Directors must face the consequences

The judicial process of bringing to book those responsible for looting state-owned enterprises (SOEs) during the state capture years has been disappointingly slow, so it was encouraging to learn last week that the department of public enterprises is actively pursuing implicated directors to have them declared delinquent. They need to be held to account.

Such a declaration would require evidence that they were grossly negligent and failed to perform their fiduciary duties as required by the Companies Act. Criminal proceedings are also possible if the accused was actively complicit in the wrongdoing.

Public enterprises minister Pravin Gordhan told MPs action is being taken to have 92 former SOE directors declared delinquent due to their role in state capture. These include Eskom (13 cases), Transnet (25), SAA (25), Alexkor (22) and Denel (10).

Evidence has to be submitted to the Companies and Intellectual Property Commission and a declaration of delinquency made by a court. It has serious consequences and will preclude a person from being a director of a company for at least seven years — or longer if the court so decides. A court may also grant leave to the companies affected to claim damages from a delinquent director for losses incurred as a result of his/her conduct.

Amendments to the Companies Act making their way through parliament will assist in holding state capture directors to account. They include an amendment to extend the time bar on delinquent director applications from 24 months after the person was a director to 60 months.