IoDSA welcomes Myeni delinquency ruling, calls for directors to commit to education

The Institute of Directors in South Africa (IoDSA) welcomes the ruling by Judge Ronel Tolmay in the action brought by the Organisation Undoing Tax Abuse and the South African Airways Pilots’ Association against the former chairperson of the South African Airways board, Dudu Myeni. Judge Tolmay found that Ms Myeni had comprehensively failed to fulfil her duties as a director and ordered that she be declared a delinquent director for life, and she was further ordered to pay punitive costs. The Judge also referred the judgment and evidence led to the National Prosecuting Authority for investigation regarding possible criminal conduct.

“Judge Tolmay’s far-reaching judgment is timely for a number of reasons, not least because it finally tests in court the IoDSA’s long-standing contention that directors must inform themselves properly about the nature and extent of their duties, or put themselves in peril,” says Advocate Fay Mukaddam, Chartered Director and technical advisor at the IoDSA. “It is also clear from the evidence led that the courts will rely not only on legislation but also the King Reports on Corporate Governance — together, these provide a sound framework to guide directors in fulfilling their fiduciary and other duties satisfactorily.” “Directors have a critical role to play, and they can only do it if they are fully conversant with what their legal and fiduciary obligations entail.”

The judgment also made the important point that directors cannot use collective decision-making as a way to evade individual responsibility.

Parmi Natesan, CEO of the IoDSA, emphasises that the Myeni case shows how important it is for organisations to appoint suitably qualified people to boards, and to ensure that they keep up to date with the latest thinking and are regularly appraised. In the words of the judgment at 276: “To serve on a Board of an SOE should not be a privilege of the politically connected. Government has, as custodian of the common good, an obligation to ensure that suitably qualified people, with integrity, are appointed in these positions.”

The same point holds true for the private sector as well, Ms Natesan adds. For many years, the IoDSA highlighted the need to deepen the pool of directorial talent, introducing two formal professional designations to advance this process: the Chartered Director (SA) and Certified Director. To gain these certifications, individuals must acquire the skills identified in the IoDSA’s Director Competency FrameworkTM and follow a programme of continuous professional development. They also must commit to be bound by the IoDSA’s Code of Conduct.

“The IoDSA believes this judgment should act as a clarion call for directors and would-be directors to take steps to ensure they are properly educated in all aspects of the director’s role,” Ms Natesan concludes. “We need professional directors and, as the custodian of the King Reports, and promoters of good governance generally in this country, the IoDSA has all the programmes in place to create them.”

ENDS

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