October 22, 2023 In Consultancy


The appearances before the Parliamentary Committee (“PC”) by the SABC board and staff (both former and current), has been a hard lesson on Corporate Governance in State Owned Enterprises (SOE’s). 5 years ago, I wrote an articles in the Director Magazine in which I highlighted the new stringent requirements of the new 2008 Companies Act on directors of companies. The main point was the “personal liability” risks faced by board members and directors alike in respect of their fiduciary duties.

The former SABC chairperson Ben Ngubane appearing before the PC today was an example of hardships faced by board members, particularly in SOE’s. The reason for this difficulty has nothing to do with the lack of corporate governance guidelines, those are captured in both the Companies Act 2008 and the King Code on Corporate Governance. The problem however relates to the interpretation and implementation of those governance requirements. The reason that is a challenge is because the state itself, which is responsible for appointing the board members, does not seem to have an appreciation of the importance of clean governance within its institutions compared to corporates, which places a “premium” on good governance practises.

Shareholders generally have personal interest, not necessarily in clean governance, but rather in cadre deployment and personal favours. All this notwithstanding the Presidential Review on SOE’s which was completed and handed over to the President a few years ago. According to this report, Government needs to first do a self-introspection to determine its exact policy on SOE relevance, performance and socio-economic benefits for each entity and to thereafter streamline all entities.

Boards are almost always composed of non-executive directors who are not in the full-time employ of the company, this leaves a huge gap for executives to run wild with business opportunities (as in The New Age deal at the SABC) and provides them with ample time to cajole and spoil the shareholder (usually the Ministers) at the expense of the board. It is thus no wonder that in all cases where there is a collapse of governance, the top executives are usually in the good books of the shareholder resulting in the concept of “super-CEO’s (or “super COO” in the case of Motsoeneng). This concept was previously demonstrated at the SAA and previous SABC boards where the CEO or COO is more powerful than the board. The board becomes useless in these scenarios. The fact that in the case of the SABC, the Minister appoints the CEO, CFO and COO is a clear demonstration of political interference in a purely corporate environment.

Mr Ngubane seems to be experienced as a board member, however, it appears that his relationship with the acting COO was too personal and he as such was blinded by loyalty, resulting on the acting COO having a free-reign at the SABC at the expense of good governance. To hear of a companies’ forensic report being kept by the COO and him threatening board members to resign because of the contents in that report is puzzling to say the least. In a normal organisation such a document is handed to and dealt with by the Board chairperson. Mr Ngubane however sees nothing untoward by the conduct of the acting COO.

The fact that Ngubane did not challenge the contents of the Public Protector report is an unfortunate indictment on his person, and he now must live with the fact that the report found him to have been negligent in the execution of his duties at the SABC. My advice to board members is to ensure that you have proper Professional Indemnity in place, prepare thoroughly for board meetings, insist that your “dissatisfaction” or “disagreement” with board positions are specifically captured in the minutes, and finally to get adequate training on their roles and responsibilities. Failure to ensure the above will no doubt leave you in a very exposed situation, where your integrity will be tarnished and your reputation flushed down the drain.