Key elements of an effective anti-corruption strategy to promote ethical behaviour and build public confidence in the public sector

Corruption statistics: Corruption Perceptions Index (CPI) 2017: South Africa’s score of 43 represents a drop of two points from 45 in 2016. Sub-Saharan Africa: 9/10 (2nd last from the bottom) BRICS countries: 71/180 (“better” performer amongst the BRICS countries) SIU Statistics: The value of money and/or assets potentially recoverable – R126 million The actual value of money and/or assets recovered – R43 million The value of potential loss prevented – R106 million The value of contract(s) and/or administrative decision(s) / action(s) set aside or deemed invalid – R4 billion The value of matters in respect of which evidence was referred for the institution or defence/ opposition of civil proceedings (including arbitration or counter civil proceedings) – R3 billion

AGSA’s role in dealing with corruption The auditor is responsible for Obtaining responsible assurance that the financial statements and reported performance against pre-determined objectives are free from material misstatement, whether caused by fraud or error; and No instances of material non-compliance have come to the attention of the auditee, whether caused by fraud or error. Planning and executing the audit Audit planning specific activities that are designed to assess the risk of fraud and corruption. During execution, specific procedures are performed to respond the assessed risk of fraud. The AGSA’s audit methodology allowed the AGSA to follow an audit approach which is much more risk focussed than before. One of the key aspect of the methodology is now compulsory involvement of fraud specialist in audits that are considered high risk. The fraud specialist assists the audit team in detecting risks of fraud and corruption which ultimately adds value to the auditee.

The fraud specialists’ role Assess inherent risk of fraud and corruption: knowledge of the business Pre-planning stage Planning stage Execution stage Reporting When Intensive fraud and corruption risk detection analysis; ideal to assist with sample selection Fraud and corruption assurance on specific high risk areas; Guidance on specialised procedures Advise on findings relating to fraud and corruption

Source: Robert Klitgaard (academic anti-corruption research)

Irregular expenditure 10

Section 195 of The Constitution stipulates the democratic values and principles that must govern public administration.

Elements of ethical conduct in the public sector Section 195 of The Constitution stipulates the democratic values and principles that must govern public administration, which include:- Services must be provided impartially, fairly, equitably, without bias Efficient, economic and effective use of resources must be promoted Public Administration must be accountable A high standard of professional ethics must be promoted and maintained

Model for effective management of corruption It is important to place a strong emphasis on fraud prevention, which may reduce opportunities for fraud/ corruption to take place, and fraud deterrence, which could persuade individuals not to commit fraud because of the likelihood of detection and punishment. This involves a commitment to creating a culture of honesty and ethical behaviour which can be reinforced by an active oversight by management, and implementing a well-articulated code of ethics. Prevention Implementing and maintaining effective measures any breach of ethics. Detection Allegations of unethical conduct are investigated and appropriate action is taken based on the outcome of the investigation. Consequences management

The winning formula: SOUND ETHICAL CULTURE Ethical conduct Elements of ethical conduct in the public sector: Services must be provided impartially, fairly, equitably, without bias Conduct corresponds to values and principles of particular institution Individual must have an accountability standard A public servants duty is a “steward” to the public SOUND ETHICAL CULTURE Anti corruption strategy Reporting mechanism

Critical considerations in anti-corruption strategies Clarity in legal framework and policies Understanding of current reality and threats Political and/or leadership will Clear objectives Promotion of institutional integrity Clarity of ethical misconduct and corrupt acts Collaborative implementation Monitor and evaluate

Implementing an effective anti-corruption strategy: Promote a culture of whistle blowing Consider whether the organization also needs an ethics hotline. Create awareness of reporting mechanisms Provide training about process and what is to be expected Explain confidentiality and anonymity Provide protection (PDA) Investigate reports (no sweeping of issues under the carpet) Provide feedback to whistle-blowers and the organisation as a whole *Reward or celebrate ethical heroes*

Activities for reporting: Example Why must employee report Illegal or unlawful activity Theft, fraud, corruption Obliged by law to do so (POCA) Violation of procedures Rules, policies, regulations Failure to do so exposes the public sector institutions to financial losses and reputational damage Wasteful conduct Decisions or actions leading to wasteful conduct Demonstrates accountability for public funds, builds public confidence Unethical conduct Transgressions of the Code, values, other misconduct such as harassment Failure to do so erodes the culture of the public sector institution

Reporting mechanisms: Governed by the Protected Disclosures Act Disclosure must be in good faith – reporting in bad faith is an offence In order to build confidence into the process, employer must: Implement internal whistle-blowing procedures Ensure that employees are aware of the procedures Ensure that due process is followed regarding communication and decision to investigate Inform the employee of the outcome of the investigation Examples of occupational detriment – disciplinary action; dismissal; suspension; demotion; intimidation; transferred against will

The Constitution of the Republic of South Africa, 1996 (Chapter 10): “a high standard of professional ethics must be promoted and maintained in public administration”

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