Throw out the corporate rubbish

It’s obvious, but it bears repeating: garbage in, garbage out.

To thrive, individuals, companies and governments all depend on the input of sound information. This information needs to be dispassionately analysed and effectively acted upon.

It’s management 101, life skills kindergarten – a deceptively simple process, yet maddeningly few manage to get it consistently right.

Nurtured ignorance doesn’t help. Emotion gets in the way. So, too, ideological paralysis and magical thinking.

One must wonder which it can be that caused the ANC government to present a budget predicated on future growth, only to have Stats SA, just a few days later, release figures showing the economy to be in recession.

Is it ignorance? Or is it political manoeuvring, timing bad news to take the angry winds out of Cosatu’s sails over the planned slashing of the public wage bill? Whatever the explanation, perhaps the most remarkable aspects of the budget and President Cyril Ramaphosa’s State of the Nation address, is the coronavirus.

Not its presence, but its complete absence.

Neither speeches mentioned it. Yet almost every assumption being made in both those presentations will be negatively affected by the Covid-19 outbreak that is sweeping the world and finally landed in South Africa.

SA’s manufacturing industries’ supply chains will be interrupted, tourism is going to drop and our export markets are going to shrink. And that is the best-case scenario – if Covid-19 doesn’t rip through the SA healthcare system like a bullet through tissue paper.

Worrying for SA is that the private sector provides no fail-safe to government dereliction, since it, too, is bristling with wilful ignorance. The country’s entire accountancy and management sector failed to act to prevent at least a trillion rands of state looting during the Zuma years.

Take Tongaat Hulett, one of SA’s iconic corporate giants, where it was found that the financials had been systematically overstated for years to R11.8 billion in 2018. Its share price has dropped almost 90% in a year.

This week, new chief executive Gavin Hudson told a global economic crime and fraud conference that Tongaat has laid criminal complaints against five former executives in SA and eight in Zimbabwe.

Sustained corruption, fraud and mismanagement cannot take place at a listed entity without some degree of collusion or criminal incompetence on the part of the board and the auditors. Yet, somehow, Deloitte, the group’s auditors for at least 21 years, apparently noticed nothing.

Deloitte oversaw two other major collapses that rocked the business world: African Bank and Steinhoff International. It has also been accused of impropriety, which it denies, in Eskom contracts of R207 million awarded to it.

It’s tempting to be hard on Deloitte. It does, after all, boast with a straight face on its website of running both the Deloitte Africa Centre of Corporate Governance and the Deloitte Alchemy School of Management.

But KPMG-SA, legal firm Hogan Lovells and the consultancies McKinsey & Co and Bain & Co have all been implicated in skulduggery. Indeed, none of SA’s big players is blameless. All are still operating, free of any legal or professional sanction.

Garbage in, garbage out doesn’t only apply to state entities.

William Saunderson-Meyer.

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