The Development Bank of Southern Africa (DBSA) will work towards greater transparency – including providing more details on its managers’ relationships with politicians – as part of a deal with Futuregrowth Asset Management to resume funding.
The DBSA plans to publicly disclose the number, quantum and performance of loans made to private companies where politically exposed persons (PEPs) are involved, as part of a PEP policy it is implementing.
Futuregrowth froze R1.8bn in funding to six state-owned entities — the DBSA, Eskom, Transnet, the Land Bank, the Industrial Development Corporation (IDC), Eskom and the South African National Roads Agency (Sanral) in August, citing concerns over governance and loans to PEPs.
The asset manager has since lifted its funding freeze on the Land Bank, the DBSA and the IDC, leaving Eskom, Transnet, and Sanral out in the cold.
Futuregrowth had found the DBSA had an appropriate board with a healthy relationship with its executive committee, but was keeping an eye on the appointment of new board members — including chairman Jabu Moleketi and deputy Frans Baleni — from 2017.
"What was requested were enhancements around … structures and policies and the provision of additional disclosure on Sens [Stock Exchange News Service], the DBSA website and the integrated annual report," DBSA chief risk officer Paul Currie said in response to questions from Business Day.
The DBSA will also enhance the board’s quorum and decision-making, and implement a cooling-off period for its directors; along with conducting an external independent governance review every two years to be published on its website.
"Additional disclosure relates to changes in the board, its sub-committees, key charters, policies and terms of reference, which will be announced on Sens and published on the DBSA website," said Currie.
While changes to key executives are announced by the bank on Sens, board appointments are not. The appointments of five board members since 2014 were not accompanied by a Sens announcement.
"The 13-member board [excluding CEO Patrick Dlamini and chief financial officer Kameshni Naidoo] is well balanced and largely independent, but Futuregrowth notes that there are some board members who hold political positions," said spokesman Michele Usher.
"Further, one of the DBSA’s business unit heads is related to a politically exposed person."
Independent nonexecutive director Arthur Moloto is an adviser to the speaker of the National Assembly, Baleni is the former general secretary of the National Union of Mineworkers, and Dawn Marole, another independent nonexecutive, is a former adviser to the finance minister. DBSA’s international financing head, Moe Shaik, is the brother of Schabir Shaik, President Jacob Zuma’s former financial adviser.
The asset manager said the DBSA’s governance framework, which includes its conflict of interest policy and the additional disclosure requirements agreed to between the financier and asset manager, could mitigate any risks arising from these matters if applied consistently.
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