Let’s mock Markus

Steinhoff demonstrates yet again just how pointless the role of directors is

At one stage during the recent parliamentary hearing into the Steinhoff debacle, an ANC MP asked Steinhoff chair Heather Sonn if she thought it was appropriate that she remained on the board. The implication being that Sonn was determined to hold on to her directorship and the generous fees, no matter what.

It was an absurd question, demonstrating the determination of some MPS to use the hearing to prove how tough they were on big business and also how ill-equipped they were to actually play that tough-guy role.

There’s little doubt Sonn would prefer to be doing almost anything other than “clinging” to a Steinhoff directorship. It’s difficult to imagine that whatever fees she has been paid for her post-december 2017 work are adequate compensation for the effort and stress. One can only assume she must curse the day Markus Jooste persuaded her to take over her father’s position on the board. And how many times must she and her colleagues have contemplated the comparatively easy option taken by former colleague Johan van Zyl?

But while Sonn is playing a remarkably useful role in Steinhoff’s life right now, and is no doubt earning every cent she is being paid, the reality is that Steinhoff demonstrates yet again just how pointless the role of directors is. It’s not just Steinhoff. Look at all of the value-destroying corporate scandals currently blighting the business landscape — you will see an inept board in the wings.

In theory directors are supposed to ensure the executives are working for the benefit of shareholders and not using their position to advance their own interests. It is deemed critical that

they are independent of the CEO and his or her colleagues.

It is because this obligation is paramount that directors recoil at the mere suggestion they are not independent. It is the reason Theo Botha’s attendance at AGMS causes such discomfort. Botha’s pet peeve is the bizarre custom boards have of describing directors as independent even when they’ve been around for 10 years or more. When questioned about their independence these directors inevitably respond theatrically, as though accused of a heinous crime.

The reality is that independence is almost impossible to achieve, not because we are dealing with bad or weak individuals but because vigorously challenging someone who is essentially a mate is contrary to our instincts. Instead we are inclined to sycophancy, particularly in the company of strong executives.

In general boards are only independent if the CEO tolerates it. And, of course, if the CEO is the sort of person who tolerates an independent board, then he or she probably doesn’t really need one.

Perhaps it’s time to acknowledge the near-impossibility of vigorous independence and look back a few centuries to an era long before the invention of companies. Instead of a lead independent director we should be considering something equivalent to Shakespeare’s court jester. The jester had a licence not only to speak freely to the king but also to protect him by mocking his ill-considered behaviour.

In a 21st-century corporate board, this mockery might help to counter the sycophancy that is an enabler of so much value-destroying behaviour. For good measure, perhaps, the jester should be required to sign off on every Sens statement.

The reality is that independence of directors is almost impossible to achieve