THE Western Cape is to introduce new provincial legislation that will significantly reduce the scope for corruption in the administration.

THE Western Cape is to introduce new provincial legislation that will significantly reduce the scope for corruption in the administration.

"It has been recognised that the absence of restrictions on state employees doing business with the state is a key driver of corruption," premier Helen Zille said yesterday.

State employees with an interest in companies that tendered for goods and services had a clear conflict of interest, but this had never been regulated, she said.

In August 2008, the Auditor General (AG) issued a performance audit of entities connected with state employees and doing business with the state.

The AG found that between April 2005 and January 2007 more than R540million worth of business was conducted between provincial governments and businesses owned or part-owned by provincial employees.

At national level, between August 2007 and July 2008, 49 state employees were identified as directors of companies that did business with national departments to the tune of R35,7million.

President Jacob Zuma acknowledged the problem in both his 2009 and 2010 State of the Nation addresses, but nothing had been done about it at national level, Zille said.

"When we assumed office in the Western Cape in May 2009, we began studying the options available to stop this practice. The result is the draft legislation that I am presenting today," she said.

The draft Western Cape (Business Interests of Employees) Procurement Bill - gazetted yesterday - introduced new rules that would restrict government employees from doing business with the provincial government, and required every employee to disclose their business interests.

"There is currently no restriction on the business interests of state employees in the Western Cape or anywhere else in the country," Zille said.

"Only senior staff members are required to disclose business interests, but there are no restrictions on which companies they can have an interest in."

The bill proposes, among other things, that provincial government employees and their families be prohibited from directly or indirectly holding more than five percent of shares, stock, membership or other interests in an entity that does business with the government, unless in certain circumstances.

Before the government enters into any contract with an entity for the sale, lease or supply of goods and services, the entity must provide an affidavit disclosing whether or not it is owned or part-owned by employees of the Western Cape government.

All provincial government employees will be required to disclose their business interests at prescribed intervals, in the same way that members of Cabinet already do.

"We hope that other provinces and the national government follow our lead in this regard," Zille said. - Sapa