A director of Wesgro, the Western Cape tourism, trade and investment promotion agency, has resigned over what she feels is a "tone deaf" reaction of the board to an increase for CEO Tim Harris.
On top of that, the chair of the board, Prof. Brian Figaji has now resigned as well, claiming undue interference by Western Cape Provincial Minister of Finance and Economic Opportunities David Maynier.
According to governance specialist and lawyer Judith February, it was mentioned at the first board meeting she attended - in February this year.
At that meeting no documents were made available, but the board was asked whether it agreed to the increase, which it did. However, there were two questions raised regarding the issue.
"At that point, I was under the impression that the issue of the quantum of his increase was by no means finalised and would still involve some more discussions, procedural steps and discussions. Unfortunately, I was mistaken," says February.
She wrote about her concerns on the quantum of the increase to the chair of the board, Prof. Brian Figaji, and copied a few other members who appeared to have reservations. She hoped for further discussions to take place.
She also expressed reservations about whether Harris was suitably qualified to move seamlessly from Wesgro to the private sector. The chair and deputy chair had earlier stated that, if the increase was not granted, Harris would resign and move to a higher-paying private sector position.
"There was no malice intended in the questioning of the decision... I was surprised that the chair took offence at my raising the matter. That was something of a "red flag" for me, regarding the board and how it operates," says February.
Extraordinary board meeting
Figaji called an extraordinary board meeting in order to provide information from the consultants used to determine the amount the salary of Harris should be increased by. At that point, however, it was made known that Figaji had already presented Harris with the new salary package and Harris had accepted.
The directors were also informed at the extraordinary meeting that Maynier had raised certain procedural issues regarding the way in which the decision regarding the increase had been handled by the board.
"I mentioned then that the board did not have all the information to make a decision about the increase and that due process was thus not followed," says February.
"It is my view that the relationship between the chair, deputy chair and CEO is too close. The CEO for instance should not be intimately involved in discussions about his remuneration - for effective oversight to occur."
Despite her objection at the extraordinary meeting, the board still voted in favour of the increase. February resigned as a director days later.
"In my view, it is in the public interest to raise an issue of the salary increase being excessive. This is public money, via the City of Cape Town and the Western Cape Provincial Government," says February.
"It is disappointing that the board also did not follow due process and also did not seem to understand that the decision was problematic. In the public interest one hopes that this is remedied in some way."
Chair resigns too
Figaji responded to Fin24 on Tuesday afternoon that he has tendered his resignation as chairperson of Wesgro as his position had become "untenable due to ministerial over-reach" on the part of Maynier.
According to Figaji the Wesgro board had unanimously decided on 12 February, and in full legislative compliance, to reappoint Harris as CEO for a second and final five-year term. Yet, Maynier "has meddled inappropriately, and repeatedly, in the processes of the Wesgro Board to try to force it to change its decision".
"Tim Harris has proven himself an excellent CEO, with a stellar track record of delivery at Wesgro. Under his leadership, investment in the Western Cape increased by 32% and international tourism increased by 16%. The Wesgro team also facilitated R20 billion worth of exports and R8bn worth of film production during that period," says Figaji.
He says the terms of the new contract for Harris were determined by following a comprehensive benchmarking exercise led by an external remuneration consultant.
"We are absolutely satisfied that the reappointment at an annual salary of R2.5 million is market-related and represents value for money. The current contract represents a R427 000 increase over his previous contract which was unchanged for the previous five-year period. It must also be noted that this increase will be substantially less after tax and other deductions," said Figaji.
On 23 March 2020, and in response to the Covid-19 health crisis and economic climate, the Wesgro Board also accepted an unsolicited offer from Harris of a 6% reduction in salary and a one third reduction in bonus for the financial year 2020/21.
He further points out that, based on their most recent annual reports, the CEOs of equivalent provincial agencies were, in the 2018/19 financial year, earning significantly more than Harris does currently. At that time the CEO of the Gauteng Growth and Development Agency was earning R3.3 million; the CEO of Trade & Investment Kwa-Zulu Natal R3.2 million; and the CEO of Eastern Cape Development Corporation R2.8 million.
Maynier says he regards the salary package approved by the Wesgro board as excessive, especially in the current fiscal climate, and for this reason he has sought to understand how the board reached their decision. He has, therefore, requested the board, in consultation with the CEO, to review their decision.
"[This] is expected and required when it comes to public expenditure as the minister responsible for executive oversight of Wesgro. What is more, my actions are not interference, but oversight and are in line with my responsibilities as the Provincial Minister of Finance," says Maynier.
In terms of the PFMA he has to "promote and enforce transparency and effective management in respect of revenue, expenditure, assets and liabilities of provincial departments and provincial public entities" in the Western Cape.