"One of the key drivers of corruption is the absence of restrictions on state employees doing business with the state.

"State employees with a financial interest in companies that tender for goods and services have a clear conflict of interest, yet this has never been regulated. The Business of Interests of Employees Bill is designed to do just that."

The Public Service Commission's 2010 State of the Public Service Report notes 1204 financial misconduct cases in government departments – the highest number over the past seven years.

Some 1 430 complaints of corruption were reported through the PSC's national anti-corruption hotline.

According to the PSC report only 46% of senior managers in national and provincial departments submitted their financial disclosure forms to the PSC by May 31.

Zille said the Western Cape was the only province to achieve a 100% compliance rate in submitting financial disclosure forms.

"This was the first time a province has done this by a due date."

The new law prohibits families from directly or indirectly holding 5% of the shares or other interests in an entity that does business with the province.

Any entity signs a contracts with the provincial government will have to provide an affidavit disclosing whether or not it is owned, or part-owned by Western Cape government employees.

"Now that the bill has been signed into law, the director general will compile and maintain a database of all employees' interests disclosed in terms of the legislation.

"All provincial government employees will be given three months to disclose. If they fail to disclose their interests, disciplinary action will be taken against them."