Jaap | Mar 28, 2022

The declaration and publication of the financial interests of councillors and senior managers: what the law says

In 2021, Julius Malema MP was a director of Mgagao Shamba Pty (Ltd), a farming company. Furthermore, he received two gifts, namely whiskey from Kgantontle Consulting and a pen, diary and USB from the Cape Town Press Club. How do we know this? We know this because it is recorded in the Register of Members Interests which can be downloaded from the website of Parliament. Members of Parliament regularly declare their interests with Parliament’s Registrar of Interests, and aspects of this are published. How does this work in local government? What are the responsibilities of municipalities in this regard? For councillors, it is regulated in the Code of Conduct for Councillors, which appears in Schedule 7 of the Municipal Structures Act 117 of 1998. For senior managers, it is regulated in the Code of Conduct for Staff Members, which appears in Schedule 2 of the Municipal Systems Act 32 of 2000.

Declaration of councillor’s interests

Item 8 of the Code of Conduct for Councillors provides that each councillor must, within 60 days of his or her election or appointment (as a local representative to the district council), declare to the municipal manager, in writing, any of the following financial interests –

(a)  shares and securities in any company;`

(b)  membership of any close corporation;

(c)  interest in any trust;

(d)  directorships;

(e)  partnerships;

(f)   other financial interests in any business undertaking;

(g)  employment and remuneration;

(h)  interest in property;

(i)   pension; and

(j)   subsidies, grants and sponsorships by any organisation.

The same applies to gifts above a prescribed amount (R 1000). A declaration of gifts received by a councillor must contain a description of the gift and indicate the value and source of the gift. Any change to the financial interests of a councillor must be declared in writing to the municipal manager annually. Each municipality will have its own internal rules on how exactly the regular updating of this register of interests and gifts works in that municipality. By now, all newly elected councillors must have declared their interests.

Furthermore, municipalities generally have internal systems to link this register of interests and gifts to the municipality’s supply chain management system. This ought to ensure that, when a legal entity, in which a councillor has an interest, submits a quote or a tender to the municipality, this does not go undetected and appropriate decisions can be taken.

Publication of councillors’ interests

The law requires more than just the declaration of interests. Item 8 also provides that the council “must decide which of the financial interests must be made public, having regard to the need for confidentiality and the public interest for disclosure”. In other words, the municipality may not keep all this information hidden from the public. The council must decide which interests must be made public. There are very few municipalities who do this.

Some municipalities deal with this by requiring an application in terms of the Promotion of Access to Information Act 2 of 2000. In other words, the municipality keeps all the information about councillors’ interests hidden from the public, until it receives, and positively decides on an application in terms of PAIA. It is suggested that this approach is unlawful. The Code does not make publication subject to PAIA. Even if it did, the information must be considered for “voluntary disclosure” under section 15 of PAIA. The Municipal Structures Act itself instructs the council to make sections of the register of councillors’ interest public, just like Parliament does. It is part of the overall process of handling the declaration of interests, and does not only come in after a concerned citizen has had the courage and wherewithal to submit a PAIA application. The Municipal Structures Act already imposes a specific duty on the municipality, separate from PAIA, to publish parts of the register of financial interests of councillors. The municipality may not ignore this statutory instruction, and conveniently subject it to a further procedure (and fee) under PAIA.

Local government is marred by persistent financial malfeasance. In many cases, this is related to the awarding of contracts to bidders that are surreptitiously connected to the municipality. The public interest in the disclosure of the interests of councillors is therefore very substantial. The Municipal Structures Act instructs the municipal council to weigh this very substantial interest against the need for confidentiality of councillors, and then decide which part of the register must be published.

It will be argued that councillors have a right to privacy, and a right not to have their personal financial affairs shared with the public. This is true, and the council must weigh this against the public interest before deciding what to publish. However, a councillor’s right to privacy is treated differently from the right to privacy of ordinary citizens. By making themselves available for election, councillors willingly place themselves in the public eye as elected representatives. On its website, Parliament explains its approach as follows:

“MPs are expected to register in Parliament their financial interests and those of their spouses, dependants and permanent companions every year. Most of this information is open to the public. The confidential part of the register includes details about the monetary value of MPs' interests and all details about spouses, dependent children and permanent companions of MPs.”

If Members of Parliament have parts of their financial interests regularly published, it is hard to argue that councillors must be treated differently.

Senior managers

With respect to senior managers (i.e the municipal manager and section 56 managers) the law provides the same. Item 5A of the Code of Conduct for Municipal Staff members provides that they too must declare their financial interests within 60 days of their appointment. It is different from the framework for councillors only in three respects. First, the interests must be declared to the speaker. Second, unlike with respect to councillors, there is no requirement to declare matters related to employment and remuneration or pension matters. Third, there is no mention in the Code of the need to declare gifts. In all other respects, including the requirement for the council to decide what aspects must be published, the provisions are the same. The weighing of the privacy vs public interest in the publication may be different, however, as senior managers are employees, not public representatives. On the other hand, the very nature of their work places senior managers ‘closer to the till’ than councillors.

All in all, each municipal council must weigh these interests, and decide which parts of the register of interests of councillors and senior managers must be published. Not publishing anything and/or waiting for a PAIA application is illegal.

 

By Jaap de Visser

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