Shanduka Group, a black-owned and black-managed investment holding company, recently announced the acquisition of a minority stake in MTN Nigeria.
The R2.9?billion deal is the largest investment the group has made outside South Africa and is a significant development in the evolution of economic empowerment in South Africa.
But questions were raised in the media about a potential conflict of interest arising from the fact that Shanduka’s executive chairman, Cyril Ramaphosa, is also the chairman of MTN Group. Reference was also made to a relationship between the chief executives of Shanduka and MTN Group. As one report put it, the deal “raises eyebrows”.
Shanduka welcomes such scrutiny in the spirit of stimulating public discussion about society’s expectations of business.
From the outset, as is standard practice in deals of this sort, Shanduka engaged the services of legal firms in Nigeria, Mauritius and South Africa to ensure the transaction complied with laws and regulations in all three jurisdictions.
However, in the wake of subsequent comments in the media, the company sought legal opinion on the specific corporate governance issues that had been raised.
This was to test the validity of the criticisms made by various commentators in the media and to ensure that Shanduka continues to uphold the highest standards of corporate governance.
The opinion given was that neither Shanduka nor Ramaphosa nor Shanduka’s chief executive breached any law or principle of good corporate governance. But eyebrows were nevertheless raised.
This holds an important lesson for any company. While it might not be a breach of law or a violation of the standards of good corporate governance, measures should be taken to avoid even the perception of a conflict of interest.
It is unfortunate that the significance of Shanduka’s investment was to some extent overshadowed by raised eyebrows. But then, even the harshest scrutiny is better than allowing lax corporate governance practices to continue.
»?Moharir is managing director of energy and infrastructure at the Shanduka Group