Maybe there’s more, maybe not

Is crony­ism and self-deal­ing unique to some SA firms?

Financial Mail - - BOARDROOM TAILS - @an­ncrotty

Ahead­line read­ing “The vast ma­jor­ity of Jselisted com­pa­nies are law abid­ing, with rea­son­ably ef­fec­tive cor­po­rate gov­er­nance sys­tems in place” is hardly one to sell news­pa­pers. In the same way “No-one in the ANC was caught with a fin­ger in the till to­day” would not at­tract many read­ers.

The sad re­al­ity is that ev­ery­one, not just jour­nal­ists, tends to fo­cus on big, dra­matic sto­ries. We seem in­tent on spook­ing our­selves, rather like chil­dren trans­fixed by a scary movie.

Such is the pace of progress in com­mu­ni­ca­tions that we now have im­me­di­ate ac­cess to de­tails about ev­ery fi­nan­cial swin­dle, po­lit­i­cal scam or flood any­where in the world. This makes it al­most im­pos­si­ble to de­ter­mine whether we are liv­ing in a more cor­rupt and dan­ger­ous world than be­fore or are just more in touch and more aware of events than be­fore.

In ad­di­tion, when it comes to fi­nan­cial and po­lit­i­cal wrong­do­ing, the spread of 20th-cen­tury Western-style democ­racy makes us less tol­er­ant and more ques­tion­ing of our lead­ers.

The fact is, it’s im­pos­si­ble to say whether the vast ma­jor­ity of Jse-listed com­pa­nies are law-abid­ing and have ef­fec­tive cor­po­rate gov­er­nance sys­tems in place. We would like to think it is so. And ev­ery cor­po­rate gov­er­nance box-tick­ing ex­er­cise that is com­pleted may pro­vide some com­fort — though con­sid­er­ably less than pre­vi­ously. We might feel over­whelmed by all the wrong­do­ing grab­bing the head­lines, but what if it is only the tip of the ice­berg?

Is it pos­si­ble that what looks to out­siders like crony­ism and self-deal­ing, which are such dom­i­nant fea­tures of the sto­ries about Re­silient, Stein­hoff, KPMG and so forth, are unique to them? Or is this an ac­cepted part of busi­ness in SA and glob­ally?

In­vestec Bank pro­vided the funds for MD Bernard Kan­tor to in­vest in the Cape Town prop­erty that was sold to Stein­hoff just days be­fore that com­pany im­ploded. In­vestec is sat­is­fied there was no breach of the group’s poli­cies and pro­cesses. But Kan­tor was a full-time ex­ec­u­tive at a large bank, for which he was very well paid. How did he have time to be en­gaged in large pri­vate in­vest­ment projects?

And for­mer Stein­hoff CEO Markus Jooste was part of so many pri­vate deals, in­clud­ing those re­lated to race horses, that it’s hard to imag­ine how he kept down a full-time job, let alone one that in­volved run­ning the sec­ond­largest fur­ni­ture re­tailer in the world.

Sim­i­larly, ex­ec­u­tives at Re­silient seemed to be en­gaged in a lot of pri­vate busi­ness trans­ac­tions.

A less scary thought is that per­haps we know about this only be­cause of higher stan­dards and bet­ter over­sight. Much of what shocks us to­day was not even seen as wrong be­fore.

There is a ten­dency to be­lieve the Ja­cob Zuma pres­i­dency dragged busi­ness as well as pol­i­tics into a dark and cor­rupt place. No doubt Zuma has trig­gered a cer­tain amount of cor­rup­tion fa­tigue; but blam­ing politi­cians for the fail­ings of busi­ness seems disin­gen­u­ous. Per­haps the un­dra­matic story is that right now lots of listed com­pa­nies are try­ing to be bet­ter cor­po­rate cit­i­zens — but many are not.

We might feel over­whelmed by the wrong­do­ing grab­bing the head­lines but what if it is the tip of the ice­berg?

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