SA has adequate mechanisms and legislation to hold delinquent directors responsible, but regulators don’t have enough capacity to see cases through speedily because they don’t have enough resources to deploy the right skills to investigate or they may be dealing with too many cases.
This is according to corporate governance adviser Linda de Beer, who spoke on Wednesday at an event organised by Allan Gray, where governance and accountability themes were explored.
Investors have yet to recover their lost pension money as a result of the corporate fraud at Steinhoff and Tongaat Hulett, two high-profile cases that affected SA’s corporate landscape, bringing corporate governance into sharp focus.
“I think it is important that there are consequences [but] the implementation is a problem. Everyone is asking why it’s taking so long to take action against some of these cases. Only if people see the consequences will they really be deterred from do things the wrong way,” De Beer said, stressing that consequence management should be strengthened.
“Companies must commit to doing what they can to address what they can when things went wrong, but I also think there are capacity issues with some of the regulators because maybe there aren’t enough people or they might have too many cases or they might not have enough money to appoint the right skills. These issues tend to delay the process.”
Nearly five years after the revelation of the accounting scandal that nearly brought Steinhoff to its knees and erased more than R200bn from its market valuation as its share price tanked, investors are yet to see accountability for the rot that allegedly set in under former CEO Markus Jooste, who has denied any wrongdoing.
SA’s worst corporate scandal at the time also shone a spotlight on the role of boards of directors, asset managers and pension funds.
Independent trustee and nonexecutive director Mabatho Seeiso said pension funds should play an active role, leverage their asset base to promote good corporate governance, as well as harness their vast asset pool to boost economic activity.
“For me, the key thing is collaboration. We are not collaborating. That’s the only way we can ever enhance our power to call out bad behaviour and be clear about the standard we want from organisations. We are not there yet.”
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