A double body blow to ethics in a week of scandals
The past week saw corporate South Africa reeling from two major scandals; although different in nature and size, they have a common denominator — ethics.
The Black Business Council was reformed in 2013 following years of cohabitation as Business Unity South Africa. Black business leaders felt the need to pursue the overt transformation agenda in an undiluted form.
Reborn out of a need to focus on building a strong foundation for black business to flourish, the BBC soon gained the confidence of political and other business leaders.
Its first president, Patrice Motsepe, with whom I worked closely at the time, was often at pains to preach the need for a focus on ethics and integrity.
Motsepe contributed his name and his own financial resources to ensure the new baby grew to meet its defined historical mandate. Ndaba Ntsele, the next president, consolidated the gains made by Motsepe.
This week, Ntsele’s successor, Danisa Baloyi, was suspended by the organisation. The reason is now public knowledge: she approached Airports Company South Africa for funds to support the council’s programmes but the cash never made it into the coffers of the lobby group.
In March this year she allegedly wrote to Acsa, asking it to deposit the R5-million into an account held by Merit Energy, a company apparently not known to the BBC.
She was requested to “step aside” while investigations were conducted. She flatly refused and instead is crying wolf. A clear violation of the basic provisions of the King codes. Whatever happened to the duty of care towards the organisation that one would expect its president to exercise?
Then there is Steinhoff. The biggest South African corporate scandal I’ve ever seen. According to the board the hole is estimated at €6billion (about R96-billion), though in truth no one really knows for sure.
But let’s for a moment analyse the company’s response to the saga that has seen its share price go from R75 a week ago to R6 on Friday, causing many shareholders, the majority of whom are civil servant pension funds, to lose billions of rands.
The first step was the resignation of CEO Markus Jooste. That was the right thing to do, but it wasn’t enough. Especially since Christo Wiese then took over the executive leadership of the business. I don’t know which is worse — Wiese taking over or Jooste staying on.
Then there was the Jooste “all my fault” apology letter to Steinhoff staff.
“It is time for me to move on and take the consequences of my behaviour like a man,” he said. “Sorry that I have disappointed all of you and I never meant to cause any of you any harm. Please continue to live the Steinhoff dream.”
He said he wanted to make it very clear that none of his fellow executives “had
Corporate governance can be taught and measured
anything to do with any of my mistakes”.
The positive: he took accountability. The negative: he didn’t tell staff exactly what mistakes he made, and he naïvely wanted his people to believe he alone was at fault.
The very reason that King IV insists on independent non-executive directors, especially in the position of chairman, is to avoid what has just happened at Steinhoff.
Wiese cannot expect the market to trust him any more than they trusted Jooste — a trust that’s clearly been broken. Both should have stepped down during this investigation, if only to ensure a truly independent process.
What is in question is the integrity of the leadership team of the company. Given the significant influence Wiese has in it, there is no way one can completely trust the process when he who was part of the problem is said to be the best person to solve it.
Ethics is not something one can teach. It is something that either you have or you don’t. But corporate governance is different. It can be taught, and more importantly measured. Many analysts and asset managers have been aware of the lack of independence on the board of Steinhoff. It seems they were too busy raking in the returns to be too concerned about it. Now they wish they had done something. Pity, because it’s too late.
Khumalo is chief operating officer of MSG Afrika and presents ‘Power Business’ on Power98.7 at 6pm, Monday to Thursday