When governance fails, things fall apart

Former public prosecutor Thuli Madonsela has come out in cautious support of independent non-executive chairman of Trillian Capital Partners, Tokyo Sexwale, who recently launched an enquiry into the company.

The enquiry will be led by advocate Geoff Budlunder and will examine allegations that the company knew of the axing of former Finance Minister Nhlanhla Nene two months before it happened and that he would be replaced with Des Van Rooyen. It will also examine whether Trillian was positioned to benefit from this regime change.

“If you hold office it is your duty to investigate these kinds of allegations. If you do not, you are insinuating that the whistle blower is lying. In this case the Public Protector issued a report and within days the chairman had acted,” says Madonsela.

She was speaking at an event organised by the Business Ethics Network of Africa (BEN-Africa), in association with KPMG, where she and Mervyn King were each presented with the organisation’s ‘Order of the Baobab’ for extraordinary achievements in good governance and ethical leadership.

Few will argue that Madonsela has become for many people the personification of integrity and courage as she went about the duties and challenges of being South Africa’s public protector.

READ MORE: For how much longer must we still call SA a ‘young democracy’?

Similarly, says Prof Arnold Smit, president of BEN-Africa and Head of Social Impact at Stellenbosch Business School, Mervyn King, perhaps more than any other individual, has promoted an integrated and inclusive approach to the business life of companies. Slowly but surely boards of companies are coming to accept that the sole purpose of a company is not simply to make profits for shareholders, but to operate ethically for the benefit all stakeholders in a company. The four King Reports on corporate governace have changed the face of reporting and governance on a global scale, he says.

In a gracious acceptance speech, Madonsela asked: “Why does governance fail?”

It fails because of a deficit in ethical leadership. It fails because of an absence of rules and procedures. It fails when an entity or institution depends on one individual to uphold the ethics of the organisation, rather than everyone in that organisation taking collective responsibility to protect the integrity of that organisation, she says.

Ethics and governance do not necessarily fail because people make mistakes. “Appointing someone or awarding a tender thinking you are following the rules could be a mistake. It is what you do next that counts. Do you keep on lying? Or do you privately admit that what was done was wrong, but publically say it was fine. These would be ethical failures. I hope that is not the approach of Trillian.”

When you are in power, it is not your power. It is assumed that you will not make decisions that will improve the fortunes of your family or your friends but rather those that enhance the lives of the entire collective

Despite what people may think, ethics and governance within government are not at all time low, Madonsela says. In many cases the findings contained within reports produced during her seven years as Public Protector have been accepted and their remedies implemented.

In particular, Nathi Mthethwa, minister of police in 2011, insisted the One & Only hotel downgrade his room from the Presidential suite to a standard room and then asked for policies to be changed to ensure there was a limit placed on expenditure by his department. “We saw that as exemplary. Ethics is not about the letter of the law, but the spirit of the law.”

Generally ministers were not repeat offenders. The exception, she says, were cases where the President was personally involved, and was also the judge in his own case.

“When you are in power, it is not your power. It is assumed that you will not make decisions that will improve the fortunes of your family or your friends but rather those that enhance the lives of the entire collective, including those that did not vote for you. You have to repay the trust that has been placed in you.”

She notes that there is ethical leadership in government. Otherwise South Africa would not have the Constitution it has. “There are clear ethical principles outlined in the Constitution. Leaders are guided by the Constitution to ask themselves: Will my decision help to heal the divisions of the past? Will my decision help to improve the quality of life of ordinary people? Will my decision free people to reach their potential?”

Sadly, she notes, there are lapses that are becoming common within certain pockets of government. “And they are pockets that are important and strategic. The Germans say that the rot of the fish starts from the head.”

Leadership, she says, is about understanding that when you are at the pinnacle of an organisation, people look up to whether you like it or not. “People look to you see what is the right thing. And people look up to you to see what is the right way to do the right thing. And what you do, somehow people follow it.

“And all I can say is that within government there are pockets where that is worrying and we need to think through that and collectively act on it.”

There are glimmers of hope, however. “The King conversations are being brought into the public sector. The principles of corporate governance could be mainstreamed into the public sector, going beyond the principles in enshrined in the Constitution. I believe that will take us forward,” she says.

“Global crises are also making us aware of the need to clean up our act.”

“However, the darkest hour is just before dawn and I honestly do see a new world being born – one with more accountability, more transparency and more responsiveness. But that new world requires many midwives, and you are those midwives.”

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