Lying CEOs should be exposed, fined and fired:
The impact of misbehaviour on corporate reputation is significant and long-lasting
Adri Senekal de Wet
TISO BLACKSTAR’S chief executive Andrew Bonamour lied to South Africans. His lies were exposed by the Public Investment Corporation (PIC) last week when the corporation published a statement on Tiso’s continuous attempts to demolish Independent Media.
The statement said:
That the PIC never requested Tiso to assist it with the management of INMSA (Independent News and Media South Africa), as alleged in a statement issued by the listed company earlier.
That it was Tiso that approached the PIC on a number of occasions, requesting it to facilitate a meeting with INMSA to discuss possible areas of collaboration.
That the continued spat does not help the media industry at all, it only entrenches the belief that the media is subjective in its posture.
The PIC owns 25 percent of Independent, 10.999 percent of Tiso, 16.585 percent of Naspers, 0.995 percent of Caxton and has some exposure to Primedia via a Private Equity Fund.
“The PIC strongly believes that both Tiso and INMSA must at all times
uuuconcern themselves with and focus on two fundamental issues: creating value for all investors and informing and educating members of the public on important things that matter in their lives in the name of nation building.”
I recently requested that this media war between Tiso and INMSAA should stop. I argued that as responsible editors, we should focus on the job at had. However, a few hours after I published the article, I was called Survé’s “attack poodle” for voicing my opinion.
Bonamour has now been caught with his pants down and should apologise, just as Sunday Times editor Bongani Siqoko did recently. I respect Siqoko for that.
The absence of the PIC statement or apology on the front pages of Tiso Blackstar titles is somewhat revealing.
Bonamour and his editor-at-large, Carol Paton, have chosen not to come to terms their own wrong-doings.
This makes Bonamour similar to former Steinhoff International chief executive Markus Jooste – they both continued to lie, even when they were caught out. Jooste resigned and was called to Parliament to explain his alleged wrongdoings.
Will the same rules apply to Bonamour? Chief executives globally, who are publicly caught lying, are usually investigated, exposed and then are asked to step down or are fired. But not Bonamour?
Is that in line with proper corporate governance?
What normally happens to a public company’s reputation if the chief executive lies blatantly? Is he above the law?
I ask: Will the JSE and the board of Tiso investigate this matter?
Harvard Business Review recently studied the bad behaviour and the consequences of 38 chief executives (CEOs).
“Most boards of directors know what to do when their CEO is accused of illegal activity. They conduct an independent investigation, and if the allegations are verified, they take corrective action.”
The review said that in most cases, the chief executive’s postition in such a case is terminated.
“It is much less obvious what actions the board should take when the CEO is accused of behaviour that is questionable, but not illegal. For example, if the CEO makes controversial public statements, or develops a reputation for being rude, overbearing, or verbally combative, the board must decide what merits investigation. It must also decide whether to address matters publicly or privately.
“These decisions become even more important when CEO misbehaviour is picked up by the media, bringing unwanted public attention that can have an impact on the organisation and its reputation.”
Harvard review states that the impact of misbehaviour on corporate reputation was significant and long-lasting.
“Shareholders generally react negatively to news of misconduct. Among the companies in our sample, share prices declined significantly.
Most companies take an active approach in responding to allegations of misconduct. In 84 percent of cases, the company issued a press release or formal statement on the matter… In more than half of cases (55 percent), the board of directors was known to initiate an independent review or investigation,” the Harvard review states.
“For boards of directors, the lessons are clear: For better or worse, the CEO is often the face of the corporation. When the CEO engages in misconduct, the board has an obligation to investigate the matter, take proactive steps to ensure that it is properly dealt with, and – most important – ensure that corporate reputation, culture, and long-term performance are not damaged.”
When the CEO of a listed media company lies blatantly, I see it a serious offence that should be investigated. THE VBS scandal exposed many anomalies at local government level, including gross dereliction of fiduciary duty to act in the best interest of the country. To the casual observer, the Municipal Public Accounts Committees were sleeping on the job when mayors and municipal managers signed off funds intended for service delivery to be invested in a mutual bank without obtaining authorisation or specialised advice in line with the legislation.
To put it briefly, these investments are illegal and ignoring the requirements for risk management. It’s not surprising that many municipalities constantly receive adverse audit reports, under-performing or otherwise deemed dysfunctional. This calls for strengthening of the financial management and oversight capacity, with serious action taken against corrupt practices.
The law enforcement agencies should act swiftly on the strength of prima facie evidence of the parasitic relation of organised crime with the state and pursue those fingered in VBS “great bank heist”. At face value, there’s a case to answer by municipalities and beneficiaries of the gratuitous payments and generous gifts from VBS.
We can only pin our hopes on the Hawks to build a watertight case for the freezing of all proceeds derived from this naïve and callous looting sooner than the culprits can face the full might of the law.
The assets of those found guilty of pillaging should be expropriated to recover losses, notwithstanding that the depositors in VBS had been paid.
Had the PIC not been conflicted, a determination would’ve been made for the interim takeover of VBS and warehousing of the equity of the alleged wrongdoers with the view to preserve the business model until there’s finality on the matter. Of course this would be subject to due diligence and bail out by the Reserve Bank, with the PIC carrying risks to rescue VBS and save jobs.