At That Point
  • home
  • our story
  • our services
  • your resources
  • SA Industry News

State capture report exposes poor regulation of directors

21/1/2022

0 Comments

 
Picture
“Acting Chief Justice Zondo’s State Capture Commission report highlights the need for formal regulation of the director profession,” says Advocate Fay Mukaddam, Chartered Director (SA) and Governance Specialist at the Institute of Directors South Africa (IoDSA).
 
As examples, Mukaddam points to the first volume’s allegations of gross mismanagement at SAA and its chairperson at the time eventually being declared a delinquent director by the courts.
 
“While legal action can be taken to prohibit an incompetent or criminal director from serving on any boards in the future, this is effectively closing the stable door after the horse has bolted,” she says, insisting that early prevention is better than eventual punishment.
 
A flawed system
What stands out in the report is cadre deployment that saw people appointed to boards in SOEs and public sector entities because of their political connections rather than their fitness as directors.
 
It is evident that they often did not understand or respect their mandate and either neglected or ignored their obligation to the organisation and the law. As a result, they allowed poor performance to infect the corporate culture they were meant to heal and led their organisation to ruin.
 
This signals a flawed recruitment, screening, selection and appointment process and a lack of appreciation for what the roles and responsibilities of a director and board are.
 
"If one doesn't understand what they are elected to do, how can they acquit themselves of their fiduciary duties?" asks Mukaddam.
 
It also appears that, due to their questionable appointment, they were not subjected to the same performance interventions or rehabilitation processes as everyone else.
 
The impact of poor directors
SAA is a prime example of what happens when even a few poor directors are appointed to boards.
 
Unfortunately, director acumen and commitment to their duties vary widely across organisations in both the public and private sectors, and low performance can go unnoticed until it is too late.
 
“Professional directors as a collective have a significant impact on the economy, yet almost anyone can become a director without possessing the level of competency essential to their office,” says Mukaddam.
 
The vetting process is largely left to the incumbent board or the vote of the organisation’s shareholders.
 
Mukaddam suggests that this process is unsustainable, especially in developing countries like South Africa where robust policy is critical to economic recovery.
 
A better approach
“It is long past due that an independent regulator is empowered to accredit incoming directors against global professional standards, hold them accountable for misconduct, and formalise their continuous professional development on pain of being disqualified,” states Mukaddam.
 
Other significant professionals, like doctors, auditors or attorneys, are required to pass a bar exam or professional evaluation before being allowed to practice. They are also subject to the disciplinary oversight of their professional body and must commit themselves to monitored lifelong learning.
 
Yet none hold more sway over their nation’s prosperity than public and private professional directors.
 
“A regulator, supported by government and the private sector, is far more effective than a long and difficult legal battle for a delinquency judgement after an organisation is already crippled,” says Mukaddam.
 
 
ENDS

 
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, [email protected], www.atthatpoint.co.za 
 
For more information on the IoDSA please visit:
Website:  www.iodsa.co.za
Twitter:  @The_IoDSA
LinkedIn:  Institute of Directors South Africa Company Page  
Facebook: Institute of Directors South Africa

0 Comments



Leave a Reply.

    Welcome to the IoDSA Newsroom.
    IN THE MEDIA

    2023
    ​

    2 March
    Financial Mail: 5572bb70-29ab-48f8-b5df-79c7bb7f27dc.pdfIN 


    Archives

    May 2025
    February 2025
    November 2024
    August 2024
    July 2024
    March 2024
    January 2024
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    April 2021
    February 2021
    November 2020
    October 2020
    September 2020
    August 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    May 2019
    April 2019
    February 2019
    January 2019
    November 2018
    September 2018
    August 2018
    July 2018
    February 2018
    January 2018
    December 2017
    July 2017
    June 2017
    April 2017
    November 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    November 2015
    September 2015
    August 2015
    July 2015
    June 2015
    April 2015
    March 2015
    February 2015
    October 2014
    September 2014
    August 2014

    Categories

    All
    702 Sun International CEO SleepOut™
    ABSA
    Accountability
    ACGN
    Advocate Fay Mukaddam
    Africa
    African Governance Showcase
    AGM
    Alex Granger
    Angela Cherrington
    Angela Oosthuizen
    Ansie Ramahlo
    Ansie Ramalho
    Audit Committees
    Auditor General
    Board
    Board Meeting
    Boards
    Budget
    Business
    CD(SA)
    Central Energy Fund
    CEO
    CEO Tenure
    Certified Director
    Chairman
    Chartered Director
    CIPC
    City Of Johannesburg
    Clover
    Companies Act
    COO
    Corporate Governance
    Corruption
    Cricket SA
    Delinquent Directors
    Director
    Directors
    Directors' Sentiment Index Report
    Disclosure
    Discrimination
    Dudu Myeni
    Economic Growth
    Eskom
    Eskom Board
    Ethics
    Executive Pay
    EY
    Fair Pay
    FEDSAS
    Fraud And Corruption
    Governance
    Governing Bodies
    Gupta
    Huge Group
    Institute Of Directors In South Africa
    Integrated Reporting
    IoDSA
    Johannesburg Property Company
    Karin Ireton
    King Code Of Corporate Governance
    King IV
    KingIV
    King IV Launch Conference
    Leadership
    Local Elections
    Management
    Mervyn King
    Mid-term Budget 2021
    Mini-budget 2021
    Municipalities
    Non-Executive Directors’ Fees Guide
    North West Cricket
    Parmi Natesan
    Politics
    Professionalising Directorship
    Property
    Public Sector Boards
    Ray Harraway
    Remuneration
    Remuneration Committee Forum
    Richard Foster
    SAA
    SABC
    SA Express
    SAPO
    School Governing Bodies (SGB)
    Service Delivery
    Shareholders
    Sikkie Kajee
    SME Growth
    Social Inequality
    SOEs
    South African Airlines
    South African Airways
    South African Forestry Company
    Stakeholders
    State Capture
    State-owned Enterprises
    State-owned Entities
    Succession Planning
    Sustainability
    Sustainable Development Forum
    The Ethics Institute
    The Institute Of Directors South Africa
    Transnet
    Trends
    Tsakani Maluleke
    UCT
    Vikeshni Vandayar
    Women
    Women's Day
    Zondo Commission

    RSS Feed

CONTACT US

office [at] atthatpoint [dot] co [dot] za
© COPYRIGHT 2024
ALL RIGHTS RESERVED
  • home
  • our story
  • our services
  • your resources
  • SA Industry News