Water boards are leaky

Some state-owned water boards have been without formally constituted boards of directors for a long time. The board of Overberg Water in Somerset West was terminated by the water affairs minister (for reasons known only to her) in July 2017.

The minister, who is the sole shareholder in this company on behalf of the people of SA, decided to illegally combine the fiduciary duties of nonexecutive directors and the management functions of the CEO into one person.

The CEOs of these boards now approve their strategic direction and policies, provide oversight of themselves, manage the companies without independent oversight and disclose to stakeholders only what they deem important.

This is no way to achieve legitimacy with stakeholders, promote ethical culture and improve performance, as King IV advises. The prescripts of King III and IV, the Companies Act and the Public Finance Management Act are clear about the separation of roles between a CEO and a board.

It is unethical for accounting officers to serve as their own accounting authorities. But this arrangement is quickly becoming a norm rather than an exception and poses numerous risks for the CEOs, their staff, other stakeholders as well as service delivery.

It is incumbent upon parliament, the primary custodian of the Public Finance Management Act, to act decisively and hold the minister and CEOs accountable for upholding the rule of law and business ethics.

Mpumelelo Ncwadi Cape Town