Why does government pay out golden handshakes? This is probably a question that many people have asked.
A recent report highlighted the, at times, ridiculous amounts that have been paid out as golden handshakes by various government departments.
From the responses that Justmoney received to its questions, many people within politics and the law do not agree with the practice of paying out golden handshakes. One of the reasons being the uncertainty and lack of clarity around the deals that government makes with the people they are paying-out.
What is a golden handshake?
Arvitha Doodnath, a legal researcher at the Helen Suzman Foundation, explained: “In the private sector the term refers to a reward given to a long time employee as a sign of appreciation for an outstanding term of service. In the context of governmental dealings it has become synonymous with corruption. That being said, the main reason that government pays out these golden handshakes is because they cannot get rid of an individual through legal means such as a suspension etc. hence they pay them off and make them go away so as to get rid of them in a way that will suit government.”
However, Doodnath believes there are alternatives to paying out a golden handshake: “There are other methods and it depends on the office that the person holds. For example with the former head of the Hawks, Anwa Dramat needed to be suspended through section 17DA (2) of the South African Police Services Act through a Parliamentary Committee Sitting.”
Some of the other methods of removing a person from office are through suspension or disciplinary hearings, or through labour law methods.
Doodnath pointed out that “there is no such thing as ‘golden handshakes’ in terms of any law or even the Constitution.”
She added: “There is nothing governing a golden handshake but usually in the case of the former head of the NPA, he took his full salary for his full term and pension benefits (but this is not in terms of the law). Golden handshakes are not to be confused with benefits accruing under an employment contract e.g. pension benefits.
Opinions surrounding golden handshakes
In an article written for the Helen Suzman Foundation, Doodnath said: “Golden handshakes seem to be a trend in our current society and if we want to make a difference we need to stop such practices in its tracks right away. At this point in time one would possibly have to engage in litigation to stop such a problem from infecting the rest of the constitutional pillars of South Africa.”
Anton Alberts, a member of the Freedom Front Plus and member of parliament for economic affairs, stated that golden handshakes are “a way to make problematic people – in the eyes of the ANC-government – go away without getting bogged down in protracted and expensive litigation.
He added: “More often than not these individuals are also privy to information about other senior officials or politicians that would be embarrassing to government. Accordingly, a lucrative settlement is reached that ensures the problem just disappears.”
Glynnis Breytenbach, Democratic Alliance (DA) shadow minister of Justice and Constitutional Development, agreed stating that taxpayers should be concerned about how the government is using their money.
James Selfe, a chairperson of the DA’s federal executive, is reported to have said: “Frequently appointments are made for political reasons, and then changed when new ministers come in. And instead of following proper process, they resort to paying people out. It is really deplorable. And some, like the National Director of Public Prosecutions, are pushed out even if they are good at their job.”
According to Alberts, one of the reasons that golden handshakes are paid out is due to their expediency in getting people out of office that the government no longer wants in that position.
One point that everyone contacted agreed on was the lack of clarity regarding how the amounts paid out in golden handshakes are determined.
Alberts noted: “Ostensibly it is based on severance packages for that job level plus additions to ensure that the individual will not talk and litigate.”
Freedom Under Law, a non-profit organisation that aims to promote democracy under law, has made an application to the courts to “challenge the practice of offering “golden handshakes” to top public servants the president wants to get rid of.”
How much has been paid in golden handshakes?
Several government department’s recently revealed the amount that they have paid out in golden handshakes from the 2008/2009 to 2014/2015 financial years. The release of these figures follows the submission of a variety of questions submitted by the DA.
According to a report, the sum of all the golden handshakes paid out since 2008/2009 for government departments are as follows:
· Department of Agriculture, Forestry and Fisheries – R6 million
· The departments of Finance, Social Development and Transport – R50 million
· Police Ministry – R30 million
· South African Airways and the Public Investment Corporation – R21 million
· South African Revenue Service – R4 million
· Passenger Rail South Africa – R16 million
These is by no means the only departments to have paid out golden handshakes, however, at present they are the only ones who have appeared to release the figures that they have paid out.
The amount paid out to each person in the form of a golden handshake differs. The Helen Suzman Foundation pointed out some of the more recent, and well-publicised pay-outs that officials have received:
· Hawks former Head, Anwa Dramat was given a pay-out of R3 million, in addition to R 60 000 a month until he reaches 60. This is a total of R13 million.
· Eskom former CEO, Tshediso Matona’s settlement was not disclosed by either Eskom or Matona, nor were the terms of his leaving.
· SAA former CEO, Monwabisi Kalawi was given a golden handshake to the value of R2.7 million.
Alberts noted: “We believe that the power to appoint top management positions in the public service and government agencies must be vested with parliament and not the President or his Ministers. In certain respects this would entail a Constitutional amendment which the ANC unfortunately will never pass.
“The ANC appoints cadres that usually do not have the ability to perform the functions required of the position. This leads to bad service delivery, in many cases corruption or maladministration as a minimum, and kingdom-building that destroys service delivery and accountability. When these appointments become politically undesirable and/or turns against their masters, the golden handshake is the operative manner to get them to leave without a fuss.”