Minding the expectation gap

Gatekeepers have been found wanting by the public

My friend realised as soon as he said it that it probably wasn’t the best question to ask a journalist. He braced himself for a tirade. “Why hasn’t the media followed up on this supposed groundsman who owned R1bn worth of shares in Greenbay and Resilient?” was the seemingly straightforward question.

My somewhat defensive answer included the words “expectation gap”. Yes, it has come to this. Almost every institution — auditors, directors, the JSE, institutional investors — has failed to meet the public’s (often unrealistic) expectations.

When it comes to expectations journalists are often at, or close to, the bottom of the pile. It is only when almost everything else fails that people tend to ask why there was no, or not sufficient, coverage in the media.

It is an expectation borne of frustration and disempowerment. And given the challenge to the traditional media business model, it seems inevitable that the expectation gap is going to widen in the years ahead.

Remarkably, even people who do not pay for news have high expectations of news agencies, as though they are a “social good” rather than just another business trying to survive.

But perhaps we should be looking more closely at the other institutions, asking why they didn’t meet expectations. Are the expectations too unrealistic or are these institutions no longer fit for purpose?

Consider the people who could have been expected to intervene to prevent the collapse at Steinhoff; or those who should have prevented Resilient from pumping up its valuation with suspect related-party transactions. The same characters pitch up in every corporate drama.

Where were the accountants, auditors, executives and directors during the years these dramas were building to their heart-stopping finales?

These are well-remunerated individuals whose responsibilities include ensuring that people in power do not abuse that power. But they all appear to have conspired — knowingly or, as bad, unknowingly — in what looks like a huge scam on the public.

The reputation of the audit profession is disappearing. Time and again we’ve been told the gatekeepers can’t be held responsible because the necessary governance boxes were ticked. Thus we have replaced the considered input of experienced individuals with a box-ticking exercise that could be completed by artificial intelligence.

Where, too, were the institutional investors with their armies of analysts? How were they not able to interrogate valuation systems that appeared to rely on a network of cronies? Of course, most of them are part of that network and for much of the time it works well for them — until it doesn’t.

The possibility that Steinhoff’s European property portfolio was substantially overvalued challenges the previous defence used by institutional shareholders that they could not have been expected to see behind the cunning machinations of a handful of determined individuals.

We, the public, should be able to expect more.

We have replaced the input of individuals with a box-ticking exercise that could be completed by artificial intelligence