Municipal sector investigations (disciplinary)

Presented by: Adv. Werner Bouwer

Where the investigation stops, and the

adversarial fora starts

Prima

Facie

Balance

of

probabilities

Beyond

reasonable

doubt

Forensic /

Investigation

Reports

Suspicion = starting point of investigation

CORRUPTION:

A LAYMAN’S DEFINITION

Corruption is the giving / receiving of gratification ...

To / by somebody whom is not due to ...

For doing something he should not do ...

Or for not doing something he should …

As an inducement or reward.

Giving includes lending/granting/conferring/ promise/procure and

agreement or offer …

Accepting includes demanding/soliciting/promise/ offer/ask for/

seek/request /receiving and agreement or offer of the above …

WIDE AMBIT OF

PUNISHABLE OFFENCES

CORRUPTION & GIFTS ...

To do / he should not do

Not to do / he should

To do / he should

Not to do / he should not do

Giving or receiving of

unauthorisedgratification

Giving or receiving of

anygratification

S 4 / PRECCA

S 10 / PRECCA

MEANING OF ‘GRATIFICATION’

Money, whether in cash or otherwise …

Any donation, gift, loan, fee, reward, valuable security, property or interest in

property …

The avoidance of a loss, liability, penalty, forfeiture, punishment or other

disadvantage …

Status, honour, employment or services …

Residential or holiday accommodation, any payment, release, discharge or

liquidation of any loan, obligation or other liability, in whole or in part …

Any other service or favour or advantage of any description …

Any right or privilege …

Any real or pretended aid, vote, consent, influence or abstention from voting …

SECTIONS 12 & 17 / PRECCA

S 12: corrupt activities relating to contracts / giving or receiving in order to

improperly influence the promotion, execution or procurement of a contract

S 17: Acquisition of private interest in contract, investment or agreement of

employer = offence, except:

- Interest in listed company

- Conditions of employment do not prohibit acquiring or holding such interest; or

- In the case of a tender process, a public officer who acquires a contract,

agreement or investment through a tender process and whose conditions of

employment do not prohibit him or her from acquiring or holding such interest

and who acquires or holds such interest through an independent tender process.OTH

ER

PR

OC

UR

EM

EN

T O

FFEN

CES

(2) Without derogating from the generality of section 2(4), “to act” in subsection (1), includes:

(a) voting at any meeting of a public body;

(b) performing or not adequately performing any official functions;

(c) expediting, delaying, hindering or preventing the performance of an official act;

(d) aiding, assisting or favouring any particular person in the transaction of any businesswith a public body;

(e) aiding or assisting in procuring or preventing the passing of any vote or the granting ofany contract or advantage in favour of any person in relation to the transaction of anybusiness with a public body;

(f) showing any favour or disfavour to any person in performing a function as a publicofficer;

(g) diverting, for purposes unrelated to those for which they were intended, any propertybelonging to the state which such officer received by virtue of his or her position forpurposes of administration, custody or for any other reason, to another person; or

(h) exerting any improper influence over the decision making of any person performingfunctions in a public body.

THE BREAKING OF RULES …

Dept level: C/o Public

Service regulations &

internal codes /

policies

THE BREAKING OF RULES …

Misconduct

Municipal level: C/o

MSA Codes, Local

Government

Bargaining Council

agreement & internal

codes & policies

Dept level: C/o PFMA

& NT regulations

issued ito the PFMA

Financial Misconduct

Municipal level: C/o

MFMA & NT regulations

issued ito the MFMA

DEMAND MANAGEMENT

DEMAND MANAGEMENT

“References to brand names, catalogue numbers, or similar classifications should be

avoided’’. If necessary to quote a brand name or catalogue of a particular manufacturer to clarify

an otherwise incomplete specification, the words “or equivalent” should be added

Paragraph 5.5 of the SCM Accounting Officer’s guide, February 2004 - if a firm was hired

to provide consulting services for the preparation or implementation of a project, that firm should

be disqualified from subsequently providing goods or works or services related to the initial

assignment, as it poses a conflict.

Demand Management: This is the beginning of the supply chain where:

A needs assessment to ensure goods or services are acquired

Specifications are precisely determined

Requirements are linked to the budget; and

The supplying industry has been analysed.

Standards and technical specifications quoted in bidding documents should promote the broadest

possible competition, while assuring that critical elements of performance or other requirements

for the goods, services and/or works being procured are achieved.

Tenders or requests for quotation must be evaluated in terms of the evaluation

criteria / process stipulated in the bid documents -

(a) Prequalification criteria

(b) Evaluation of mandatory criteria

(c) Evaluation in terms of local production and content if part of the tender

(d) Evaluation in terms of Functionality if part of the tender; and

(e) Evaluation in terms of 80/20 or 90/10 preference point system.

THE EVALUATION PROCESS

PROHIBITED EXPENDITURE

Unauthorised expenditure –

Not in accordance with vote – overspend

Irregular expenditure –

Other than ‘unauthorised expenditure’ in

contravention of legislation and not condoned

Fruitless and wasteful expenditure –

Could have been avoided had reasonable care been

taken

Must take

reasonable steps

To prevent

Irregular

Fruitless and

wasteful

Unauthorised

Expenditure

Negligence

Dolus Eventualis

Dolus Indirectus

Dolus Directus

CULPA & BURDEN OF PROOF

Approves recommendation Signs on 2 Oct 2011

Approves recommendation – signs on 3 Oct 2011

Approves recommendation – signs on 4 Oct 2011

Approves on 5 Oct 2011

Drafts request to deviate from public tender process and appoint A –bases are urgency and security reasons / states did receive quotes from B, C & D as well / only A could address all specs / request approval of recommendation to appoint A. Signs 1 Oct 2011. Urgency in Oct true, but knew since June. Obtained only 2 quotes, from A & B. B already agreed with end-user’s knowledge during July to sub-contract.

CASE STUDY

End-user

Direct report: DDG

SCM

CFO

DG

In the case of negligence the question is whether the

consequence, objectively seen, was reasonably foreseeable, while in a case

of dolus eventualis the question is whether the wrongdoer actually

subjectively foresaw the possibility of the consequence.

The fact that a particular result was reasonably foreseeable, may clearly be of

fundamental importance in deciding whether the actor actually foresaw the

result. The implication is that the objective foreseeability test may provide

evidentiary material for determining what was actually foreseen by the

wrongdoer.

Where the wrongdoer alleges that he did not foresee consequences which are

reasonably foreseeable, he must demonstrate factual circumstances which

make his version reasonably acceptable.'

DIFFERENCE BETWEEN DOLUS EVENTUALIS & NEGLIGENCE

SO WHAT IS NEGLIGENCE?

One does not expect of a diligens paterfamilias any extremes such as Solomonic wisdom, prophetic foresight, chameleonic caution or the trained reflexes of a racing driver. In

short, a diligens paterfamilias treads life’s pathway with moderation and prudent common sense.

S v Burger 1975 (4) SA 877 (A)

A reasonable person may be justified in taking a slight risk on the grounds of the urgent and laudable action in which he is engaged; or where the precautions may have been so difficult,

inconvenient or costly that a reasonable person would not have guarded against the possibility of the unlawful occurrence.

Herschel v Mrupe 1954(3) SA 464 (A)

Negligence constitutes the failure to exercise the degree of care of the reasonable person in the same circumstances. The “foreseeability test” in negligence is whether a reasonable person in the position of the:

• Would foresee the reasonable possibility of his or her conduct injuring another person’s rights; and

• Would take reasonable steps to guard against such occurrence, but failed to take those steps.

• It has been held that whether or not an accused “took a reasonable step” to guard against the consequences of his act is a question of fact.

Burchell / S v Ngubane 1985(3) SA 677 (A)

Department of Co-operative Governance v Seapela JR 226/2012 delivered

on 4 February 2015 in the Labour Court Johannesburg is instructive –

“… the MEC and HOD followed exactly, to the letter, what the team

recommended. There was no further reconsideration or debate….

….the simple point has to be, was it not for the recommendation there would

not have been a settlement of R15 million.”

SO WHO IS NEGLIGENT?

19

W Mthombothi v State / A821/2007 / Gauteng High Court

• WM charged and convicted with c/s 38(1)(c)(ii) read with

section 86(1) of the PFMA, and sentenced to 6 mths

imprisonment or R10k / wholly suspended for 3 years

• Alleged that he wilfully / grossly negligent way failed to

take the prescribed steps …

Acting HoD of DPW, Roads & Transport in MP

A contractor requested him to release some of the project

retention money against submission of guarantees on a

roads project he had just finished

Was meeting in HoD’s office, internal staff present (QS and

CE) and HoD wanted to ascertain whether he could release it

He did release it

State charged him for failing to take effective steps to

prevent prohibited expenditure in accepting the guarantees

as exchange for payment of the retention

‘… in section 86 the Legislature intended to

criminalise only extreme cases of absolute careless conduct … (although) the appellant was rather naïve or inexperienced in dealing with matters of this kind …’

‘… he took the trouble to enquire whether the

guarantee was good with the bank … can hardly be

described as being grossly negligent.”

Section 38(1)(c)(ii) of the PFMA provides as follows:“(1) the accounting officer for a

department, trading entity or constitutional institution –

(c) Must take effective and appropriate steps to –(ii) Prevent unauthorised,

irregular and fruitless and wasteful expenditure and losses resulting from criminal conduct, and…”

‘OUGHT REASONABLY TO HAVE KNOWN’ = NEGLIGENCE

Negligence

Failure to exercise degree of care of the reasonable

person in his/her circumstances

‘foreseeability test’: whether reasonable person in position of

suspect would foresee prohibited possibility & would take reasonable steps to guard against

occurrence & fail to take steps

Gross negligence

‘normal or gross’ = question of fact

Extreme departure from reasonableness

Complete obtuseness of mind / No consideration

whatsoever for consequences / total disregard of duty /

‘aggravated’ negligence falling short of wilfulness

BEE

In terms of section 130 of the B-BBEE Act (as

amended in 2013), a person commits an

offence if that person knowingly –

Misrepresents or attempts to misrepresent

the broad-based black economic

empowerment status of an enterprise;

Provides false information or misrepresents

information relevant to assessing the

broad-based black economic empowerment

status of an enterprise to any organ of

state or public entity; or

Engages in a fronting practice.

Section 130(2) imposes a

reporting duty -

A … procurement officer or

other official of an organ of

state or public entity who

becomes aware of the

commission of, or any attempt

to commit, any offence

referred to in subsection (1)

and fails to report it to an

appropriate law enforcement

agency, is guilty of an offence.

PPPF 2017

AOs / AAs must ensure that the B-BBEE

Status Level Verification Certificates

submitted are issued by the following

agencies:

9.9.1. Tenderers other than

EMEs

(i) Verification agencies accredited

by SANAS; or

9.9.2. Tenderers who qualify as

EMEs

(i) Sworn affidavit signed by the

EME representative and attested

by a Commissioner of oaths.

See below a link for a website where you can

search a company’s name/VAT number and find

its BBBEE Certificate:

https://www.beagledatabase.co.za/search/new

Confirmation of the validity of a B-BBEE Status

Level Verification Certificate can be done by

tracing the name of the issuing Verification

Agency to the list of all SANAS accredited

agencies. The list is accessible on:

http://www.sanas.co.za/directory/bbee_default.

php

BEE VERIFICATION

CONFLICT OF INTEREST

These occur when an employee, manager, or executive has an undisclosed economic interest in a transaction that adversely

affects the employer.

It is not necessary that the company or Department actually suffers damages in order for conflict of interest violation to be

sustained. The effect need only be potentially adverse.

Conflict of interest schemes contravenes the principle that an employee has a fiduciary responsibility to his employer. A conflict of interest scheme can, and often does, involve other schemes.

Adv. Werner BouwerFacilitator and Director of Nexus Training Academy

Director of Nexus Forensic ServicesMobile: +27 82 419 1262

Tel: +27 12 664 5568Fax: +27 12 664 0307wbouwer@nexfor.co.zawww.nexustrain.co.za