Ac­count­abil­ity, trans­parency are of ut­most im­por­tance

The Star Early Edition - - OPINION & ANALYSIS - Roshan Mo­rar Roshan Mo­rar is the chair­per­son of the South African Na­tional Roads Agency board.

ONE OF the hall­marks of our rel­a­tively young democ­racy has been its con­tri­bu­tion to the dis­course on cor­po­rate gover­nance now en­shrined in what is com­monly re­ferred to as the King Re­port. In July 1993, the In­sti­tute of Di­rec­tors in South Africa asked re­tired judge Mervyn King to chair a com­mit­tee on cor­po­rate gover­nance whose re­port (King I) led to the first cor­po­rate gover­nance code for South Africa. Since then three more re­ports have been is­sued, King II (2002), King III (2009) and King IV (2016).

While the first three re­ports gen­er­ally ap­plied to listed com­pa­nies, King IV suc­ceeds in ex­tend­ing the reach of good prac­tices and prin­ci­ples that are used to bench­mark cor­po­rate South Africa into the pub­lic sec­tor.

In­deed, one of the key strengths of King IV – com­pared to its ear­lier edi­tions – is the in­clu­sion of sec­tor sup­ple­ments that pro­vide much clearer guide­lines to pub­lic sec­tor en­ti­ties on how to ap­ply good gover­nance guide­lines to their par­tic­u­lar cir­cum­stances.

The ob­jec­tives of state-owned en­ti­ties ob­vi­ously dif­fer markedly from pri­vate sec­tor com­pa­nies. There gen­er­ally is no profit mo­tive and in many of our busi­ness ac­tiv­i­ties we have to abide by the de­vel­op­men­tal man­date given to us by our share­holder (min­is­ter) who rep­re­sents the South African gov­ern­ment.

This is re­flected in our em­pha­sis on the em­pow­er­ment of small- and medi­um­sized en­ter­prises and our com­mit­ment to al­lo­cate a grow­ing share of work pack­ages in the road con­struc­tion and main­te­nance sec­tors to black-owned and women-owned com­pa­nies.

The suc­cesses we have achieved in com­mu­nity de­vel­op­ment, in skills trans­fers, in bur­saries and in­tern­ships, in re­search into road safety and trans­port en­gi­neer­ing are well-doc­u­mented. Sanral is proud of the con­tri­bu­tion it has made to eco­nomic trans­for­ma­tion and em­pow­er­ment – with­out ne­glect­ing its pri­mary man­date to man­age the na­tional road in­fras­truc­ture.


As a pub­lic sec­tor com­pany, our ac­tiv­i­ties are de­fined by the Sanral Act and the Pub­lic Fi­nance Man­age­ment Act. Within this frame­work Sanral has, how­ever, in the past ob­served most of the prin­ci­ples of gover­nance con­tained in the King codes and will, most def­i­nitely, con­tinue to do so once King IV be­comes ef­fec­tive in April.

The value of King IV lies in the man­ner in which it has dis­tilled the pre­vi­ous 75 prin­ci­ples for good cor­po­rate gover­nance into 17 – each linked to very dis­tinct out­comes. The sec­tor sup­ple­ments make the re­port more ac­ces­si­ble than the 2009 ver­sion and will en­able en­ti­ties such as Sanral to bet­ter mea­sure our per­for­mance against broader stan­dards.

King IV recog­nises the need for sta­te­owned en­ti­ties to ad­dress the se­ri­ous chal­lenges fac­ing South Africa in re­spect of ser­vice de­liv­ery and the pro­vi­sion of strate­gic na­tional in­fras­truc­ture. But it also em­pha­sises the im­por­tance of such en­ti­ties to be vi­able, ef­fi­cient and com­pet­i­tive to en­sure the coun­try’s cit­i­zens re­ceive value for their tax money.

Within Sanral we are con­scious of the fact that the state com­pany op­er­ates within the pub­lic con­tract­ing arena where trans­parency and ac­count­abil­ity are of the ut­most im­por­tance.

We took clear note of the pub­lic con­cerns that have been ex­pressed about his­tor­i­cal col­lu­sion in the con­struc­tion and en­gi­neer­ing sec­tors and are adapt­ing our own pro­cesses and pro­ce­dures in line with the rec­om­men­da­tions of the Com­pe­ti­tions Com­mis­sion.

We also recog­nise the fact that Sanral raises sig­nif­i­cant amounts of its cap­i­tal from the bond and cap­i­tal mar­kets and that the choices we make on gover­nance and eth­i­cal busi­ness con­duct have dis­cernible im­pacts on the de­ci­sions taken by the in­vest­ment com­mu­ni­ties.

King IV em­pha­sises the role of the board in risk and op­por­tu­nity over­sight and it is im­por­tant to note that Sanral is al­ready one step ahead of the rec­om­men­da­tion to com­bine the func­tions of au­dit and risk man­age­ment in a sin­gle board com­mit­tee com­prised of non-ex­ec­u­tive mem­bers.

More­over, we wel­come the em­pha­sis King IV places on the man­age­ment and pro­tec­tion of tech­nol­ogy and in­for­ma­tion and the need for com­pa­nies to de­velop a “cy­ber-se­cu­rity” plan. Re­cent events in the global en­vi­ron­ment have proven that cy­ber-hack­ing is a grow­ing threat and that com­pa­nies can for­feit their long-stand­ing rep­u­ta­tions in a day if they are not ad­e­quately pro­tected against mal­ware and in­dus­trial es­pi­onage. Thus, the Sanral board and man­age­ment have de­cided to el­e­vate the im­por­tance of cy­ber-se­cu­rity.

In the fi­nal anal­y­sis, King IV is a wel­come step for­ward to guide the ac­tiv­i­ties of both pri­vate sec­tor com­pa­nies and sta­te­owned en­ti­ties such as Sanral. The lat­ter are in­creas­ingly op­er­at­ing in a global en­vi­ron­ment and it is im­per­a­tive that we bring their gover­nance in line with global best prac­tices.

The Sanral board is com­mit­ted to the prin­ci­ples and spirit of King IV in as much as they ap­ply to state-owned en­ti­ties.


Part of the com­pleted N2/Um­geni Road in­ter­change in KwaZulu-Na­tal is now open to traf­fic. The project has been be­set by con­trac­tual and labour prob­lems and se­cu­rity is­sues on site. The to­tal cost of the project was re­vised up­wards to R512 mil­lion. State-owned en­ti­ties such as Sanral are wel­com­ing the King IV Re­port .

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