Fallout from PhDgate deepens
• Institute of Directors CEO warns of risks when due diligence is not done
Boards of companies must do justice to shareholders by vetting potential directors properly, the Institute of Directors in SA has urged as fallout from the Thabi Leoka “PhDgate” debacle exposes corporate SA’s lapses in governance.
Business Day on Tuesday lifted the veil on Leoka’s 15-year deceit, in which she claimed falsely to have been awarded a PhD in economics at the prestigious London School of Economics (LSE).
With the mention of her name, the institute’s CEO Parmi Natesan said the allegations of misrepresentation of qualifications surrounding Leoka show weaknesses in the vetting process, warning that failure to conduct proper due diligence before appointing boards risks eroding the trust of the market.
“An organisation that does not perform this routine vetting of directors prior to appointment risks eroding the trust that shareholders, potential investors and other stakeholders have in its wider governance, and thus in its potential to succeed,” Natesan said in a statement on Wednesday.
“Performing due diligence on any appointment in any organisation, and especially senior appointments, is basic good governance. Given the huge responsibility that directors carry, and their importance to the organisation, they of all people need to be thoroughly vetted before appointment.”
Business Day has it on good authority that the lack of a PhD cited in her CV is what led to her prematurely leaving the board of Johann Rupert’s investment vehicle, Remgro. She served on the Remgro board for fewer than eight months.
Leoka and Remgro have denied the PhD saga was the reason for the parting of ways, attributing Leoka’s departure to “personal reasons”.
However, Remgro emphasised that it had proper vetting processes in place. “Remgro’s values are central to the culture of ethical and moral behaviour and compliance. To ensure that these values are upheld, the board recognises the need to ensure rigour in the process of electing and nominating members to the directorate,” the company said in a statement.
RED FLAGS
The institute’s red flags come as MTN SA and Anglo American Platinum remain silent on what due diligence they conducted before appointing her to their boards.
During the 15 years she claimed to have the PhD from LSE, Leoka has held several high-profile positions in the business world. These include a role as the chief economist at Renaissance Capital.
She has also worked for blue-chip companies such as
Investec, Barclays Capital and Standard Bank.
The Institute of Directors in SA said that failure to perform rigorous due diligence processes makes companies vulnerable to reputational damage.
“It must begin with ensuring that the potential director meets the criteria for serving on the board as determined by applicable legislation and the organisation’s founding documents.
“This typically includes identification, qualification, reference and even credit checks. In addition, the board needs to interrogate the candidate’s knowledge of, and experience in, directorship,” the institute said.
“It’s no longer enough to be a subject-matter expert — modern-day directorship requires a range of professional directorial skills. It’s also important to assess whether the potential director has the right personal qualities, which would include integrity, honesty, curiosity, courage, teamwork, communication skills and so on.”
Leoka denies that she misrepresented her qualification, saying she had obtained the highest level of academic achievement under a different name. She has not provided the details to Business Day.
The name that appears on the master s degree from LSE is
The’ LSE also distanced itself Bathabile Leoka. from Leoka on Wednesday.
“A graduate can provide official verification of any degrees they have from LSE via the ‘Higher Education Degree Datacheck’ or via ‘Digitary’,” said an LSE spokesperson.
“I can also reiterate and clarify what was said before: we have checked our files and can find no record of ‘Thabi Leoka’, or ‘Bathabile Leoka’, being awarded a PhD from LSE.”
Leoka could face perjury charges should she fail to prove her PhD credentials.
In 2017, she gave evidence before the commission of inquiry into higher education and training, which investigated whether free higher education in SA was possible.
After she swore that the evidence she would give was the “whole truth and nothing but the truth”, Leoka was asked to talk about her qualifications.
“I have got five degrees, I have got an undergrad from Wits University, it was a BA focusing on international economics and international relations, and then I did an honours degree and a master’s degree in international economics and international relations at Wits University,” reads the transcript of the hearing available on the department’s website.
“Then I did an MSc in economics, looking at economics and economic history, and then a PhD in international economics, the last two at University of London LSE.”
Lying under oath is a criminal offence that can result in a fine or imprisonment.
PERFORMING DUE DILIGENCE ON ANY APPOINTMENT IN ANY ORGANISATION … IS BASIC GOOD GOVERNANCE Parmi Natesan Institute of Directors in SA CEO