Sasol not the only firm with independence issues
April 14, 2009
There should be no understating the significance of a possible legal battle between Brian Molefe, the chief executive of the Public Investment Corporation (PIC), and Sasol chairwoman Hixonia Nyasulu over the issue of independence.
That part of the definition of independence may have to be decided in court highlights the lack of vigour in the approach taken to defining the concept in the King 2 corporate governance recommendations.
King 2's weak approach, which is set to become even weaker in King 3, has resulted in individual directors being highly sensitive to any perceived challenge to the notion of their independence.
At any annual general meeting attended by shareholder activist Theo Botha, nothing is likely to generate quite as much indignant bluster from directors, especially chairpersons, as the mere questioning of their categorisation as independent.
Of course, now the big "independence" issue tends to relate to chairmen who are involved in black economic empowerment (BEE) ventures that hold a stake in the company. That is the basis of the fight between Molefe and Nyasulu. Molefe argues that the chairwoman, who is required to be independent, should not have a commercial interest in the company.
Sasol counters that it has dealt with this possibility by appointing a lead independent director on the board. Molefe says this is not good enough.
Molefe's extremely useful points are unfortunately undermined by the PIC's rather ad-hoc approach to the enforcement of corporate governance principles.
Nyasulu could quite rightly point out that Molefe has done nothing about similar situations at Bidvest, where chairman Cyril Ramaphosa has a BEE interest, Mondi, where joint chairman Ramaphosa also has a BEE interest; Pretoria Portland Cement, where chairman Bheki Sibiya has a BEE interest, and Barloworld, where chairman Dumisa Ntsebeza has a BEE exposure. This raises concerns about consistency.
The PIC's commitment to corporate governance would be much more forceful if it was based on a formal scorecard approach that could be applied consistently instead of the guerrilla-type tactics it currently applies.
MEC in the house?
The Western Cape government has sprung into unaccustomed action as the country heads towards a national election on April 22. Hardly a day passes without an MEC holding some sort of walkabout, delivery demonstration or talk shop.
Last week it was the turn (again) of the MEC for local government and housing, Whitey Jacobs, who called together interested parties to discuss the housing plan for the disabled.
Head of the Housing Department Shanaaz Majiet and department official Jackie Samson presented a paper titled "Provincial policy to support group accommodation for people with special needs".
It is apparently the product of interaction with various organisations that are involved in care for the elderly, the blind, people with cerebral palsy, orphans and victims of abuse.
It is proposed that on top of a housing subsidy of about R52 000, provided by the central government but channelled through the provincial government, a R10 000 once-off grant be given to those with special needs to provide the appropriate "top structure", such as wheelchair access for physically disabled people.
Asked whether a fund had been set up for such a payment, Western Cape Housing Ministry spokesman Lukhanyo Calata said: "It is in the document and will be acted upon."
The idea is to mirror normal households, especially for children who are abandoned, with a house parent for about six children per household. A pilot project has been set up in the informal settlement at Hermanus, near Cape Town, where a cluster of three houses has been built with the support of churches.
Jacobs, billed to attend the talk shop, was called to an "important" government meeting instead. One assumes he was getting his house in order.
Paying through the nose
It boggles the mind how a small technology company, Valor IT, won a R153 million tender to upgrade the information technology systems of the Companies and Intellectual Property Registration Office (Cipro).
Official opposition DA trade and industry spokesman Pierre Rabie suspects there is something "fishy" behind this. Especially as Faritec - a somewhat troubled technology firm but with incredibly good black empowerment credentials that include Jay and Jayendra Naidoo - put in a substantially lower bid of just R60 million.
Questions put to Cipro chief financial officer Renier du Toit about alleged irregularities were quickly referred to Tshediso Matona, the director-general of the Department of Trade and Industry.
The awarding of the tender followed complaints from Cipro chief operating officer Melanie Bernard-Fryer, who had apparently reported a number of allegations of improper processes to her bosses.
The highly affable Matona quickly responded to Business Report's questions.
Matona said the tender, issued in September 2008, had been through a rigorous evaluation process. Detailed specifications had been vetted by the State Information Technology Agency. Initially, eight service providers had been asked to tender. Five, including Valor IT and Faritec, had done so.
Two independent evaluation teams had assessed the bids. Their scores were consolidated to determine the final score. The report was submitted in December to an adjudication committee that included Cipro chief executive Keith Sendwe.
The unsuccessful four bidders were informed in January 2009 and given a week to object. None did.
What was at issue was whether the bid "met specifications", said Matona. A lower price seems not to have been part of the specifications.
Edited by Nontyatyambo Petros with contributions by Ann Crotty and Donwald Pressly.
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