Sapo in corporate firing line

2011-10-29 09:54

Corporate governance guru Mervyn King has added weight to those who believe the SA Post Office (Sapo) is in breach of corporate governance rules in appointing one person to hold two of the most senior executive posts simultaneously.

Acting chief financial officer (CFO) Nick Buick was last week also appointed to act as the chief executive.

Buick – who was Sapo’s permanent CFO for 10 years – has been acting in the position since last November when his contract was not renewed.

Buick’s appointment as the acting chief executive comes at a time when Sapo is trying desperately to prevent a leadership crisis.

King, who drafted the South African corporate governance bible known as the King Codes, said the positions are not supposed to be held by one person.

“The jobs...are different. They each perform a different function. The CFO should report to the chief executive and the latter should have oversight of the work done by the CFO,” said King.

“Consequently, the two positions should not be held by the same person,” he said.

The incumbent chief executive, Motshoanetsi Lefoka, was placed on leave of absence as she faces a disciplinary hearing relating to a R425 million-lease contract awarded to commercial property developing firm M&T without proper tender regulations being followed.

Sapo has terminated its relationship with the chief operating officer, John Wentzel, who was also facing a disciplinary hearing over the lease scandal. Wentzel officially leaves Sapo tomorrow.

Ansie Ramalho, the chief executive of the Institute of Directors differed from King, saying it was within reason to appoint one person to act in both positions.

Ramalho said: “The issue from a governance perspective is, of course, not that the CFO is acting as chief executive but rather that one person is in an acting position in both capacities, both are key.

“As a very short-term interim measure it may be acceptable, but anything beyond that is to the detriment of the entity.

“Persons in acting positions are just maintaining the status quo and they do not drive the entity forward as they normally do not have the mandate.”

The chairperson of Parliament’s communications portfolio committee Sikhumbuzo Kholwane said it would have been preferable for both positions to be held by different individuals.

“It depends on the situation but if the CFO acts as chief executive, you might appoint another person to be the CFO. This is something that the board has to analyse and decide on,” said Kholwane.

South African Postal Workers’ Union spokesperson Tutu Mokoena backed the decision, saying: “For the purpose of stability while we wait for Lefoka’s disciplinary hearing to be concluded, we support Buick’s appointments.

“Our understanding is that he is just stabilising the Post Office and does not have the authority that would be enjoyed by a permanent chief executive or CFO,” he said.

Sapo board chairperson Vuyo Mahlati said: “The current situation is being addressed. The board has finalised recruitment and recommended candidates for the position of chief financial officer to the shareholder. This process is being finalised and an incumbent is expected to commence soon.”

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