Wouter Smulders | Mar 29, 2022

The declaration and publication of financial interests of local councillors in The Netherlands and South Africa

Democracies are built on trust. Citizens must be able to trust that their elected local councillors, members of Parliament and heads of government are honest and transparent. This also applies to their private financial interests, and anything that could affect the way they act in their elected positions. It is important to conduct research, monitoring and advocacy on this.

There is often a lack of information on whether municipalities are publishing sufficient financial details on gifts, assets or shares, board memberships etc. of councillors and senior managers. In recent years, the Dullah Omar Institute (DOI) conducted research on transparency in municipal procurement, but not yet specifically regarding the issue of financial interests of councillors and senior managers in municipalities. As part of this upcoming research, this article outlines the transparency mechanisms in Dutch municipalities, and makes some comparisons with South Africa.

Constitution of the Netherlands and the Municipalities Act

The Dutch Constitution states that “the powers of provinces and municipalities to regulate and administer their own internal affairs shall be delegated to their administrative organs” (Article 124(1) Constitution of the Netherlands). The ‘Gemeentewet’ (Municipalities Act), article 15 (3) then provides that “[t]he council establishes a code of conduct for its members”. This means that each municipality has the authority to create its own code of conduct. This is an important difference with South Africa, where the Code of Conduct for Councillors is a national law. In the Netherlands, each municipality adopts its own Code. However, with respect to the issue of conflict of interests, article 15 of the Municipalities Act clearly states what councillors are not allowed to do in addition to their political role.

 "Artikel 15 Gemeentewet" (Article 15 Municipalities Act)

(1) A member of the council may not:

  1. work as a lawyer or consultant in disputes for the benefit of the municipality…
  2. to act as an authorised representative in disputes on behalf of the counterparty of the municipality or the municipal council;
  3. work as a representative or advisor for third parties to enter into a contract with the municipality;
  4. directly or indirectly enter into agreements with the municipalities on prohibited topics (seven specific examples are listed, ranging from renting property to the municipality to accepting work for the benefit of the municipality).

 Article 15 (1) d of the Municipalities Act prohibits councillors to enter into agreements on any of the listed subjects. It provides several other examples concerning laws regarding renting/leasing properties without proper knowledge of the municipality. Article 15 gives insight into what is unacceptable, but does not go into specifics regarding financial transparency of the councillors when it comes to the declaration and publication of their financial interests. This is because these laws are outlined in the Code of Conduct, created by municipalities themselves. The Municipal Code of Conduct is thus subject to several national prerequisites, but many specifics are left to the local level. In other words, in Dutch law, there are certain minimum requirements related to codes of conduct for councillors, but the detail is left to the local level. 

Publication of Councillors’ Gifts, Services, Invitations & Ancillary Positions: the Rotterdam example

Because each municipality creates its own Code of Conduct, we selected one specific municipality out of the 344 municipalities in the Netherlands, to illustrate the rules for financial transparency of councillors. The municipality of Rotterdam was selected because it published its new Code of Conduct online, whereas many others have not done so yet (local municipal elections took place in March of 2022). The Rotterdam Code of Conduct is relatively new, it was published and has been in force since 15 March 2022. The Rotterdam City Council Code of Conduct 2022 contains eleven articles which primarily focus on transparency and the public trust of councillors. 

Article 4, entitled “[i]nterests, memberships and additional positions” forces councillors to declare all personal interests, memberships and “nevenfuncties” (additional positions) to a clerk at the beginning of their term, and at the end of their term. The “clerk” in Dutch local government holds a crucial role. He or she functions as a secretary to the municipality during meetings, providing support streamlining proceedings and often operates as the link between the mayor and the secretariat.

Article 4(1) demands that all elected councillors must declare the following “memberships that he has or wishes to accept during the term of office, and of all (financial) interests that he has, including shares, options and derivatives, and that can reasonably be regarded as relevant to his functioning as a board member”.

As set out in another article in this edition, the South African Code of Conduct for Councillors compels all councillors to declare their financial interests within 60 days of being elected, and the same applies to gifts above R1000. In the Rotterdam Code of Conduct there is no clear deadline for declaring such financial interests. It might be that Dutch municipalities have a soft law agreed deadline which does not appear in any legal text.

On its website, the Rotterdam Municipality offers direct insight into the ancillary positions of its councillors. The current list relates to the previous electoral period of 2018-2022. The register states whether the individual is paid for their other position. Most of the declarations were published in March 2018 but a few were published in the following months, so the final list of the new 2022 councillors might not be published yet.

Article 6 of the Rotterdam Code, entitled “Gifts, services and invitations”, outlines specific rules regarding the reception and declaration of gifts, services and invitations. This includes anything from being invited for lunch to receiving a gift or the proposition of free services. It states that “[a] councilor will not accept gifts, facilities or services of any kind in connection with his position that can reasonably be believed to affect his independent position”. This clearly outlines the importance of the independent position of councillors and that a councillor may not allow this independence to be influenced by a third party.

Article 6 gives each councillor two weeks to declare any gifts, services or invitations in a register specifically made for this purpose. Any gifts, services or invitations worth more than € 75 must be declared within this time period. Importantly, the register is public and available online. The limit of € 75 roughly translates to about R 1200, so it compares well to the limit for councillors in South Africa. It was not possible to find a register with financial declarations such as gifts, services or invitations for Rotterdam. However, many other municipalities’ registers are available online, so possibly the city of Rotterdam has one too but one might need to be a local citizen to access it.

Conclusion

South Africa and the Netherlands are more than 9,000kms apart, and the political contexts are very different. However, when it comes to the regulation of the conduct of councillors and the declaration of their interests, there are many similarities. Both jurisdictions emphasise the protection of the independence of councillors, by not allowing conflicting interests, gifts or outside invitations to influence their decision making as councillors.

One major difference is that in South Africa the Code of Conduct is outlined in national law, whereas in the Netherlands, municipalities are free to adopt their own code (whilst adhering to certain national guidelines). The declaration and publication of the financial interests of councillors are legally outlined in both countries. However, as outlined elsewhere in this edition, in South Africa, the Council must decide which elements are made public. There is no such distinction in the Netherlands, where all declared financial interests must be made public.

 

by Wouter Smulders, Intern: Dullah Omar Institute

 

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