Governance — right way and wrong way
TWO events this week — related though only obliquely — tend to provide poignant lessons in governance.
The first saw Gold Fields’ CEO Nick Holland ‘‘offer” to forego his bonus for what his chairwoman Cheryl Carolus described as “poor judgment” over his handling of possibly the most odious empowerment deal clinched in recent years.
Under Holland’s watch, Gold Fields hired former convict Gayton McKenzie to put the BEE deal together. But asked to reveal the identity of the 73 beneficiaries by journalists, including from this newspaper, Gold Fields flatly refused. As any halfway clued-up pundit would know, this wasn’t exactly in the spirit of transparency or the King code.
When the cronyism claims first surfaced, Gold Fields selfrighteously sniffed that critics unjustly “sought to discredit what has been broadly welcomed as a ground-breaking” deal.
Not that Gold Fields’ refusal was too surprising when it emerged that the people it decided “had not been the beneficiaries of BEE to date” included Jacob Zuma’s former legal counsel Jerome Brauns, ANC member Baleka Mbete, McKenzie’s mother-in-law Pamela Leitch and Zuma Foundation chair Dudu Myeni.
Well, it turned out this week that Gold Fields’ handling of the BEE deal wasn’t (gasp!) as virtuous as the company made out.
Carolus told this paper that the fact Holland’s team hadn’t released the list earlier was “poor judgment on the part of management” and had “quite a serious reputational impact”.
So what did Holland do? Offered to waive his bonus for the 2013 financial year.
But what did Holland do in recent times that would have warranted a bonus in the first place, besides failing to “consistently meet the high standards set by Gold Fields” on BEE, as the board said this week?
After all, Gold Fields’ share price has fallen 39% this year, and this week, the company revealed it had a net loss for the June quarter of R1.16-billion while operating profit fell 41%.
Granted, a large part of the loss wasn’t Holland’s fault because of hefty write-downs thanks to the gold price drop, but Gold Fields wasn’t shy to reward him hand- somely in the past when the market was thriving.
Over the past five years, Holland made R110.8-million from the company in salary, bonuses and share options. Last year alone, he was paid R45-million, so he can probably afford to forego a bonus to which his claim would have been questionable anyway.
Gold Fields reiterated this week that it believed the BEE deal was “of lasting benefit to the company and its BEE shareholders”. Quite how it reached this conclusion is unclear given that it won’t release lawyers’ reports which, ironically, poke holes in its transparency.
Some would no doubt argue that Holland deserves greater sanction for hiring a convict to stitch together perhaps the most cynical BEE deal yet, benefiting a bunch of already-empowered politicians, and then refusing to be transparent about it. That’s up to shareholders to decide.
The second event related to Mamphela Ramphele, leader of Agang and until February chair of Gold Fields. This week, Ramphele disclosed her wealth (R55million) and challenged Jacob Zuma and Helen Zille to follow suit publicly, rather than simply in a declaration to a functionary that will never surface.
It’s unlikely Zille or Zuma will do so, given that the ANC and DA are about as transparent as a presidential SUV. In an unusual show of solidarity, both the ANC and DA went to court to keep their donor lists private.
Some say Ramphele will only suffer from the “stigma” of people knowing how rich she is. But many have no problem with leaders who have money — as long as it was honestly earned.
Mervyn King has said that good governance is about “intellectual honesty”, and that “capital flowed towards companies that practise this type of good governance”. Ramphele’s transparency deserves to boost her political credibility, just as it will hopefully eat into the capital of her secretive opponents.