JJ Tabane | Striking a balance between ethical behaviour and corporate responsibility

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The decision to fire him from this role was made two weeks after an extremely unhappy Pityana sued the Prudential Authority, Photo: City Press
The decision to fire him from this role was made two weeks after an extremely unhappy Pityana sued the Prudential Authority, Photo: City Press

VOICES


Sipho Pityana’s dismissal from Absa as the bank’s lead independent director and then as an ordinary member of the board is the latest in a series of relationship breakdowns between the boards and directors of corporate South Africa.

The decision to fire him from this role was made two weeks after an extremely unhappy Pityana sued the Prudential Authority, South Africa’s bank regulator. The authority learnt about an allegation of sexual harassment made against Pityana in 2020, while he was chairperson of AngloGold Ashanti and, Pityana claims, blocked his nomination to become Absa’s chairperson.

Outside of the legalities of this series of events, and the ongoing disputes between executives and boards, there are several key issues that need to be unpacked.

What does good faith mean?

According to the King IV code of corporate governance, all directors are required to always act in the best interests of the company. This can only be achieved if directors set aside their personal interests. Acting in the utmost good faith is the broadest and most important of duties, even more so when it comes to the role of a lead independent director.

To act in good faith is to act honestly or sincerely, without an intention to deceive, to genuinely believe that a decision you make is for the benefit of the company as a whole and not merely for your self-interest.

READ: I will never be anybody’s ‘Yes Sir’ or ‘Yes Madame’ – Pityana

The question must be asked: Does failure to disclose that a workplace sexual harassment charge is hanging over your head constitute acting in good faith? But, similarly, is it acting in good faith if a corporate uses unproven allegations to disadvantage a director?

Allegations of sexual harassment in the South African context are extremely serious.

Gender-based violence as a sociopolitical issue manifests itself in many different forms, one of which is workplace sexual harassment. The treatment of women in this country is a social crisis, and it must be taken seriously at every level.

Because directors set a clear example for management and staff, and have a duty to uphold a company’s integrity and reputation, their behaviour must be beyond reproach at all times, especially when it comes to social issues that plague an entire country.

This may well mean that, if there are inconclusive allegations of this nature, a board member may well have to “step aside” until these are cleared, for the sake of both the company and the board member.

What does it mean to accept a board role?

Directors bring a unique combination of skills and experience to their board roles. Alongside these, they also bring personal qualities such as good judgement, communication skills, confidence, integrity and discipline.

Accepting an appointment as a director should be deemed an acceptance of the principles and values of an organisation as articulated by its leadership, which has a duty to ensure that integrity and ethics permeate all aspects of the business.

We must not, however, be naïve to the fact that this heavy burden may be abused by corporates wanting to get rid of directors they deem undesirable.

Whether this is the case on the Pityana matter with Absa remains to be seen.

In banking, this is even more critical. Absa’s 2020 results revealed a base of 9.7 million customers and more than 60 000 employees. In the financial services sector, companies sit between savers and borrowers and play an important role in the smooth functioning of the economy.

An enormous number of stakeholders stand to be adversely affected by negative media coverage that may turn general public opinion against the bank. It may be for this same reason that the matter in which this is handled must not linger on, as we saw in the conflict between Old Mutual and its former CEO, where similar ethical clashes were a bone of contention.

READ: Absa ‘frustrates’ Pityana out of PA battle

In this case, the matter is headed to court and no one knows what the outcome may be. The outcome of such litigation will tell us who the real loser in this equation will be.

A question of leadership

While directors have the responsibility to protect their own reputation, anyone in a position of leadership should have the wisdom and dignity to realise when their actions are prejudicing the very organisation whose reputation they have undertaken to protect and uphold.

Similarly, any company must also take a moment to protect the reputations of its directors. It is this fine but complicated balance that is a mark of leadership – in this case, collective leadership.

Transparency is what promotes the confidence of shareholders, employees, regulatory bodies, the media and other stakeholders. It is incumbent upon directors to withstand the test of scrutiny and to be absolutely accountable under every circumstance.

In this instance, the court will have to decide whether a director has been found to have a personal interest that competes against the interests of the company.

At the board level, leaders should be capable of seeing the company and business issues from a broad perspective.

When an individual has had a long and illustrious career, there is an unwritten obligation from them to act honourably and generously to others. To hold such status requires actions beyond mere entitlement and towards the fulfilment of moral and social responsibilities.

Similarly, companies should be mindful of the seriousness of dismissing a director. A company’s decision to fire a director might see the end of that person’s career, as no other company wants to be associated with someone whose image has been tarnished in one way or another.

Which is to say, companies need to tread carefully, for their actions can have an adverse effect on the talent pool that corporate South Africa taps into.

Dr Tabane is editor of Black Business Quarterly and Leadership magazine. He is also the host of Power to Truth on eNCA, Mondays and Wednesdays at 8pm.


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