CORRUPTION INVESTIGATIONS IN SOC’s: THE DOWNSIDE

Corruption, period!

Many many moons ago in a land far away, a combative Board chairperson is appointed to a critical SOC with one personal mission, fighting corruption. This chairperson is immediately consumed with this “mammoth” task and calls media-briefings to outline his plans to deal with this corruption and on every single occasion he talks about this “cancer” of corruption. A huge investigation is commissioned costing over one hundred million rand to leave no stone unturned in exposing corruption. The chair is very passionate about fighting corruption that eventually he sues even the Shareholder because the Shareholder is too slow in prosecuting those people that are eventually allegedly found to have been corrupt. This is the story about how the chair and eventually his whole board that was consumed by corruption investigations at the expense of ensuring a fully operational, well resourced entity to ensure the achievement of its mandate and objectives for South African citizens, especially those directly affected by the service, mainly the poor.

A dead-end

• Whilst the board is all over the media, regarding this question of corruption and the investigations that go with it, the SOC is silently choking to a slow death. The following anomalies begin to unfold within the organization:
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  1. A poor self-image of the employees develops over time and they lose their enthusiasm for their jobs;
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  2. The only narrative the staff hears everyday is that they are corrupt;
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  3. Employees become overly-cautious about their duties on the job and refuse to serve on bid committees where appointed to do so; or
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  4. Bid committees are appointed but all bids are constantly “in process” as they are afraid of being investigated once the bids are finalised;
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  5. Consequently, no critical services are procured and the system slowly derails as the service becoming worse than it used to be and users (“customers”) are shoved to the side-line and ignored;
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  6. The entity’s budget is not spent for over 3 years plus due to the “procurement-phobia” that develops;
  7. Economic growth is stifled and the industry collapses due to lack of activity;
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  8. The institution itself collapses due to the lack of leadership and activity and the work ethic and company morale is suffocated.
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  9. The organization grinds to a screeching dead-end!

SOC diagnosis

The above scenario is now happening daily in South Africa, most key institutions are under some form or another investigation where billions of Rands are spent on one investigation or another. My argument is not to stop investigations where grounds for such are present. But rather it cannot only be about corruption. Our SOC’s are funded by tax-payer’s investments to achieve very specific objectives mainly to address socio-economic infrastructure and services demands. The State has a duty to manage these investments prudently and to demonstrate a return of investment “ROI” from every cent spent.
However, there is currently no ROI on key institutions that could assist in driving South Africa forward. Never in a lifetime would any businessman constantly pump-in money into failed businesses as we do in SA.

Changing lanes

Mechanisms need to be put in place to ensure that amidst the corruption investigations taking place that the core business of the SOC is not compromised. Boards need to strike a balance between cleaning up the organizations and delivering on the mandate of the business. Board’s that fail to achieve this are not suitable for any board leadership roles as they are clearly “one-dimensional” in their thinking in an environment requiring an enterprising spirit as a well as compassion for both the clients of the service as well as employees. We cannot have employees who are “damaged goods” walking around our businesses with bruised egos and low self-esteem occasioned by the constant media attacks.
The question becomes, the Board leader that focuses only on corruption and collapses the organization in the process, is that a successful leader? You decide!

Ronny Mkhwanazi is MD of Mkhwanazi Inc. specialising in Corporate law, Corporate governance and International Trade law