LATEST DIRECTOR SENTIMENT SURVEY BY THE INSTIUTE OF DIRECTORS IN SOUTH AFRICA

JOHANNESBURG - COMPANY directors in South Africa feel predominantly negative about economic conditions facing South Africa in coming months and are also increasingly concerned over a shortage of skilled labour as well as sometimes onerous union demands.

 That’s the top line from the 2021 Institute of Directors in South Africa (IoDSA) Sentiment Index – the sixth iteration of the study. The survey seeks to gauge how South African directors view the current operating climate. The survey was conducted earlier this year when South Africa was on a national adjusted Level 3 lockdown due to the rising cases of Covid-19.

 The IoDSA’s Vikeshni Vandayar Executive: Governance and Corporate Services who oversaw the report says while serious macro-economic concerns understandably remain around the boardroom table, there is a welcome upside in that the perception of general business conditions has improved from 2020. She believes this may be because of the positive adaptation to the so called new normal conditions of remote and virtual working.

This year’s survey included key questions around technology and its uptake given the Covid-19-driven move to a virtual workplace. It’s an issue that patently needs more top-level attention with just 46% of respondents believing boards are devoting enough time to discussion around technology and its future role. Only half of those surveyed believed that directors had a high-level understanding of cybersecurity risks.

Vandayar says while directors are learning to live with the flux and mutability caused by the pandemic, most respondents still feel the uncertainty of the South African economy has impacted their business the most. To that end, corruption and inadequate government service delivery remain in the top ranked challenges affecting business. Energy security is not as much of a concern as it was two years ago but still ranks highly along with inadequate government service delivery.

 The IoDSA Director Sentiment Index polls the views of close to 500 directors mostly in an executive capacity. Fifty-nine percent were executive directors and 41% non-executive directors.

In terms of the daily operating business climate, those polled believe that general business sentiment is starting to improve with brighter prospects ahead in the next year. But says Vandayar, the most negative sentiments remain the level of red tape and its impact on business, poor consumer confidence, an over regulated environment, high tax levels and a lack of infrastructure development. She says, “It’s testimony to the resilience, fortitude and application of directors in South Africa that in spite of myriad challenges, many of their businesses remain operational and robust.”

 The Index shows that South African directors feel positive towards current governance conditions in South Africa, but it must be noted that this positive sentiment has been decreasing since the survey started in 2016.  Notes Vandayar, “Directors felt the most positive about boards adequately setting the tone of ethical conduct through their ethical leadership and most negative about the implementation of good corporate governance practices improving in the next 12 months.”

 The top governance challenges are lack of sustainable thinking and a lack of understanding of the overall benefits of good governance.” In terms of the job itself, directors are buoyed that continuous professional development is impacting positively on-board performance but there is concern over the willingness of some directors to take risks that could hinder innovation and growth.  In terms of what motivates a director’s willingness to serve on a board, the top factors are a strong adherence to ethical behaviour independence and maintaining and preserving a company’s reputation.

ENDS

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@thatpoint.co.za,  www.atthatpoint.co.za
For more information on the IoDSA please visit:
Website:  www.iodsa.co.za
Twitter:  @The_IoDSA
LinkedIn:  Institute of Directors in South Africa Company Page  

Concern over local government’s overall ability to reliably deliver services to citizens has been strengthened by findings in a report by the Ethekwini Municipality, which raises concerns over board member appointment processes, inductions and ongoing training at two of its municipal entities.
 
These findings align to common issues that we have identified over several years of performing board evaluations and governance advisory services in the public sector.
 
The IoDSA has repeatedly spoken out in the media and in commentary to government that directors need specialised training in governance and other directorial skills in order to discharge their duties properly, and that these specialist skills need to be kept up to date via rigorous continuous professional development.
 
“Municipal entities in general are at the coalface of service delivery and, at the end of the day, if any entity is not delivering on its mandate, its board needs to be held accountable and face the consequences,” says Natesan.
 
The IoDSA currently trains more than 6 000 directors and prospective directors annually, and has introduced two professional designations—Chartered Director (SA) and Certified Director (SA). These designations provide a credible framework that enables directors to acquire the necessary skills through training, prove them through certification, and then maintain them through continuous professional development.
 
“The question of specialist skills also speaks to the whole nomination process, which we have found to be a challenge, particularly in the public sector. Too often, appointments are made on political or other inappropriate grounds, thus effectively setting the organisation up for failure,” Ms Natesan says.
 
She argues that board nominations need to be the result of a formal and robust process conducted by an independent and qualified nominations committee that undertakes the necessary due diligence on each candidate.
 
“It’s vital that only individuals who have the knowledge, skills and experience that the organisation requires are put forward. In addition, candidates should also enough time to discharge their board commitments, and lack of conflicts of interest,” she says.
 
NOTE TO EDITOR
This media release replaces one issued on 29 June 2021 entitled uShaka Marine World crisis makes the case for the professionalisation of directorship in local government,  which was based on a published news article.
The IoDSA has since received the Ethekwini Municipality Audit Committee report and has revised the media release.
The original media release was not intended as findings or judgments by the IoDSA on uShaka Marine World, as may have been perceived. The comments were intended to be informative and general in nature, based on best practice in governance as informed by years of conducting board evaluations and governance advisory projects.
 
ENDS
 
MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@thatpoint.co.za,  www.atthatpoint.co.za
For more information on the IoDSA please visit:
Website:  www.iodsa.co.za
Twitter:  @The_IoDSA
LinkedIn:  Institute of Directors in South Africa Company Page  

The massive fire at the warehouse of chemicals company UPL in Durban has created an environmental disaster whose scale is still not clear, and has put the company into the headlines for all the wrong reasons. While the facts are not yet confirmed, it’s clear that the incident holds many lessons for directors and regulators across all industry sectors, says Advocate Fay Mukaddam, Chartered Director and Technical Advisor at the Institute of Directors in South Africa (IoDSA).

“When something on this scale happens, those who are accountable need to take a hard look at what went wrong. Perhaps even more important, though, corporate and government leaders everywhere need to tease out what the lessons are, and have the humility to see what they can learn,” she says. “Directors, in particular, bear the ultimate accountability for anything that happens to their organisation, and so should be looking at this disaster very carefully. There are key lessons we should all take to heart.”

Some of these lessons include:

What does leadership actually entail? Organisations need to understand the impact they have, or could have, on the economy and society, and thus what being an ethical and effective corporate citizen means. In this instance, it seems clear that there simply wasn’t a deep enough examination of the stakeholder universe, and what that meant for its business strategy.

At a broader level, both directors and regulators need to consider what leadership means in the context of being a good corporate citizen—King IV pairs ethics and effectiveness when defining leadership, which should be informed by integrity, competence, responsibility, accountability, fairness and transparency (iCRAFT).

Does the board and executive team understand the reputational issues? A company’s reputation can be destroyed in an instant, not so much by a catastrophe but by how the company responds to it—with considerable impact on its bottom line. “The temptation to take a short-term view and play one’s cards too close to one’s chest will have long-term consequences,” she says. “To drive sustainability, directors must move from a short-term to a long-term value creation view.”

A related issue here is that of crisis communications. How well a company survives a disaster is intimately connected to how well it communicates as events unfold. It seems clear that neither UPL nor the regulator or other parties concerned had an effective crisis communication strategy, leaving an exceptionally broad body of stakeholders largely in the dark about something that could have severe health and environmental ramifications.

Is your risk management up to scratch? For UPL’s directors, a big question has to be whether this risk was foreseeable. One might perhaps argue that social unrest on such a scale was unforeseeable, but even that is highly debatable given the facts of South African life. But there’s no doubt that a catastrophic event (no matter its nature) should have been foreseen, and contingency plans put in place. All directors should be subjecting their risk strategies to minute scrutiny. Do you have mitigation strategies in place should the unthinkable happen?

“As I’ve said, the facts are still being investigated, but two aspects of what has occurred are hugely disappointing from a board leadership perspective,” says Advocate Mukaddam. “One is the retreat into a laager, with both company and regulator clearly reluctant to give out any information lest, it seems, they admit liability. One gets the impression that lawyers and insurers are leading the conversation whereas the best interests of those affected should be at the forefront. A constructive and stakeholder inclusive approach that brought together all role-players to fast-track ways to fix the problem would have been infinitely preferable—and would have paid off in the long term.

“In a situation like this, we all want individuals to step forward and take responsibility for putting things right, not to resort to the smokescreen of legalese.”

The firefighters were casualties of this legalistic approach as they appear to have not been given information about the nature of the chemicals in store, with potentially grave consequences for their own health and safety. This information would have also ensured that the way they fought the fire could have been adjusted to reduce the risk of widespread contamination. The broader public also was deprived of potentially important information about the health risks it faced as the fire blazed and the contamination spread.

“Directors and regulators alike need to be looking at the UPL disaster to see what they can learn, and at a minimum, I would hope that they are stress-testing their own contingency plans.”

ENDS

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@atthatpoint.co.za, www.atthatpoint.co.za
For more information on the IoDSA please visit:
Website:  www.iodsa.co.za
Twitter:  @The_IoDSA
LinkedIn:  Institute of Directors in Southern Africa Company Page  

Business Day reports that government is planning to intensify the vetting of non-executive directors and other employees at SOEs to improve the quality of appointments.[1] These moves are long overdue and should be welcomed—but with caution, says Parmi Natesan, CEO of the Institute of Directors in South Africa (IoDSA).

“For many years, the IoDSA has been calling for reform in how board appointments are made in order to put SOEs back on track,” she says. “So much so that we provided input to the Department of Public Services and Administration many years back on a guide to the appointment of SOE directors, but we are not aware of it ever being approved or applied.[2] The brutal truth is that implementing good governance best practice will require the state to make some hard choices, and we have yet to see whether there is genuine political will to drive through the necessary changes.”

One of the elements highlighted in the news report is better vetting via stringent background checks before appointments. However, it must be recognised that this vetting process must be extremely detailed and goes beyond merely performing the standard identification, qualification and criminal checks, but should extend to investigating candidates’ knowledge, skills and experience, as well as other necessary personal characteristics.
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The article also indicates that there are no uniform criteria for the recruitment of board members, which is a concern. Directors have a very specific governance role, and need specific skills to discharge it. While there are no legally mandated, uniform criteria for board members, the IoDSA has developed a robust director competency framework that covers the skills that every director needs in order to be able to serve effectively.

“The King Reports make it very clear that directors have a critical role to play, and they need the right skills to do so. Given the importance of the role, and the substantial personal risk that board members carry, the IoDSA believes it’s necessary to professionalise directorship. We have developed two director designations that are approved by the South African Qualifications Authority that will allow directors to gain the right skills and then maintain them via continuous professional development obligations,” she explains.

“Becoming a Chartered or Certified Director (SA) not only means you demonstrably acquire an objectively designed skillset contained in the Director Competency Framework, you also become subject to a professional code of conduct, under which you can be disciplined.” This should be taken into account when appointments are made.

Another key challenge for the public sector has been a lack of role clarity, again something that the IoDSA has frequently highlighted, most notably in its 2019 paper “Challenges facing public sector boards”. The challenge has always been that SOE founding legislation frequently gives the state, as sole shareholder, the power to appoint both directors and senior executives. By contrast, governance best practice reserves the right of appointing these senior positions to the board. This is logical because it is the board, not the shareholder, which is accountable for the organisation’s performance.
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“To implement good governance and improve organisational performance, the state will have to recognise that its criteria for appointing senior roles can no longer be subject to political considerations, and should focus on what the organisation actually requires to fulfil its mandate. The shareholder would be well advised to consult the board throughout the process, and make it clear that appointees answer to the board and have a primary duty to the organisation, not the politicians who appointed them,” Ms Natesan concludes. “Good governance can help save our SOEs to everybody’s great benefit, but it remains to be seen if Government has the appetite for real reform.”

[1] Thando Maeko, “Public enterprises aims at strict vetting of SOE appointments”, Business Day (18 August 2021), available at https://www.businesslive.co.za/bd/national/2021-08-18-public-enterprises-aims-at-strict-vetting-of-soe-appointments/.
[2] IODSA HAILS GOVERNMENT PLAN TO IMPROVE BOARD APPOINTMENTS ON STATE-OWNED ENTITIES
https://www.iodsa.co.za/news/355434/IoDSA-hails-Government-plan-to-improve-board-appointments-on-state-owned-entities.htm

ENDS

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@atthatpoint.co.za, www.atthatpoint.co.za
For more information on the IoDSA please visit:
Website:  www.iodsa.co.za
Twitter:  @The_IoDSA
LinkedIn:  Institute of Directors in Southern Africa Company Page  

According to a report in Business Day,[1] President Ramaphosa ended his recent testimony to the Zondo Commission with a defence of the government’s transformation policy, and urged Deputy Chief Justice Zondo not to order that the ANC’s deployment committee be scrapped. Dr Simo Lushaba, a governance specialist who facilitates Director Development Programs at the Institute of Directors in South Africa (IoDSA), says that President Ramaphosa’s plea indicates that government has no intention of doing away with this practice and, even more concerning, has not yet recognised the effect it has had on the state of governance in the country and on service delivery.

“Cadre deployment is essentially a form of political nepotism, and is as destructive,” he says. “Cadre deployment by a shadowy ANC committee—remember we only know that it exists and that the sitting deputy president sits on it—has had a calamitous impact on how our state entities perform and thus on service delivery. People tend to focus on the particular instance of cadre deployment, but the real impact is on the public service as a whole.”

For example, he continues, cadre deployment does not only put people in unearned positions of leadership, it shows that the highest positions are available only to cadres. Professionals in the public service are demotivated, and few will apply to join an organisation in which the criteria for promotion are shrouded in secrecy.

The fundamental unfairness of the system is evident in the fact that even cadres themselves are disadvantaged. Genuine cadres of the party have no way of knowing whether they are on “the list” of possible appointees because it is not published even within ANC circles.

The sidelining of professionals, state capture and corruption are ultimately the poisoned fruits of this opaque, secretive system operating outside governance best practice.

“We are asked to believe that for many years this powerful secret committee kept no minutes, when even the humblest stokvel does that,” he says. “The intention is clearly to keep everything shrouded in secrecy and, above all, to avoid scrutiny. And without transparency and scrutiny, there will be no accountability.”

Dr Lushaba says that South Africans should insist that leaders and prospective leaders of state entities be prepared to accept a transparent nomination process that is independent and audited.

Nonetheless, the ANC—and any other organisation—retains the right to nominate an individual whom it believes would be the best candidate for a leadership position, but it should not be allowed to impose its will on the process. In his view, the problem is not the cadres themselves per se, but rather the broken system. The key point is that the appointment should be the best interests of the entity concerned, and the board should have the final voice in that decision. Good governance demands a segregation of duties and roles with good reason—one party cannot both be the nominator and the decision-maker. If this segregation is not maintained, as we see all around us, the outcome is disastrous.

“We cannot convince any entities, public or private, to appoint leaders based on their competence and merit, while still driving transformation, if the head of state and his ruling party cling so tightly to their brand of political nepotism—even after so much has gone wrong,” Dr Lushaba concludes. “Ethical leadership requires that leaders can only expect the same standards of conduct from others that they hold themselves to.”

[1] Harja Omerjee, “Ramaphosa defends ANC’s cadre deployment policy”, Business Day (12 August 2021), available at https://www.businesslive.co.za/bd/national/2021-08-12-ramaphosa-defends-ancs-cadre-deployment-policy/. 

ENDS

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@atthatpoint.co.za, www.atthatpoint.co.za
For more information on the IoDSA please visit:
Website:  www.iodsa.co.za
Twitter:  @The_IoDSA
LinkedIn:  Institute of Directors in Southern Africa Company Page  

Many commentators have pointed out that the recent riots in KwaZulu-Natal had a silver lining in the way that communities quickly banded together to protect themselves and maintain law and order. Less commented on is the master class the riots and near anarchy gave on the importance of governance in delivering good outcomes, argues Muhammad Seedat, Chair of the Institute of Directors in South Africa (IoDSA) and himself a “veteran of the barricades” in Durban.

“It’s true what they say—the crisis truly brought local communities together in quite a remarkable way. Now that some of the dust has settled, though, it seems as though the outcomes for some communities are not so positive,” he says. “In these communities, I believe, the unfortunate outcomes can be traced to a lack of governance.”

Mr Seedat says that what was remarkable about his experience was how rapidly his community came together and put governance structures in place on the fly. It was this that enabled them to mount a successful defence of their community without overstepping the mark.

“One can argue that adopting leadership structures and hierarchies in times of crisis is hardwired into the human genome, but what sets the successful communities apart is how well that emergency leadership was able to deliver the desired outcomes. Ungoverned leadership and communal action might be effective in the short term, but it can lead to undesirable outcomes as we seem to see in places like Phoenix,” he says.

“One key thing we did was to identify the threats we faced and what the appropriate responses were. We knew very well that a key risk for us was the death of any community member or alleged perpetrator. Without this kind of analysis, it’s very easy to overstate the risk and thus deliver an inappropriate response—excessive force might deliver short-term results but then the community has to live with the fallout over the long term.”

He believes that the more affluent areas were helped in crafting a response that was both effective and morally justifiable because many of the community members were familiar with the principles of governance from their work lives, and so automatically applied those principles in the emergency. By contrast, areas like Phoenix probably lacked individuals with deep experience of, and expertise in, governance and might thus be more prone to losing control of the situation.

“In our area, and I’m sure in other similar ones, the leaders had to play an educative role as regards the need for some form of governance, and how it would provide a structure through which the skills that people had to offer would be enabled to make the best possible contribution,” he says. “For me, it was a real lesson in how governance can be deployed fast and almost organically, and how it truly does increase the chances of delivering the best possible result.”

ENDS
 
MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@atthatpoint.co.za, www.atthatpoint.co.za
For more information on the IoDSA please visit:
Website:  www.iodsa.co.za
Twitter:  @The_IoDSA
LinkedIn:  Institute of Directors in Southern Africa Company Page  

As long as Government’s cadre deployment policy is defended, governance of South Africa’s state- owned entities (SOEs) will remain vulnerable and at risk, says Dr Simo Lushaba, Facilitator of Director Programs at the Institute of Directors in South Africa (IoDSA).
 
He was reacting to the testimony of President Cyril Ramaphosa before the Zondo Commission of Inquiry into State Capture, who acknowledged that “massive system failures” with board appointments paved the way for SOE failures. At the same time, the President defended cadre deployment.
 
Lushaba says boards are the custodians of good governance. When there is interference with their appointment it compromises the essence of good corporate governance.
 
According to King IVs sector supplement for SOEs, the composition of its board is a key factor driving the performance of an SOE. Like the boards of all organisations, an SOE’s board must have the right balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively.
 
The deployment committee, which the President described as overseeing board appointments to SOEs, should thus have been mandated to recommend people who were fit for purpose to be appointed to SOE boards.
 
By-passing the deployment committee
 
In addition, some of the SOE board member appointments, now being questioned before the Zondo Commission for their role in state capture, actually bypassed the oversight role of the deployment committee. “The question then is what did the committee do about it. It clearly shows that it is a system that lacks accountability”.
 
If any individual can bypass a committee of this nature, and it does not act; it can only mean there is no respect for the committee or its mandate.
 
Parallel structures
 
Lushaba feels there is a thirst within Government to exercise an undue level of power. South Africa was exposed to state capture because of the abuse of power. State entities failed because of the abuse of power.
 
Government seems to have satisfied its thirst by creating parallel structures outside of the established oversight Government structures. He argued that if the deployment committee was a structure of Government, as appointments are a responsibility of Government, the deployment committee would account to Parliament. He questioned why the deployment committee operated outside the oversight of Parliament when it carried so much weight in providing names of candidates that are appointed to such key leadership roles in Government and its entities?
 
Transparency and accountability
 
Lushaba says that if the deployment committee is retained it should be transparent and accountable. Its meetings should be public, similar to that of the Judicial Service Commission, which is responsible for the appointment of fit for purpose individuals in the judiciary.   The deployment committee should also be accountable for making appointments of individuals who display the necessary competencies and are fit for purpose to serve as directors.
 
“Without transparency and accountability on board appointments, the current state of SOEs will remain the same or it may even become worse.”

ENDS
 
MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@thatpoint.co.za,  www.atthatpoint.co.za
 
For more information on the IoDSA please visit:
Website:  www.iodsa.co.za
Twitter:  @The_IoDSA
LinkedIn:  Institute of Directors in South Africa Company Page  

Cricket South Africa (Cricket SA) has lurched into yet another crisis with the Members’ Council rejecting the interim board’s proposal that the new board be composed of a majority of independent directors. The move by the Council goes against widely-accepted international best practice, including the King IV Code on Corporate Governance, and is probably indicative of the lack of trust between the Members’ Council and the Cricket SA board, says Ansie Ramalho, Technical Facilitator at the Institute of Directors in South Africa and Chair of the King Committee on Corporate Governance in South Africa.
 
“The challenge that Cricket SA faces is common in the non-profit sector, small businesses and even some state-owned entities, where boards are often dominated by representatives of key stakeholders such as donors, communities, beneficiaries or investors. Stakeholder representivity might seem like a good idea as it gives stakeholders a say at the highest level, but in fact it is not ideal,” she explains. “Directors have a primary duty to the organisation itself—in this case Cricket SA—and not to the Members’ Council or other stakeholder groupings. Usually, the interests of the organisation and its key stakeholders are aligned but there are situations in which the short-term interests of a particular stakeholder may conflict with longer-term considerations relating to the organisation’s sustainability. So-called representative directors are often mandated to promote a particular agenda at the board which also increases the potential for conflicts of interests.”
 
For this reason, good governance practice for a company such as Cricket SA would be to have a majority of independent non-executive directors who are better placed to take a more objective view of issues, and to put the interests of the organisation first. This was also a recommendation by the Nicholson Commission of Enquiry in its 2012 report on maladministration at Cricket SA.
 
Ms Ramalho also argues that there is a good case to be made for the appointment of professional, career directors who have the governance and oversight skills necessary to discharge their fiduciary duties competently. The dilemma of non-executive directors is that they do not have the benefit of day-to-day knowledge of the organisation, and thus suffer from a “knowledge deficit” when compared with executives.
 
“Being an expert at wielding the tools of governance and oversight compensates for the asymmetry of information between non-executive directors and executives. Merely representing a stakeholder grouping or having had a successful career as an executive are not in themselves adequate for offering rigorous and objective oversight,” she says. “If the directors are not sufficiently independent and fully qualified to offer oversight and look after the organisation’s long-term interests, the whole system of checks and balances is rendered ineffectual.”
 
Ms Ramalho suggests that, the primary focus of the Members’ Council should be to ensure that Cricket SA has the best possible board, composed of directors with the ability to hold management to account competently and without bias. It is after all ultimately the responsibility of Members’ Council to elect the board members and it is therefore within its power to insist on a rigorous selection process that delivers this outcome. “That is the only way to ensure Cricket SA is governed with its long-term interests—and the interests of the game as a whole—at the forefront,” she urges.
 

News reports indicate that the suspended board of North West Cricket might be facing an application by parent body, Cricket South Africa, to have them declared delinquent directors. While the facts of the matter have yet to be tested in court, being declared delinquent is a serious issue and all directors should take note, says Advocate Fay Mukaddam, Chartered Director and Technical Advisor at the Institute of Directors in South Africa (IoDSA).

“On the face of it, this seems to be an issue that does not appear to revolve around looting or corruption such as we see on vivid display at the Zondo Commission. Rather, the issue here seems to be maladministration and the misappropriation of funds,” she explains. “This was only possible if the board failed in its primary responsibility to exercise oversight effectively, and that’s why it and its chairman may potentially be held liable.”

The basic facts are that Cricket South Africa made funds available for upgrading a stadium. An investigation by Deloitte showed that R2.2 million of the R10 million received had been used not on the stadium but on operational matters.[1]
According to Advocate Mukaddam, this misappropriation of funds should have been picked up by the board in the course of its normal oversight activities.

“In other words - and this is a point the IoDSA has always stressed - directors need to have the right skills in order to discharge their fiduciary duties. Being a successful businessperson or professional, or just a good person, is no guarantee you will be a good director,” she says. “Directors bring their existing skills, experience and personal qualities to the table, to be sure, but they also need to learn how to be directors. It’s for that reason that we introduced our Certified Director and Chartered Director designations to provide directors with a way to acquire the necessary directorial skills.

“Directors don’t have to be bad apples to be held liable for not fulfilling their duties—if they can’t or don’t do their job, they can also be held liable.”

Cricket South Africa placed North West Cricket under administration in 2018 on the basis that its administrative, governance and financial functions were not satisfactory,[2] a lack for which the board is ultimately responsible.

If found to be delinquent, directors face the prospect of fines or even jail time and being barred from serving on a governing body for a length of time or forever.

[1] Tiisetso Malepa, “North West Cricket board directors could be declared delinquent”, TimesLive (16 March 2021), available at https://www.timeslive.co.za/sport/cricket/2021-03-16-north-west-cricket-board-directors-face-delinquency/.

[2] Cricket South Africa press release, “CSA appoints administrator for North West Cricket”(13 December 2018), available at https://cricket.co.za/news/27470/CSA-appoints-administrator-for-North-West-Cricket.

In his recent State of the Nation Address, President Ramaphosa emphasised the deep negative impact of corruption on the country’s growth and development, with specific reference to the shocking revelations emerging from the Zondo Commission. The President noted that good progress had been made in rebuilding the law-enforcement bodies, and the implementation of a National Anti-Corruption Strategy.

“South Africans need no reminding that corruption is a cancer that is destroying the fabric of our society, and the recent scandals relating to the procurement of personal protective equipment have driven home how brazen the looting has become. But, at the same time, society is cynical about government’s political will truly to bring malefactors to book,” argues Parmi Natesan, CEO of the Institute of Directors in South Africa (IoDSA).

“Accountability is critical to rebuilding trust in the institutions of state and in government itself. It’s critical that the Anti-Corruption Strategy works and is seen to work.”

The IoDSA urges that government needs to consider the following in order to ensure its anti-corruption strategy actually works:

Is it well designed? “It’s important the programme is aligned with legal requirements and stakeholder expectations—it must deliver accountability in line with what long-suffering citizens want,” she explains. “Equally important, the programme must focus on the key risks to ensure maximum impact, and its results must be rigorously measured and reported. Transparency is the twin sister of ethics and accountability.”

Is it being applied in good faith? With the greatest respect, it is easy to set up initiatives but only few actually deliver. Adequate resourcing and a record of swift action taken against corrupt individuals indicate good faith. It must also be clear that initiatives are in place to make ethical behaviour the default setting across government. These would include a visible commitment to ethical behaviour at the highest echelons of government, comprehensive training throughout the organisation and a well-communicated anti-corruption policy. In a sense, government is the board of South Africa Inc, and so is responsible for setting the “tone at the top” and driving it down throughout the country.

Does it work? Any programme is only so good as its results. Government must commit to actively monitoring how well its anti-corruption programme is working based on a consistent set of metrics, one of which should be the incidence of corruption both in terms of value and number of incidents. “Government needs to ensure not only that that monitoring takes place, but that it reviews the results regularly to identify and remediate any gaps,” Ms Natesan notes.

It’s worth reminding ourselves of how serious the consequences of corruption and unethical practices are. They include lack of societal service delivery, and reputational damage to the country and the government, as well as their leaders.

From a governance perspective, corruption is essentially the opposite of good corporate governance i.e. ethical and effective leadership.

“A corrupt country will find it hard to attract foreign direct investment, inhibiting the growth of a tax base government can use to fund social-upliftment projects. Civil claims by parties who suffered loss as a result of corruption are also a possibility,” Ms Natesan concludes. “Of course, individuals convicted of corruption could face criminal charges as well.”

​ENDS

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@thatpoint.co.za,  www.atthatpoint.co.za
For more information on the IoDSA please visit:
Website:  www.iodsa.co.za
Twitter:  @The_IoDSA
LinkedIn:  Institute of Directors in South Africa Company Page