Stock Exchange News Service (Sens) announcements from two apparently unrelated JSE-listed companies last week are bound to raise all sorts of questions in the market about governance in general and the people and companies concerned in particular. They are the sorts of questions that do no good for the reputation of the companies nor for SA’s reputation among global investors.
The first announcement came from Absa, just before 5pm on Friday. The banking group said its board had decided to remove Sipho Pityana from his positions as lead independent director and chair of the remuneration committee, and therefore from the board’s directors’ affairs committee. Curiously, there was no suggestion that Pityana might also step down from the board — though he has taken the Absa Group and Absa Bank to court, along with the banking regulator, because someone else got the Absa chair Pityana had his eye on.
Curious too was the timing of the announcement. It came a full two weeks after Pityana launched his court action. And it was issued at the equivalent of “witching hour” on the JSE — just before 5pm on Friday. It’s hard not to wonder if the Absa board finally and suddenly had to bow to mounting shareholder pressure after two weeks of outrage from many in the market that Pityana had remained lead independent director of a company whose bona fides he has attacked so aggressively. Absa’s board may believe that forcing him, belatedly, to step down from the lead independent and Remco posts is enough. But if it values its reputation, it should be getting him off the board altogether.
Then we have the second Sens announcement, which came from listed property group Redefine two days earlier. Redefine said Daisy Naidoo had resigned from its board. Naidoo was chair of the board audit committee. And there was none of that obfuscatory stuff about resigning to pursue other interests. This announcement was explicit: Naidoo had resigned “due principally to her disagreement with the decision making processes supported by other directors, which in her view affects her ability to adequately discharge her duties as an independent nonexecutive director”, said the Sens notice from Redefine.
The chair of Redefine is none other than Sipho Pityana.
As it happens Naidoo is also on Absa’s board of directors, where she has served as an independent non-executive director for a number of years.
The connections could all be entirely coincidental and innocent. But Redefine certainly needs to explain itself, as indeed does Absa. And the hints of boardroom drama leave a taint which surely cannot do either company any good.
Boards and directors are not supposed to make headlines. They are supposed to go quietly and competently about their business of overseeing the companies under their stewardship and holding them accountable on behalf of shareholders but also of stakeholders more broadly. They are supposed to be the grown-ups in charge, monitoring the risks and making sure that management acts in the company’s best interests and ensures it can thrive in the future. A diversity of opinion within a board can only be a good thing. But to the extent that there is division and conflict within, the board and its chair should be mature enough to navigate this. When boardroom shenanigans spill over into the public domain, it’s not a good look for governance.
Not only is that not good for the company concerned, it is also not good for the JSE or for SA. Good governance of companies is not just about making sure their shareholders get short-term returns but is about ensuring that companies create value in the long term in ways that are good for society and the planet as well.
SA’s robust corporate governance framework has traditionally been one of its biggest assets, helping to ensure that the JSE and the country remained investible and that the management of its private sector companies is held accountable, even when public-sector governance was tainted by corruption. At a time that SA is struggling to attract the investment it needs, the last thing it needs are curious governance issues at some of its leading listed companies.
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