In its final report, the Zondo Commission repeatedly comments that directors of the various captured state entities have not been properly held accountable for the massive damage they have caused to the organisations they were supposed to serve, and thus indirectly to the country as a whole.
The Institute of Directors in South Africa (IoDSA) endorses these observations.
“The issue of director accountability is one that the IoDSA has been raising in public forums for a number of years. In a letter to the Commission in September 2021, we specifically raised the point that not only do our leaders need to be held accountable, the process for doing so must be swifter,” says Parmi Natesan, CEO of IoDSA.
“We recommended the establishment of a constitutional means of alternate dispute resolution to facilitate prompt and effective consequence management both for transgressing directors and those charged with exercising oversight over them.”
In its final report, the Zondo Commission maintains that legal processes typically only manage to identify “egregious abuses of public power” when the perpetrators or those that protect them are out of power. The Report also points out that the delayed legal process is a “cumbersome, time consuming [sic] exercise”.
It, therefore, recommends that the Companies Act’s 24-month time bar relating to delinquency directors should be extended. This would allow prosecution of, amongst others, the 2014 board of Eskom and two erring South African Airways directors.
One of those two directors, Dudu Myeni, the former chair of South African Airways, was declared a delinquent director in 2020 but, says Natesan, only after an extremely time- and resource-intensive process. As a result, director accountability remains rare.
The Report then makes a more sweeping recommendation that Government “give consideration to the creation of a statutory offence rendering it a criminal offence for any person vested with public power to abuse public power vested in that person by intentionally using that power otherwise than in good faith for a proper purpose”.
“The IoDSA certainly supports the idea that the 24-month time bar should be extended to allow the numerous defaulting directors identified in the Report to be investigated and prosecuted if necessary. Furthermore, we strongly believe that a more streamlined and rapid process needs to be found,” Natesan says. “An excellent shortcut would be to mandate that all directors have to belong to the professional body for directors, so that they could be disciplined under a Code of Conduct and barred from serving as directors if they are found to be in breach of their duties, without the long delays inherent in the legal process.
“The benefit would be that the transgressing director would not remain in office while the legal process takes its course—something that would surely have contained the damage caused to SOEs like Eskom and SAA.”