MINIMUM MUNICIPAL COMPETENCY PROGRAMME Dr Zwelinzima Ndevu

Governance and Legislation Group 3 Governance and Legislation Module 1 Stakeholder Consultation and Ethics in Municipal Finance Unit Standard 116343 Apply the Principles of Ethics in a Municipal Environment

The full programme Group Modules Strategic Management; Budgeting Implementation & Performance Management 3. Strategic Planning & Multi Year Income & Expenditure Management 6. Budgeting Principles & Cycles 7. Financial Reports & Performance Management 2. Municipal Accounting & Risk Management 8. Cash, Investment, Asset, Liability Management 4. Risk Management; Internal Control Framework Design and Audit Planning and Implementation 3. Governance & Legislation 1. Stakeholder Consultation & Ethics in Municipal Finance 2. Intergovernmental Fiscal Relations, Legislation & Policies affecting Municipal Financial Mngmt 4. & 5. Costing & Capital Planning; Municipal IT Support & Project Management 9. Capital Planning & Financing & Costing Principles 5. Managing Information Technology Resources in Municipal Finance 6. Supply Chain Management & Public Private Partnerships 10. Municipal Supply Chain Management 11. Public Private Partnerships

Not applicable for CMFM The content 26 US -ID’s: 116339 116340 116341 116342 116343 116344 116345 116346 116347 116348 116351 116353 116357 116358 116360 116361 116362 116363 116364 119331 119334 119341 119343 119348 119350 119352 NQF Le 6 5 Credits 10 11 12 15 8 CMFM 48965 C E F Not applicable for CMFM Key Certificate SAQA ID - 48965 - 166 credits; F = Fundamental; C = Core; E = Elective (1) AccOff X CFO SnrM MidFin SCMH SCMM

US116343- Assessment Plan 1 Individual assessment Open book case study based controlled class test 29 May 2017 2-hour paper consisting of a case study with insight questions relating to all outcomes: It will be expected of the learner to apply the theoretical models/tools to the questions. OUTCOME 1: Demonstrate knowledge and insight into existing legislation, regulations and codes affecting activities of municipalities in South Africa OUTCOME 2: Apply the principles of ethics and professionalism to a municipal code of conduct Assessment Criteria OUTCOME 3: Develop an implementation plan to achieve compliance with an established code of ethics 2 Individual work-based assignment 17 March 2017 Research the factors that undermine ethics in your municipality and recommend solutions. In doing your assignment reflect on what you have learned and respond to the following questions: 1. What are the values and ethical standards? 2. What conditions would cause the compromise of the abovementioned values and standards? 3. What should be the approach of the municipality in dealing with ethical dilemmas? Is the code of conduct important in regulating the behaviour of stakeholders in a municipal financial environment? Briefly explain your response.

Ethics in Municipal Finance– setting the context and challenge Round-table interactive workshop: Individually reflect upon your (1) personal (in your community) and (2) professional experience (at your office/department) with regards to Ethics in municipal environment In a round-table discussion, share your views with the group

Stakeholder Consultation and Ethics in Municipal Finance Module 1 Stakeholder Consultation and Ethics in Municipal Finance

Apply the Principles of Ethics in a Municipal Environment SAQA 116343 Apply the Principles of Ethics in a Municipal Environment

Orientation Specific Outcomes Demonstrate knowledge and insight into existing legislation, regulations and codes affecting activities of municipalities in South Africa … Apply the principles of ethics and professionalism to a municipal code of conduct … Develop an implementation plan to achieve compliance with an established code of ethics … 

Ethics and Ethical Behaviour in a Municipal Government 22

Ethics – a definition The principles (values) … what is right, what is good and what is proper The standards which guide us in achieving what is right, good and proper The sustained efforts … to employ those sound principles and standards - which best serve the public and their interests 23

Behaviour – lack of diligence and probity 24

Waste of the organisation’s resources Laziness Carelessness Waste of the organisation’s resources Abuse of the organisation’s assets Disrespect for the public and their interests 24

Behaviour – dishonesty for purposes of self interest 24

Corruption, theft, graft and fraud Using insider knowledge and influence Self-dealing Making personal use of government property Unauthorised outside employment 24

Professionalism and ethics in the workplace Criteria Characteristics Competencies Expectations 24

Relationship between ethical individuals and ethical organisations 27

UNETHICAL BEHAVIOUR IN THE PUBLIC ORGANISATION 28

“Public Service is public trust “Public Service is public trust. Citizens expect public servants to serve the public interest with fairness and to manage public resources properly on a daily basis. Fair and reliable public services inspire public trust and create a favourable environment. Public service ethics are a prerequisite to, and underpin public trust and are a keystone of good governance.” OECD “ … trustworthiness, responsibility, respect, compassion, fairness and citizenship … ” IGE 28

LEGISLATION, REGULATION AND CODES APPLICABLE TO MUNICIPALITIES IN SOUTH AFRICA 31

“The ultimate answer to ethical problems in government is honest people in a good ethical environment. No web of statute or regulation, however intricately conceived, can hope to deal with the myriad of possible challenges to a person’s integrity or his devotion to the public interest.” President John F. Kennedy - 1961 33

The Constitution Act 108 of 1996 Rights & Obligations The Bill of Rights The Chapters and the Sections …… 34

And all the legislation … 36

And Codes of Conduct … 43

Class exercise Identify a professional field within municipal environment Identify three ethical concerns (are the issues becoming more of a problem or getting worse) Identify relevant stakeholders in the conflict (what values are in the conflict for each stakeholder) How to handle the issue and why?

Conflict of Interest Disclosure … Recusal … ? 45

King II – Triple Bottom Line Governance Economic Environmental Social

King Reports 1994 – King I “ … integrated approach to the good governance in the interests of a wide range of stakeholders …” 2002 – King II “ … a move to the triple bottom line, embracing the economic, environmental and social aspects …” 2009 – King III “ … core philosophy revolving around leadership, sustainability and corporate citizenship …” 46

Concepts Accountability Responsibility Stakeholders Role-players Corporate Governance Vision Banking Charter – increased focus on sustainability issues, such as access to finance, empowerment and social responsibility. Marketing- sustainability is also a corporate identity issue – can improve reputation. Social responsibility – such as foundation activities and good treatment of employees improves reputation, gives back to community, and makes firm an employer of choice. Good Business sense- improved risk assessment eliminates debt risks, can save costs on facilities by employing environmentally beneficial technologies.

Batho Pele Consultation Service standards Access Courtesy Information Openness and transparency Redress Value for money 49

Codes of conduct and ethics in the workplace Learning activity (see next slide) 56

Codes of conduct and ethics in the workplace Enron Group exercise 57

Good governance includes ten principles as requisites of ethical local governance: These principles are: • Participation; • Rule of Law; • Transparency; • Equality; • Responsiveness; • Vision; • Accountability; • Oversight; • Efficiency and Effectiveness; and • Professionalism.

Codes of conduct and ethics in the workplace Learning activity 58

State forced to reconsider review of parastatals

Applying principles of ethics and professionalism in the municipal environment 61

Public Sector Code of Conduct (66) Codes of Conduct … Public Sector Code of Conduct (66) Code of Conduct for Municipal Staff Members (68) 63

International principles … Principles of personal ethics Principles of professional ethics Principles of global ethics 63

Application of principles to Codes of Conduct in the South African public sector 66

Dilemmas … relationship with councillors relationship with the public relationship among employees performance of duties personal conduct - private interests 68+

Ethical Dilemmas: steps 1 - 5 Ten-step method for resolving ethical dilemmas (adapted from Wallace & Pekel) What are the known facts in the situation? Who are the key stakeholders, what do they value and what are their desired outcomes? What are the underlying drivers causing the situation? In priority order what ethical principles or operating values do you think should be upheld in this situation? Who should have input to, or be involved in, making this decision? 78

Ethical Dilemmas: steps 6 - 10 List any alternative and action plans that would: prevent or minimise harm to stakeholders uphold the priority values for this situation be a good solution to the situation Build a worse-case scenario for your preferred alternative to see how it affects the stakeholders. Rethink and revise your preferred alternative if necessary. Add a preventative ethics component to your action plan that deals with the underlying drivers causing the situation listed in Step 3. Evaluate your chosen decision and action plan against any relevant checklist or code of conduct. Decide and build an action plan, and implement and monitor it.

Ethical Dilemmas – the 12 questions Have you defined the problem accurately? How would you define the problem if you stood on the other side of the fence? How did this situation occur in the first place? To whom and what do you give your loyalties as a person and as a member of the municipality? What is your intention in making this decision? How does this intention compare with the likely results? Whom could your decision or action injure? Can you engage the affected parties in a discussion of the problem before you make your decision? Are you confident that your position will be as valid over a long period of time as it seems now? Could you disclose without qualm your decision or action to your boss, your municipal manager, the council, your family, or society as a whole? What is the symbolic potential of your action if understood? If misunderstood? Under what circumstances would you allow exceptions to your stand? 79

Three examples – individual assignment Ethical dilemmas Three examples – individual assignment 76

Dealing with ethical misconduct in the workplace 80

Forms of warning Verbal warning Written warning Reprimand Suspension Termination Disciplinary steps (82) Dealing with fraud, theft or corruption in the workplace (82) 81

Resolving ethical dilemmas in the workplace Learning activity 87

Compliance with an established code of ethics 90

Roles and responsibilities in an ethics management programme Municipal Manager support An Ethics Committee within council? Ethics Officer? Ombudsman? One person responsible! The guidelines … (96) 95

Hoffman’s Ethical Pyramid 99

Initial tasks of an ethics management programme Purpose … Guidelines … Identify and review values Review which values support the ideal Identify behaviours Identify core values - the top five to ten Compose a code of ethics Include wording - all employees are expected to conform Obtain review from key members of the municipality. Announce and distribute the new code of ethics Update the code at least once a year. 100

Implementing the code of ethics … Internal initiatives Communicating internally External initiatives External communication 107

Whistleblowers’ Charter 112

Appendices A - Code of Conduct for Councillors B – Code of Conduct for Municipal Staff Members C – South African Public Service Code of Conduct D – Prevention and Combatting of Corrupt Activities Act, 2003 E – Sample Ethics Programme for a municipality 125+

SCHOOL OF PUBLIC LEADERSHIP Thank you ……