The problem with the NEF’s ‘vindication’

PHILISIWE Mthethwa was in a buoyant mood this week after she was “cleared” by a Deloitte investigation into 23 claims of corruption, nepotism and various other evils at the parastatal she heads, the National Empowerment Fund (NEF).

Speaking to 702’s Bruce Whitfield, Mthethwa, wife of Police Minister Nathi Mthethwa, said she was petrified of doing anything that could be seen as dodgy. “I’m so scared of going to jail, so I would never,” she said. “Can you imagine: my husband would have to come and arrest me.”

She then hit on an altogether more serious topic: how easy it had become, especially in government-owned companies, to “blow the whistle” on someone without a shred of evidence.

“We have allowed some of these whistle-blowers to actually use this whistle-blowing policy as an instrument of harming other people’s characters and reputation. So if anyone wants to harm your reputation, all they do now is they accuse you of being corrupt,” she said.

Mthethwa is right, of course. And the problem gets even more acute the closer you get to government.

Telkom financial director Jacques Schindehütte and Government Employees Pension Fund (GEPF) head John Oliphant are two guys recently put on ice over nebulous claims that they were involved in something illicit.

Quite what they did, no one is saying clearly. That, of course, leaves it open to conspiracy theorists to assume that they’d angered the wrong guy, or worse, refused to follow a dicey order and were suspended on flimsy evidence as retribution.

So when should somebody be “suspended” or “disciplined”? And when should a board of directors (heaven forbid) ignore a whistle-blower, as Mthethwa seems to suggest?

One corporate lawyer says you can suspend someone only if “there is a credible basis for something, and it must not be done vindictively or to silence them”.

The controversial argument here is that it would be poor governance to simply suspend someone based on an uncorroborated whistle-blower’s report. Intuitively, it seems right. To do that has the potential to destabilise the organisation, wreck its reputation and that of its executives.

But it’s a giddying balancing act: if you get a whistle-blower’s report, and there’s real evidence, your board will be castigated for ignoring it. Hypothetically, just imagine if the board of the GEPF or Telkom got a proper forensic report detailing various shenanigans and did nothing about it? They’d be rightly lambasted.

So, you have to act if you’ve verified the veracity of the claims, but equally, you shouldn’t treat every smattering of watercooler gossip as legitimate.

Except, in the case of Mthethwa’s NEF it isn’t entirely so simple.

First, the NEF is the very company at which former Olympic athlete Sydney Maree worked when he pulled a fast one for which is now doing five years in Pretoria’s ODI prison.

Second, some particularly troubling aspects about the NEF emerged as part of this scandal, and they were not addressed at all in the fanfare over Mthethwa’s vindication.

There is, of course, the NEF’s steep rise in non-performing loans to R290million last year, and there is also the odious R34.1-million loan given to Khanyi Dhlomo’s Luminance store.

The NEF’s paltry press release this week didn’t address these issues. Instead, it said Deloitte flagged two issues “which required work” by the NEF’s board — without elaborating.

So, despite claiming “vindication”, the NEF isn’t planning to release the full Deloitte report. Right there is the central problem.

One corporate lawyer said that if the NEF was serious about claiming “vindication”, it should be fully transparent and release the full report.

“You would have expected that. The day you start resisting disclosure, you’re on a slippery slope,” he said.

“It’s actually a protection for a board to fully disclose everything, to eliminate the perception that there would be a cover-up.”

Take the case of Gold Fields. The mining company was supposedly largely cleared in an investigation by a US law firm into its noxious black empowerment deal. But it never released the full report. And, as the Mail & Guardian revealed, that law firm had a whole lot more to say about just how noxious the deal really was.

Mthethwa is right that whistleblowing can be abused. It may very well have been in this instance. But if you want to make the argument with any real conviction that you’ve been abused by the process you should at least be transparent in how you trumpet your apparent exculpation.