Business Day

MEC was ‘harsh and heavy-handed’ when dissolving agency: court

- Tauriq Moosa moosat@businessli­ve.co.za

Gauteng economic developmen­t MEC Tasneem Motara dissolved a provincial economic agency so she could hire her preferred appointees, the high court in Pretoria heard. The recently terminated directors took her decision on urgent review and last week the court suspended her decision, pending a final review.

Motara in March dissolved the Gauteng Growth and Developmen­t Agency (GGDA), which initiates and co-ordinates provincial economic developmen­t efforts focusing on local and internatio­nal business stakeholde­rs.

The current board was elected to serve until 2024 and, according to Pretoria high court judge Stanley Nyathi, it “is on track to turning around to reach high performanc­e standards”. The GGDA’s performanc­e had never been questioned.

Nyathi highlighte­d a letter Motara wrote to the current chairperso­n, and the main applicant, Sibongile Vilakazi, confirming Vilakazi’s skills.

In 2022, before Motara was MEC, the GGDA finalised its recruitmen­t process for group CEO. It was overseen by previous MEC Parks Tau. While Tau was preparing his submission­s to the executive committee, the committee was changed. Motara replaced Tau as MEC.

Motara met the GGDA board and was informed about the recruitmen­t process and its current status. After being briefed on the kind of group CEO the GDDA needed, Motara indicated she had, as Nyathi wrote, “no intention” of approving the current board’s recommende­d candidate, acting group CEO Simphiwe Hamilton. She indicated another person “she could rely on”, despite this person not being shortliste­d by the board.

However, Vilakazi told Motara her preferred candidate was not suited for the role, due to not meeting the minimum requiremen­ts based on the skills and experience. Motara said Vilakazi should meet this preferred candidate and undertook to arrange a meeting, which never happened.

Motara, at the time unbeknown

to Vilakazi, met with Hamilton. She indicated while he was the board’s preferred candidate, Motara preferred others. She wanted the recruitmen­t process to start afresh. Hamilton informed Vilakazi about this meeting, which “alarmed” her because it was, as Nyathi wrote in his judgment “a governance protocol violation”.

At the beginning of 2023, the board wrote to Motara wanting an update. She indicated some procedural issues, such as the previous group CEO challengin­g a dismissal at the Commission for Conciliati­on, Mediation and Arbitratio­n (CCMA). The board said there was no risk to the agency and the CEO position was vacant and needed filling.

Motara then accused the board of acting outside its mandate, as the relevant legislatio­n says the MEC appoints the group CEO. She indicated she would be restarting the recruitmen­t process, managing it herself. The board had to elect a representa­tive for the recruitmen­t panel.

The board attempted to meet with Motara to obtain clarificat­ion. Motara viewed this as an “act of defiance”, since she had given the board an instructio­n. The board could find no basis to equate wanting a meeting with an act of defiance, it argued in court. The board contended there was no point starting the recruitmen­t process afresh as it would be a waste of time and money.

Motara also backed out of

alternativ­e dispute resolution mechanisms. She then began dissolving the board.

In the high court, the board argued that Motara had not followed relevant company law legislatio­n, which is applicable to the GGDA, in dissolving a board. This requires a shareholde­r resolution which Motara did not have. Judge Nyathi agreed.

Nyathi also noted that even if Motara had not followed procedure, there may have been substantiv­e reasons for dissolving a board. However, “the reasons for the terminatio­n of board membership are hard to fathom.”

Nyathi noted Motara did not obtain a shareholde­r resolution, recanted on dispute resolution, did not send notices of terminatio­n to one of the board members, and constantly refused to meet the board.

“All these ‘reasons’,” wrote Nyathi, “leaves one to reasonably infer the existence of ulterior motives on the part of [Motara].”

Nyathi therefore found Motara’s approach to be “inordinate­ly harsh and heavy-handed.” The court ordered that the directors be reinstated and Motara’s decision to dissolve the board be suspended pending a final review. Nyathi also ordered Motara to pay punitive costs due to her “harsh” conduct.

“Through asserting its independen­ce,” Nyathi said, praising the board, “and by being diligent, [the board] invited the wrath of [Motara] resulting in its demise.”

 ?? /123RF/JanPietrus­zk ?? Praise for board: The high court in Pretoria ordered the GGDA directors to be reinstated.
/123RF/JanPietrus­zk Praise for board: The high court in Pretoria ordered the GGDA directors to be reinstated.

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