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