The Department of Public Service and Administration is intent on bringing to book the government employees doing business with the state.
The governance and administration cluster briefed the media on Thursday on their plans, following President Jacob Zuma's State of the Nation Address.
Leading the briefing, Home Affairs Minister Malusi Gigaba said the transitional period for public servants to declare their activities and choose a side was over.
The 2016 public service regulations came into effect in August 2016, but the transitional period meant that employees had until January 31 to make a decision.
"The practice by public service employees to do business with organs of state threatens good governance and the public's trust in government institutions," Gigaba said.
By January 31, those doing business with an organ of state had to resign either from their business, or from government.
Anti-corruption hotline
The department is still compiling a list of employees who failed to comply with the new regulations.
Once this process is completed, disciplinary processes will be instituted, the department said on Thursday.
Public Service Deputy Minister Ayanda Dlodo said failure to resign from either the business or government would not be taken lightly.
She said that because the regulations had been in effect for less than a year, the department did not have official numbers yet.
Gigaba said the government's national anti-corruption hotline was helping identify cases of fraud.
As of January 31, a total of 18,778 cases had been referred to government departments and feedback was received on 17,249 cases.
Ninety percent of cases had been closed, he said, and 3,600 officials had been found guilty of misconduct between 2004 and January 2017.
Outstanding municipality bills
He said 1,700 officials were dismissed from the public service, 447 were fined, 137 were demoted, 921 were given final written warnings, and 395 were prosecuted.
Investigations had led to the recovery of R410 million.
The cluster also raised concerns about the inability of some municipalities to pay power utility Eskom.
Co-operative Governance Minister Des van Rooyen said the department was continuing to provide support for the affected municipalities.
There was a plethora of reasons why these municipalities were not able to pay Eskom, he said.
These included financial reasons, such as the imbalance between what some municipalities charge as tariffs and what they pay Eskom.
He said the way Eskom managed the credit of some of these municipalities "leaves a lot to be desired".