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Zondo Commission: Molefe testimony a milestone in SOE governance

Home Government & Municipal Zondo Commission: Molefe testimony a milestone in SOE governance

By Parmi Natesan

THE testimony of Popo Molefe, the current chairman of Transnet, as set out in Part 2: Volume 1 of the Zondo Report (Zondo 2) makes sensible and far-reaching suggestions relating to board and executive appointments at SOEs.

The Institute of Directors in South Africa (IoDSA) has been raising these same issues for many years.

One of the most encouraging outcomes of the Zondo Commission is surely the public ventilation of important issues, and the fact that in this case the comments are made by a leading figure in business and political circles is heartening.

We recently wrote to Deputy Chief Justice (DCJ) Zondo in his role as chair of the Commission to ask that the report included a number of recommendations, and some of these were echoed by the Report’s summation of Molefe’s views.

Molefe’s overriding point was that the state capture project was characterised by the appointment of boards and senior executives to serve other interests than those of the organisation. Natesan said this was an issue that the IoDSA had repeatedly emphasised.

Directors have to understand that they have a legal duty to the organisation and not to whoever appointed them.

At the same time, board nominees must have the skills needed to function effectively as a director within the context of the organisation’s strategy. In our letter to the DCJ, we made the point that directors should ideally be measured against an objective competency framework and also required to be members of a professional organisation so they can be held accountable and disciplined.

The IoDSA has developed a comprehensive Director Competency Framework and two Director designations to address these issues, so providing a way for nomination committees to identify individuals who are both suitably qualified and subject to a Code of Conduct.

It is absolutely vital that board appointees understand their legal obligations and have the skills to do their jobs properly—if they do not, they face the real possibility of having to accept personal liability for losses suffered by the company.

Molefe’s testimony also proposes an alternative to the current flawed nomination and appointment process. In order that individuals with the right level of qualifications and ethics are appointed, a dedicated body or committee that is representative of various stakeholders should be convened to vet candidates, along the lines of the Judicial Service Commission.

Whether it’s a separate committee or the board itself, the principle is a sound one because it removes political interference from the nominations process, instead focusing on the candidates’ competence and ethical standpoints.

We are agreed that the goal is to get the right people with the right skills onto our boards.

Parmi Natesan is CEO of IoDSA

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