PERU, NOVEMBER 2005 THEME I. Controls on property and income of public officials. Procedure for

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1 4 th EUROSAI-OLACEFS CONFERENCE PERU, NOVEMBER 2005 THEME I Controls on property and income of public officials. Procedure for avoiding conflicts of interests: existing legislation and possible ways the SAI may take action THE PORTUGUESE CASE 1. Introduction The democratic state is based on a relationship of trust between the citizens and their representatives. The exercise of political office and other public duties is bound by the principle of public interest procedure. This must not be confused with any private interests.

2 To preserve the relationship of trust between the administration and the administrated and to guarantee that public officials do so effectively in the pursuit of the public interest, there are rules as regards control of wealth and impediments and incompatibilities of political officials and high public officials. 2. Public control of the wealth of political officials and other comparable officials. In Portugal, political officials are obliged to present a statement of their income, of their property and of the social offices they hold or have held in the two years immediately preceding the statement, to the Constitutional Court at the beginning of their mandate. Political officials and other comparable officials shall renew the respective statements annually. 2

3 They shall also present a new statement when they cease their functions and when they are reappointed or re-elected to the office. In the case of guilty non-compliance or making false statements, and save as to the President of the Republic, the President of the Parliament and the Prime Minister, the officials shall incur a loss of mandate, dismissal or legal removal from office, depending on the case. If the non-compliance is in regard to the statement to be made on cessation of functions, reappointment or re-election, the penalty applicable is that of preclusion, for a period of five years, from holding the office which required the statement to be presented (providing this does not correspond with the exercise of functions as a career magistrate). For the effects of public control of the wealth of public officials, the following offices are considered to be equivalents: public managers, administrators appointed by public entities to legal persons in public 3

4 law or in societies with public capital as well as general directors, deputy directors and their equivalents. Any citizen may consult the statements presented. Publication of the content of these statements is, in principle, free, save in cases where the public official opposes this with due foundation, which shall be deliberated on by the Constitutional Court. 3. The legal regime of incompatibilities and impediments of political officials and high public officials. Political officials and high public officials are also subject to a legal regime in terms of incompatibilities and impediments. Members of Parliament benefit from a special regime as set out in the Statute for Members of Parliament. 4

5 Generally speaking, save in the cases of Members of Parliament and of local governments, political officials as well as high public officials, exercise their functions in a regime of exclusivity. In effect, the law determines that the holding of political offices and high public offices is incompatible with any other professional functions, remunerated or not, including membership of managing bodies of any for-profit legal persons. High public officials may still engage in some activities, such as teaching in universities, research activities, non-remunerated participation in commissions or work groups, etc. They may also earn remunerations from copyright and from giving conferences, lectures, short-term training programmes and other activities of an identical nature. Save in the cases of returning to the company or activity exercised at the time of taking up office, public and political officials may not exercise, for a period of three years counting from the date of cessation of their respective functions, positions in private companies which 5

6 pursue activities in the sector directly under their jurisdiction if during the period of the respective mandate these have been the object of privatisation or have benefited from financial incentives or fiscal benefits and incentives systems of a contractual nature. In addition, political officials and high public officials who hold or have held, directly or indirectly, in the three years preceding their taking up office, over 10% of the capital of any company or are part of or have been part of managing bodies of any for-profit legal persons, cannot take part in: (1) public tenders for goods and services for the State and other public legal persons to which those companies and legal persons are candidates; (2) contracts with the State and other public legal persons; (3) any other administrative procedure in which those companies and legal persons take part, susceptible to generating doubts on the impartiality or correctness of the conduct of the aforementioned officials, namely in the concession or modification of authorisations or licences, of acts of expropriation, of concession of property benefits and the donation of goods. Violation of these rules shall determine the nullification of actions carried out as well as 6

7 the loss of mandate, dismissal or legal removal from office, depending on the case. At the beginning of each mandate political officials are obliged to deliver in the Constitutional Court a statement as to the non-existence of incompatibilities and impediments. The respective analysis, supervision and eventual application of sanctions is up to that body. High public officials shall present a statement for the same purposes to the Attorney General. 4. The role of the Portuguese Court of Auditors (Tribunal de Contas) As already stated, the Portuguese Court of Auditors is not directly responsible for the control of the wealth of public officials. However, under the terms of the Portuguese Constitution, «[the] Court of Auditors is the supreme body for controlling the legality of public expenditure and deliberating on accounts that the law requires be submitted to it». 7

8 It is up to the Court of Auditors to control the legality and the conformity of public income and expenditure, to assess good financial management and to attribute responsibilities for financial infractions. Under the scope of its attributions and powers, the Court of Auditors plays an important role in combating fraud and corruption involving political or high public officials, whether through prior control of acts, contracts and other instruments generating public expenditure or representative of financial responsibilities as set out by law. This may be carried out through audits or attribution of financial responsibilities. Whenever action taken by the Court of Auditors results in its becoming aware, by any means, of facts which show the violation of the legal regimes of control of wealth and of incompatibility and impediments of political officials and of high public officials, the Court of Auditors shall communicate these facts to the competent bodies. In effect, the nature of the Court of Auditors positions it as one of the sovereign bodies with powers to administer justice in the name of the people and with the fundamental duty to ensure the defence of the 8

9 legally protected rights and interests of citizens, to prevent the violation of democratic laws and avert conflicts of public and private interests. In addition, the Portuguese Constitution confers to the courts, in the exercise of their functions, the right to cooperation from other authorities, including the Administration and of other courts. Thus, in the event of becoming aware of facts which constitute a violation of the law, the Court of Auditors shall pass such information on to the competent bodies for taking proceedings in the particular case. But, apart from its eventual participation, in an incidental manner, in the public control of wealth, impediments and incompatibilities of political officials and of high public officials, the Court of Auditors may have to act primarily, in its capacity as Supreme Audit Institution (SAI), when there is a question as to the legality (and validity) of determined acts which generate expenditure or represent financial duties or responsibilities for entities subject to its jurisdiction. 9

10 It may happen, for example, that the political officials or high public officials has a capital holding of over 10% in a corporation that makes a tender for supplying goods or services to the State in contracts signed with the State, or in other situations which may raise doubts as to the impartiality or correctness of the conduct of the aforementioned officeholders. In these cases, the law shall determine the nullification of such acts, which constitutes foundations for the refusal of visa of acts or contracts subject to prior controls by the Court of Auditors. The Court of Auditors may also, having carried out audits (or by other means) detect situations of incompatibility or impediment of political officials or high public officials which imply facts constituting financial responsibilities. In this case, the Court of Auditors shall, apart from informing the competent bodies for public control of wealth, of impediments and incompatibilities of the officials, send the file to the Public Prosecutor 10

11 so that eventual jurisdictional procedures for the attribution of the financial responsibilities by the Court of Auditors may be implemented. 5. Conclusions Given the above, we have formulated the following conclusions: 1) In Portugal, there is a regime for the control of the wealth of the public officials; 2) The competent bodies for directly exercising this control are the Constitutional Court and the Attorney General; 3) The Court of Auditors may intervene, secondarily and under the ambit of cooperation with other bodies involved in the administration of justice, in the control of wealth and of incompatibilities and impediments of political officials or high public officials, namely through the communication of 11

12 facts it becomes aware of in the carrying out of its supervisory activities; 4) In addition, whenever facts violating the rules for exercising such offices have financial implications for the State, the Court of Auditors shall act primarily in its role as SAI and Court based on prior control, through refusal of visa, or through the verification of eventual responsibilities. 12