ethical leadership: issues, challenges and amp; ethical leadership: issues, challenges and
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ETHICAL LEADERSHIP: ISSUES, CHALLENGES AND OPPORTUNITIES
MAINTAINING AND ENHANCING GOOD GOVERNANCE: LESSONS FROM THE SOUTH AFRICAN ARMS DEAL
Prof Harry Herbert Ballard Head of Department
Department of Public Management Faculty of Business
Cape Peninsula University of Technology Cape Town, South Africa
Adv Yasmin Nanabhay Lecturer/Legal Advisor
Faculty of Business Department of Public Management
Cape Peninsula University of Technology Cape Town, South Africa
ABSTRACT The paper attempts to evaluate the reasons why corruption is still rife in South Africa,
despite the enactment of legislation and policies which attempt to prevent and combat
corruption. The South African Arms Deal is selected as the case-study to test this
phenomenon from a qualitative paradigm. The paper will analyse and present the
Ethics and law, professionalism and accountability form the cornerstones of good
governance amongst governments worldwide. These concepts ought to positively
influence public governance and non-adherence or lack of adherence thereto may
inevitably lead to corruption within the public sector. At most schools of public
administration around the world, these concepts are taught as an integral part of the
management programmes, to adequately equip prospective public officials, to promote
and enhance sound ethical behavior. Despite the foregoing, unethical conduct is still
prevalent in the public sector in South Africa.
The paper analyses statutes enacted by the South African legislature, most notably, the
Constitution of the Republic of South Africa Act of 1996.The Constitution places
immense responsibility on all public officials to conduct their affairs in accordance with
the democratic values and principles enshrined in the Constitution. Of particular
importance is the establishment of certain institutions that would strengthen a
constitutional democracy, as contained in Chapter nine of the Constitution. The paper
includes a discussion on ethics and good governance in South Africa, with particular
reference to possible causes for unethical behavior. In this regard, reference is made to
the King Report on Corporate Governance for South Africa, which although not
enforceable provides clear guidelines to ensure compliance to corporate governance
principles within both the private and public sectors. As a concluding note the paper will
analyse and discuss lessons gained from the Arms Deal.
ETHICS AND GOOD GOVERNANCE IN THE SOUTH AFRICAN PUBLIC SECTOR
A public sector official when employed by any of the three spheres of government,
namely national, provincial or local, finds him or herself in a very special situation, which
is to serve the government to which he or she owes obedience and loyalty and above all
to serve the nation. The latter obligation requires complete adherence to the democratic
principles and fundamental rights which are enshrined in the basic values and principles
governing public administration, as contained in the Constitution of the Republic of
South Africa Act, 1996. Section 195(1)(a) of the Constitution (1996) states that a high
standard of professional ethics must be promoted and maintained.
In terms of the foregoing, the public sector official is vested with the following powers:
• powers of authority (example, to grant or refuse a residence permit);
• powers to exercise discretion in decision-making (example, to appoint a
preferential service provider); and
• powers to influence political office bearers (example, to provide reliable and valid
information to influence political policy).
In the exercise of these powers the public sector official must define an ethic “…as a
singular, logically deduced, self-created and self-chosen choice to think and behave as
deemed most correct to the individual.” (Gildenhuys, 1996).
Possible causes for unethical conduct could be inter alia: inadequate control and
accountability; complicated legislation; inadequate policies, systems and procedures;
and ineffective management and organizational arrangements.
In addition, the King Committee on Corporate Governance developed the King Report
on Corporate Governance for South Africa, 2002 (King II) which although not
enforceable provide clear guidelines to ensure compliance to corporate governance
principles within both the private and public sectors. The King II report propagated an
inclusive approach rather than an exclusive approach with a greater emphasis on the
non-financial aspects of performance.
The King II report (2002) defined the characteristics of good Corporate Governance
which included the following seven (7) principles: discipline; transparency;
independence; accountability; responsibility; fairness; and social responsibility.
Although the King II report was published after the Arms Deal appeared in the public
domain, the paper will further include an evaluation as to whether, the above principles
were adhered to during the Arms Deal procurement process.
PROCUREMENT MANAGEMENT IN SOUTH AFRICA
The level of public spending and the various sectors in which it takes place, impacts on
the economy and influences the country’s Gross Domestic Product (GDP). The impact
can also be global. Furthermore, the impact is also felt by the various communities as it
relates to the social being and welfare. Government should therefore act ethically,
equitably and to uphold public accountability.
Government can ensure the survival of certain sectors of the economy when it decides
to procure goods and services from that particular sector. Procurement thus enforces a
divergence of legal, ethical and political aspects. Government therefore has an
obligation to uphold all the principles of governance especially as it relates to public
At the time the Arms Deal case arrived in the public domain, national, provincial and
local government departments had a large collective buying power with an estimated
consolidated figure of R 56 billion. The amount constituted approximately 13% of GDP
and represented 30% of all government expenditure. It is clear that public sector
procurement had a significant effect on the South African macro economy in terms of
consumption and investment spending.
In view of the foregoing, to ensure the effective delivery of services in the correct
quantity and quality resulted in the Green Paper on Public Sector Procurement Reform
in South Africa in 1997 – an initiative of the Ministry of Finance and the Ministry of
Public Works to deal with inter alia:
• the need for value for money;
• the need to eliminate corruption;
• the implementation of procedures of control and accountability;
• uniformity of procedures, policies, documentation and contract options; and
• effective monitoring and reporting.
The achievement of the foregoing was tested during the Arms Deal case-study.
A broad definition of procurement, as submitted by Du Toit, Knipe, Van Niekerk, Van
der Waldt and Doyle (2002:202) relates to the whole process of acquisition from third
parties (including the logistical aspects) and covers goods, services and construction
Du Toit, Knipe, Van Niekerk, Van der Waldt and Doyle (2002:203) cite Baily (1994)
when utilizing a well known definition of the aim of procurement which is to purchase the
right quality of material, at the right time, in the right quantity, from the right sources, at
the right place. Therefore, one of the objectives of procurement management is inter
alia, to purchase effectively and efficiently and to acquire by ethical methods to obtain
value for money. Procurers normally apply the 80:20 principle which hypothesizes that
80% of the items bought represent only 20% of the total purchase value.
Du Toit, Knipe, Van Niekerk, Van der Waldt and Doyle (2002:213) state further that the
same is true for the public sector – in most states the government seldom produces
through state owned businesses the goods and services that public institutions need in
order to carry out their activities. Governments therefore, usually resort to the market to
buy and contract their needs.
Du Toit, Knipe, Van Niekerk, Van der Waldt and Doyle (2002:215-217) submit three
core principles of government procurement, namely: value for money; commitment to
competition; commitment to best practices and innovative procurement processes.
The first core principle according to the same authors includes all procurement
decisions which should be based on a comprehensive appraisal of all the options in
each set of circumstances, such as:
• the status of the firms involved (example, quality assurance,