R500 000 fine for Thabi Leoka’s falsified PhD is a shift towards more accountability

The JSE’s R500 000 fine for a director who was found not to have the PhD she said she had indicates a shift to more accountability expected from company directors.

Prof. Parmi Natesan, CEO of the Institute of Directors in South Africa (IoDSA), says embellishing your CV with a qualification that you did not earn is unethical, but many South Africans get away with it.

She points out that the high-profile case of economist Thabi Leoka, a director with an apparently fraudulent PhD, who was fined R500 000 and banned from holding a Johannesburg Stock Exchange (JSE) directorship for five years, shows that directors should be more accountable.

“Whether this sanction is adequate may be debatable, but it sets a powerful public example that this kind of misrepresentation will not be tolerated. We welcome seeing tangible consequences like this, as not nearly enough South Africans are held accountable.”

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JSE’s R500 000 fine for Thabi Leoka

Leoka served as an independent non-executive director on the boards of several JSE-listed companies and as a member of President Cyril Ramaphosa’s Presidential Economic Advisory Council, when her alleged CV fraud was exposed.

The JSE censured and penalised her for submitting a director’s declaration (as required by the JSE listings requirements) and therefore being a party to the dissemination of information into the market that falsely confirmed that she has a PhD in economics from the University of London.

Natesan points out that social media users seemed to defend her, arguing that “certificates, degrees and diplomas are just pieces of paper” and “if she was able to perform her duties, what is the problem?”.

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Societal issue?

However, Natesan warns that this mindset reflects a broader societal issue where the ends are seen to justify the means, undermining the principles of accountability, integrity and transparency which are essential for building trust in leadership and institutions.

“Misrepresentation of qualifications may also disadvantage other candidates who may have been better qualified but missed opportunities due to unethical practices. This perpetuates inequality and sends the message that deceit is acceptable for personal gain.”

She says it seems that not many South Africans are aware that the National Qualifications Framework Amendment Act makes it a criminal offence, punishable by up to five years in prison, to falsely or fraudulently claim a qualification registered with the National Qualifications Framework or any accredited body.

“Obviously, the primary concern lies with the director who was dishonest in her CV, but the companies that did not verify her qualifications are also at fault,” Natesan says.

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Companies also at fault for not verifying qualifications

“Performing due diligence on any appointment, especially senior ones, is basic good governance. Listed companies are required to apply King IV, which directly recommends the verification of qualifications, amongst other due diligence processes, before nomination.

“Directorship is a position of trust and responsibility. While it is vital that board members have the right skills for the organisation’s needs, it is equally important to ensure that the board members have the highest ethical standards.

“The legitimacy of a leader is not just about performance but also about the trust they inspire among stakeholders. When it is found that leaders falsified their qualifications, it erodes trust in their organisations and it can tarnish their reputation, even if they were competent in their roles.”        

Ironically, Natesan says, having a PhD is not mandatory for obtaining a directorship and therefore the censured director could very well have been appointed to those boards on the strength of her existing qualifications and experience, had she only been truthful.