender’ to pay under a government’s ministry then it raises serious
towards the debt while settling the remainder from conflict of interest concerns.
his own funds.56 The lender, it turned out, was a Yusuf
Dockrat – a longtime acquaintance of the minister’s. 57
According to the Public Protector, the minister would Conflict of interest situations
eventually repay the full amount of the loan from his
acquaintance in instalments. manifest in various typologies
At the time of the loan, Dockrat was the director which are not merely restricted
of Sedgars Sport. Sedgars, according to the Public
Protector’s report, was the technical sponsor of the
to financial gain
South African Sports Confederation and Olympic
Committee (Sascoc) and supplier of formal clothing The above case studies aimed to demonstrate how
worn by the South African athletics, boxing and conflict of interest situations manifest in various
beach volleyball teams.58 However, in 2017, during typologies which are not merely restricted to
a question-and-answer session with the minister of financial gain. As can be noted, these situations can
sports and recreation in Parliament, it was noted that take the form of a public official benefitting from a
Sedgars Sport was only contracted to supply sports government contract, a conflict of duties of public
equipment and attire to the Department of Sports, Arts, and private entities, a public official obtaining a
Culture and Recreation in the Free State and North loan from a friend who does business with the
West provinces and that the contract had ended on department one is responsible for and many
31 July 2017.59 others. Nonetheless, these cases underscore the
importance of managing and regulating conflict of
The minister further emphasised that while Sedgars
interest situations before they escalate and result in
Sport was not contracted to Sascoc, the company is a
corrupt activities.
registered supplier in Sascoc’s database. It is important
to note that Sascoc is a partner of the Ministry of Sports
and Recreation and in 2017, the sports confederation Section 3: Key findings of the study
received a grant which represented 9.5% of the total
Having examined what conflicts of interest are and
allocated budget from the department.60 This indicates
how they manifest in various settings, this section
that there was a relationship between Sedgars Sport,
aims to provide some key findings that emerged from
Sascoc and the Department of Sports and Recreation
the research. The section briefly elaborates on two key
of which Mbalula was the minister at the time.
findings, namely, challenges in 1) the understanding
From the above case study, Mbalula’s acceptance of of conflict of interest and 2) the monitoring of conflict
the loan to pay for his family vacation presented an of interest situations.
Research Paper 24 / September 2021 9Understanding conflict of interest He was prosecuted and convicted on charges of conflict
of interest and sentenced to 12 months’ imprisonment by
One of the key findings emerging from the research the intermediate court.66
is the limited understanding surrounding the term
conflict of interest itself. From the interviews conducted The current prime minister would eventually be cleared
with participants across the region, the term was often of any wrongdoing by the Privy Council (the highest
associated and at time conflated with procurement court of the country) after appealing the judgment of the
corruption and financial benefits derived from such intermediate court. One of the key issues emerging from
situations.62 In some cases, conflict of interest was not the case concerned the term personal interest – which the
perceived as a major issue, such as procurement fraud Privy Council felt was misinterpreted by the intermediary
or corruption. The issue was often perceived as an ethical court. Undoubtedly identification of conflicts of interest
issue in some cases and as something that could not be can be challenging and including a definition of the term
avoided in others.63 in anti-corruption legislation is crucial.
One of the main challenges faced in understanding
Limited capacity of a conflict of interest
conflicts of interest is the lack or limited definition of
the term in legislation. This is highlighted in the fact
enforcement system
that both the African Union’s Convention on Corruption The most effective approach to managing and
and the SADC Protocol on Corruption do not contain addressing conflicts of interest is to prevent them
a definition of conflict of interest but rather mention from occurring in the first place. It is crucial for states
aspects related to it. to incorporate conflict of interest systems as a key
preventative anti-corruption measure. Such a system
South Africa is one of the few countries in the SADC
should ideally contain three vital facets: 1) a clear and
region to possess a more updated and comprehensive
comprehensive code of conduct/ethics for public
framework on conflict of interest, so it is striking that the
officials, 2) the disclosure of interests and 3) an effective
definition of the term is missing in the PCCA Act – despite
enforcement system.67 For a conflict of interest detection
the fact that conflict of interest is criminalised in Section
and management system to function effectively, all three
17 (1) of the Act.
facets need to be present and operate optimally.
As illustrated in two of the case studies in the previous
section, there is often a lack of understanding of what
constitutes a conflict of interest. The exact reason for this The main challenge in dealing
challenge is difficult to pinpoint, given the plethora of
frameworks and policies which govern the public sector
with conflicts of interest is
in South Africa. the absence of an effective
For instance, one research participant mentioned the enforcement system
case of former president Jacob Zuma and the Arms Deal
and posed the question: ‘Of all the charges instituted
against the former president, why does conflict of interest From the research, it surfaced that while South Africa’s
not feature even though it is right there in the PCCA?’64 public sector does possess all three of these facets,
conflicts of interest still persist and present a major
Another challenge that arises with the term conflict of challenge. As one former government official noted,
interest lies within the definition itself. In instances where ‘South Africa has one of the best regulations in the
the term is defined, for example in the PSC Notice 865 [SADC] region but the problem is with the lack of/
of 2009,65 it is often delineated in broad terms to include limited implementation of these regulations’.68
all types of conflict of interest. However, this can lead
to a broad interpretation of the term and may result Codes of ethics for public officials and disclosure of
in difficulty in prosecuting an individual on conflict of interests are comprehensively governed by legislation
interest charges. and regulations as indicated in previous sections.
However, as the research showed, the main challenge
This became evident in a case involving the current in dealing with conflicts of interest is the absence of an
prime minister of Mauritius while he was vice prime effective enforcement system, due to limited political will
minister and minister of finance and development. and lack of effective skills capacity.
10 Whose conflict is it anyway? / Addressing conflicts of interest in South Africa’s public sectorIn South Africa, the role of the enforcement system is financial and interest disclosure should be extended to
played by the Public Service Commission (PSC) which public sector employees below level 11.
is mandated by the South African Constitution to
Although systems and frameworks are in place, it
promote the principles and values governing public
appears that conflicts of interest still persist and the fact
administration.69 Two key functions played by the PSC
that, as indicated in Table 2, employees do not disclose
in promoting an effective system in the regulation and
their interests is quite concerning. One may be excused
management of conflicts of interest in the public sector
for perceiving such processes as merely a compliance
is through the administration of the Financial Disclosure
exercise with little consequences. As one participant
Framework (FDF)70 and the monitoring and evaluation of
aptly notes, ‘Conflict of interest is not taken seriously. All
the Code of Conduct for public officials.
one does is fill in a form and it gets stored away and only
Despite these initiatives by the PSC, conflicts of interest reviewed when it is required. And even when a conflict of
still continue to pose a significant challenge in the interest is discovered, the punishment is not as severe.’74
public sector. These challenges faced by the PSC in
implementing the FDF consist of a lack of compliance
with the FDF, such as non-disclosure of full interests Conflicts of interest still continue
and non-submission of financial disclosure forms,
conflict of interest situations where employees are
to pose a significant challenge
conducting business with the state, officials involved in the public sector
in remunerative work outside of the public service and
non-disclosure of gifts and sponsorship as indicated in
Table 2 below. This sentiment is evidenced in the PSC Quarterly Bulletin
for the period 1 October to 31 December 2020 when it
Table 2: C
ompliance with the Financial Disclosure highlighted that only 31 out of 147 executive authorities in
Framework (as at 30 May 2020) national and provincial departments provided feedback
on the actions taken from the findings in Table 2. From
FDF received 9 792 the information provided by the 31 executive authorities
FDF not submitted 169 for not disclosing all their financial interests, 290 SMS
FDF submitted but interest not disclosed 1 813 members were ‘sensitised of the need to comply with
the Regulations and to avoid actual conflicts of interest’
Activities constituting potential conflict of 1 508
interest while 128 SMS members faced disciplinary action for
contravening the FDF.
Activities constituting actual conflict of 16
interest
As indicated above, if any one of the three pillars
Engaged in remunerative work 382 (comprehensive codes of conduct and regulations,
Gifts and sponsorship R4 631 314,21 disclosure and effective administration and
Adapted from the PSC71 enforcement) are missing or not functioning optimally,
addressing conflicts of interest in the public sector will
It is important to note that the FDF applies only to remain a futile exercise.
Senior Management Services (SMS). Realising the
limitation of this framework, in 2018, the minister of
public service and administration issued a directive
Section 4: Recommendations
extending the categories of public officials who had From the previous section, it is clear that South Africa
to disclose their financial interests. These included possesses more than adequate legislation, policies and
employees at salary level 13 and above through the frameworks to address conflicts of interest in the public
Occupation Specific Dispensation (OSD),72 those sector. Rather than re-inventing the wheel, this section’s
appointed at salary level 11 and 12, employees in supply aim is to provide recommendations that focus on
chain management units, employees in financial units, strengthening the current systems and where possible
ethics officers and PSC officials.73 However, it was a suggest new approaches which may assist policymakers
common sentiment among the research participants tasked with addressing conflicts of interest in the
that this is also not adequate as the categories of public sector.
Research Paper 24 / September 2021 11Awareness training on conflict of interest One suggestion from research participants was that
the training could be designed on a yearly basis as a
A limited understanding of the concept of conflict of refresher course for all members of the public sector.
interest among public sector officials was one of the Invited would be not only those officials in senior
most prominent findings from this research. Despite positions or those more susceptible to conflict of
the numerous policies and legislation on conflict of interest situations, as prescribed in the 2018 directive
interest, a limited comprehension surrounding the by the minister of public service and administration.
concept is quite concerning. Various cases of high-level Further impact could be gauged by making the training
public officials, as highlighted in this paper, involved in compulsory for all employees.
corruption or procurement-related irregularities claiming
ignorance on whether their actions constitute conflicts Additionally, training should be adapted to different
of interest exemplifies this concern. This leads to the government departments and should factor in dynamics
question of whether these are cases of ignorance or of such as context, culture and type of duties. For instance,
avoiding accountability. conflict of interest training for the police would be
different from conflict training for officials from the
health department.
Despite the numerous policies
Moreover, training and awareness should also
and legislation, a limited target members of the general public. Of particular
interest are those who deal on a regular basis with
comprehension surrounding the government, whether as contractors, vendors or service
concept is quite concerning providers.77 This becomes crucial as several conflict of
interest situations resulting in corruption scandals by
government officials involve either a vendor, service
Since every public official is meant to adhere to the provider or contractor conducting business with
Code of Conduct for Public Servants, it becomes the government.
important to understand the contents of the policy.
One approach in addressing this challenge is to require
To this end, the PSC released an Explanatory Manual
that any individual or company conducting business
on the Code of Conduct in 2002.75 As noted above,
with government should undergo some form of
however, comprehensive legislation and policies
conflict of interest training. Another suggestion would
on conflict of interest are not sufficient and have
be to include clauses related to conflict of interest in
little impact on public officials unless they have an
contracts for anyone providing services to government,
understanding of the concept and how they can apply
as exemplified in the code of conduct for procurement
it in their work.
in Canada.78
This was captured by one research participant as ‘There
Admittedly, conflict of interest training and awareness
are rules but no awareness’.76 A key recommendation
will not eradicate conflicts of interest in the public
from participants was the need for greater awareness
sector. But it would provide basis for officials with
of the concept of conflict of interest in terms of what
knowledge to detect and prevent these conflicts in
it is and the factors that give rise to such a conflict and
should be targeted for both public officials and the their work.
general public.
Conflict of interest system
For public officials, the awareness could take the form
of training and capacity building whereby officials In theory, South Africa has the necessary policies,
familiarise themselves with policies related to conflicts legislation and systems in place for an effective
of interest in the public sector, recognising conflict conflict of interest system. In fact, the PSC’s role, when
situations when they arise and being equipped with established, was to provide such a system, which would
skills on ways to manage and prevent them. To be enable it to achieve its mandate of promoting the
effective, these training and capacity building workshops principles and values governing public administration.
need to be on a continuous basis rather than offered as a Despite achieving some success in this regard such as
once-off endeavour. the administration of the FDF and the monitoring of the
12 Whose conflict is it anyway? / Addressing conflicts of interest in South Africa’s public sectorCode of Ethics, the PSC has not yet managed to fully Regulations and the Protection of Personal Information
implement an effective conflict of interest system.79 Act. A lifestyle audit is performed to determine if the
lifestyle of an employee matches the person’s income
It emerged during the research that one of the
stream. And in the public sector, this exercise is a
challenges is the limited scrutiny of conflict of
key tool in the prevention of corruption. It consists of
interest forms/documentation and submissions. ‘After
three tests: lifestyle review, lifestyle investigation and
completing and submitting the FDF, it is filled away lifestyle audit.
and only reviewed if something [corruption allegations]
appears,’ explained a former government official. Thus Firstly, a lifestyle review is performed through the
far, the scrutiny of such documents is arbitrary rather examination of various pieces of information from
than systematised. 80 databases to determine whether the employee’s
lifestyle matches the individual’s income stream.
Even the current approach of the FDF to mitigate When a discrepancy exists without explanation, then
conflict of interest is fraught with challenges. In addition a lifestyle investigation is launched. A lifestyle audit
to the lack of full disclosure of assets, public officials fail is conducted to provide the investigator with more
to disclose the assets of their spouses and close relatives. information about the assets of the individual to clarify
As one anti-corruption expert noted, there have been the discrepancy and unexplained wealth. Through the
instances where public officials would use a different review, investigation and audit, conflicts of interest can
surname or change their names slightly so they would be determined.
not be picked up in the system.
According to PSR 2016 Regulation 22 (a), all heads
To this end, a recommendation emerging from the of department and their delegates are mandated to
research is to develop a systematic way of detecting conduct lifestyle audits.81 Lifestyle audits are different
conflicts of interest in all aspects. This system could from other verification exercises conducted by other
take the form of an online database connected to all state departments such as the identification of conflicts
government departments. This database could be of interest by the PSC, the tax audits performed by the
interlinked to other government databases containing South African Revenue Service and the vetting done by
government officials’ information such as personal the State Security Agency.82
information, ownership of real estate, directorships
of private companies and information from tender Despite the legislation and frameworks in place and
procurement databases. This would enable cross- the continuous pronouncements by various ministers83
referencing of information, making it easier to detect any that lifestyle audits will become a standard practice
conflicts of interest. in the public service, progress on the issue remains to
be seen.84It becomes important for the public service
Thus, it would require inter-departmental collaboration to implement a mandatory lifestyle audit for public
such as information gathering from state security, the officials; this could be a regular practice occurring on
National Treasury procurement database, the Auditor a yearly basis. Furthermore, lifestyle audits on their
General’s office, the Companies and Intellectual own are not sufficient but need to be complemented
Property Commission (CPIC), Home Affairs and the with the other conflict of interest prevention tools
South African Police Service (SAPS), amongst others. mentioned above.
This collaboration could later extend to the private
sector, such as banks and asset management firms, to Blockchain technology to
detect any private or offshore accounts and companies
address conflict of interest
held by public officials identified during the conflict of
interest check. Similar to corruption, conflicts of interest cannot be
eradicated as individuals will always find ways to
Another recommendation for strengthening a conflict
manipulate and bypass systems and policies designed to
of interest monitoring system would be bolstering
strengthen the detection and management of conflicts
the lifestyle audit system for public officials. In South
of interest.
Africa, lifestyle audits are governed by several pieces
of legislation, such as the Public Service Act, Public To address this challenge, blockchain technology could
Administration Management Act, the Public Service be an avenue to explore. Blockchain technology is the
Research Paper 24 / September 2021 13system that supports digital currency and consists of an sanctions. Supporters of the latter argue that a conflict
open and distributed ledger with strong cryptography to of interest system is meant to be preventative rather
secure online transactions. The benefit of such a system than punitive. As such, the objective is to prevent such
is that the recorded information cannot be changed, a situation from occurring rather than to focus on
hacked or doctored in any way, making the system punishing the official, unless corruption is involved.
attractive as an anti-corruption tool.85
Proponents of criminalisation, meanwhile, argue that
Despite being a relatively novel concept in public since corruption is a manifestation of a conflict of
administration, the use of blockchain technology is interest, an official found guilty of a conflict of interest
being discussed with regard to strengthening public should be held accountable and punished as a means
procurement processes to prevent corruption. The of deterrence. While both arguments are valid and have
provision of a high level of security of information and some legitimacy, the situation is more complex upon
the integrity of the data makes it a potentially useful closer examination.
anti-corruption tool in procurement systems. Another
appealing facet of blockchain technology is the Generally, penalties for violations of conflict of interest
transparency it affords. For instance, every transaction regulations may include administrative or criminal
is recorded chronologically and can be traced. 86 sanctions or none at all. In South Africa, for instance, the
PSR 2016 section 21 (2) (c) advocates for administrative
sanctions against an employee found in breach of an
The benefit of such a system is unresolved conflict of interest situation89 while the
PCCA Act of 2004 section 26 (1) (b) prescribes a fine or
that the recorded information a sentence not exceeding 10 years by a high court or
cannot be changed, hacked or regional court or a fine or a sentence not exceeding three
years if found guilty by a magistrate’s court.90
doctored in any way
Meanwhile, in the case of a public official found guilty
of conducting business with the state, the PAMA of 2014
Thus far, several countries have implemented blockchain section 8 (a) (b) prescribes both a fine and imprisonment
technology in their public sector. These include the land not exceeding five years and may result in the
register in Georgia, digital identities in Estonia and India termination of employment.91 Although the legislation
and shared service centres in Poland. From this, it can
87
makes provision for the various sanctions of violating the
be noted that blockchain technology is not only relevant conflict of interest system, determining which sanctions
to procurement systems but can also be used in conflict to apply is complex.
of interest detection and management systems. Since
South Africa is one of the few countries in the world
the FDF system already operates on a digital platform
(the e-disclosure system) in South Africa, adopting that has legislation which specifically makes conflict of
blockchain technology would further strengthen the interest a criminal offence. However, South Africa faces a
system and provide much-needed transparency. challenge shared with countries with similar legislation
in that ‘there is no established track record of criminal
Another area where blockchain technology could be prosecutions’ with regard to public sector officials.92
of assistance is at the Auditor General’s office in their This may often be the case when the burden of proof in
computer-assisted audit techniques currently used conflict of interest cases is too stringent, requiring the
to detect conflicts of interest.88 In short, blockchain prosecuting authorities to prove not only that a conflict
technology may provide an updated and innovative of interest situation existed but also that the public
system to prevent and mitigate conflicts of interest in official obtained an actual de facto advantage from
the public sector. the situation.93
Some countries such as the United States and Romania
Criminalisation vs administration
have prescribed certain criteria in their legislation for
A significant debate that surfaced during the research is a person to be criminally prosecuted for a conflict
whether officials found guilty of perpetuating conflicts of of interest. These include 1) perpetration of the act
interest be criminally charged or only face administrative (rationalisation) while 2) engaged in public office
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