October 22, 2023 In Consultancy

Appointment of Transnet Interim Board, a missed opportunity


The Cambridge English Dictionary’s definition of interim is “temporary and intended to be used or accepted until something permanent exists”. The challenges at Transnet are astronomical and very serious allegations of corruption and mismanagement have been reported widely in the press. One would’ve thought that a permanent or rather long-term solution would be implemented to arrest the further deterioration of our national asset. As a shareholder in Transnet, and all other SOC’s for that matter, it boggles my mind as to why we need an interim board at Transnet and other critical assets like Prasa, which also recently appointed an interim board.

One could argue that an interim board is inherently hamstrung, and that its effectiveness may not produce the desired outcome i.e. stability and effectiveness. Recent history has demonstrated that in order to weaken an organization, one simply needs to weaken its leadership. This could be achieved by either appointing weak leaders, or in the alternative appoint leaders with limited or no authority. The interim board falls into the latter category since it is “temporary” by nature and will therefore not have the bold authority required to act swiftly and decisively in a crisis situation.

The problem with interim boards

Having sat on an interim board before, one remembers the state of paralysis created by this scenario. It results in boards being incapable of reaching critical decisions around appointment of the CEO and executives in general, resolving critical challenges and enforcing performance plans. This is because the interim board is disadvantaged by its mere “temporary” nature. Effectively the shareholder will be involved in day to day operations as the board must constantly get the shareholders’ approval on execution of plans.

In such an environment, the Shareholder should rather place the entity under administration (business-rescue) rather than appointing an interim board. Of course, the shareholder does not intentionally limit the powers of the interim board, but it is a natural consequence arising from temporary appointments. As demonstrated by the multitudes of “acting” CEOs, CFO’s, “Acting-this” and “Acting-that” etc. which has a direct impact on service delivery.

A further challenge with the interim appointments is the fact that by nature, a board and executives will jointly plan a medium to long-term strategy and agree on the direction of the company and the expected performance outcomes. This does not function well in an interim board scenario as your planning will not be aligned to specific timelines as you may be removed at any time before the achievement or not of the stated objectives. This has the effect of creating a vacuum in terms of performance, and such boards will inadvertently focus on short term victories e.g. focusing on corruption investigation only or mainly, at the expense of other critical outcomes which in the main are the core business of the company.

Rising to the challenge

South African SOC’s and entities in general are facing very serious challenges, mostly around service delivery and execution of business plans. We therefore need decisive and action-oriented leadership that will have full authority and mandate to execute programmes and contribute towards economic development. We will not achieve this unless we have decisive action from the shareholder in appointing properly constituted boards with authority and the capacity to turn-around these institutions. Anything else is merely a “papering over the cracks” history is therefore bound to repeat itself.

SA has the experts and professionals from all industries that can be appointed to these boards, we need to find these people and place them where their expertise will add value to our companies and country. Interim boards create an impression that we are incapable of finding the right people and we should therefore have a “start-stop” approach to leadership. This will not accelerate the economic growth that we so desperately need. I appeal to the shareholders Ministries to appoint properly constituted boards and change the narrative of maladministration and corruption to one of vison and execution!

Ronny Mkhwanazi LLM (International Business Law) Manchester, UK. Is a Corporate and Trade law expert, specialising amongst others, in Corporate Governance and Legal Compliance. Ronny is an avid writer on Corporate law and a sought-after trainer of Boards and Executives of companies on governance and trade law matters.