<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
JEREMY MAGGS: The ongoing crisis at the Public Investment Corporation (PIC) has moved far beyond the suspension of one executive, with senior board resignations, regulatory scrutiny and a new board now in prospect.<\/p>\n
I think the deeper question now is whether South Africa\u2019s public institutions are designed to withstand political pressure and leadership conflict.<\/p>\n
Read:<\/p>\n
PIC rocked by governance woes \u2026 again
\nGodongwana reviews PIC CEO suspension<\/p>\n
Someone who\u2019s applied her mind to that is Parmi Natesan, who\u2019s the chief executive officer at the Institute of Directors South Africa (IoDSA). Parmi, welcome. Is the PIC, then, and the crisis a failure of particular individuals, do you think, or a broader system used to appoint and oversee them?<\/p>\n
PARMI NATESAN: Jeremy, I think it\u2019s difficult to say. There are so many complex issues in the PIC. And literally every day when we open the news, we\u2019re reading something else. But definitely one of the issues that I\u2019ve honed in on is around appointment of boards.<\/p>\n
There\u2019s also been a lot of debate around appointments, specifically of the chair of the board of such a large public interest organisation.<\/p>\n
Who should be the chair in order to give the public confidence that this board is actually acting in the best interest of this organisation?<\/p>\n
That doesn\u2019t necessarily mean that it\u2019s in the best interest of government or of the political party that they\u2019re affiliated to, or even of the person who appointed them.<\/p>\n
That\u2019s the key distinction for me around, on the one hand, independence, which is so critical for a board chair, and then on the second hand, competence, which is the other critical thing we need to look at when it comes to board appointments in the public sector.<\/p>\n
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JEREMY MAGGS: What process then should have been undertaken to make sure the chair was the right one at the get-go?<\/p>\n
PARMI NATESAN: I think it\u2019s very important that we set down actual criteria that the public and everyone involved are aware of. So what is the criteria against which you are measuring individuals before appointing them? Secondly, who is doing the appointments?<\/p>\n
Because typically your shareholders are responsible for appointing your directors. But in the public sector, as we know, the shareholder is a sole shareholder, which is government, represented by one individual, which is a minister.<\/p>\n
So is it just a minister\u2019s choice by him or herself, or should there be some sort of an independent nominations panel, really assessing and interviewing these candidates to understand whether they have, on the one side, the independence necessary and on the other side the director competencies.<\/p>\n
We always say directorship is a very critical and important role, and it requires its own level of competencies. That means that by virtue of being a politician, let\u2019s say, it doesn\u2019t necessarily mean you also have the competencies to serve as a director.<\/p>\n
An individual may have it, but has it been tested and who has it been tested by before appointments are made?<\/p>\n
JEREMY MAGGS: Effectively, I think what you\u2019re saying is that a serving deputy finance minister should never be chairing the board of an institution such as the PIC.<\/p>\n
PARMI NATESAN: I think from an independence perspective, that\u2019s where we talk about someone having unfettered discretion and there being no undue influence or bias in their decision-making and so on.<\/p>\n
Now, even if an individual, let\u2019s say, a deputy minister, were to say categorically, no, I know I act independently and I\u2019m not influenced by others and so on, that\u2019s one thing. That\u2019s perhaps actual independence; it may be argued.<\/p>\n
Read:<\/p>\n
Masondo reassures PIC staff amid governance turmoil
\nBatandwa Damoyi appointed as acting PIC CEO<\/p>\n
But the missing piece is perceived independence. So what do we, as the public, see as a requirement for an independent chair of a board? Certainly not, I believe, one of the ministers appointed by political affiliations.<\/p>\n
JEREMY MAGGS: Parmi, if you can maybe telescope back slightly, what do you think a properly functioning board should have done before this dispute became a public institutional collapse, as we\u2019re witnessing right now?<\/p>\n
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PARMI NATESAN: That\u2019s quite difficult to say because we\u2019re reading so many different things and different perspectives on what\u2019s happened at the PIC. In terms of, for example, in this instance around whistleblower complaints and so on, the board has no action but to act on those things.<\/p>\n
I think a lot of it has to do with perhaps, there are certain things you have to do, but perhaps the way in which it\u2019s being done and taking the public along with you.<\/p>\n
One may argue, well, what\u2019s happening in that organisation is that board\u2019s business. However, with the PIC being such a public interest organisation with the impact it has, perhaps more explanation in terms of why things were done and the need for those things.<\/p>\n
JEREMY MAGGS: In this case, no smoke without fire. So the board suspended the CEO, directors resigned, the regulator intervened. That would obviously, on the surface at least, appear to be evidence of independence or governance failure.<\/p>\n
PARMI NATESAN: It certainly looks like it. It\u2019s always difficult to say whether trouble within corporates necessarily is governance failure. It\u2019s always difficult to make that link.<\/p>\n
However, seeing what we\u2019re seeing and reading what\u2019s available in the public, it seems like there\u2019s definitely a governance crisis in the organisation, with so many board members resigning, including the chair.<\/p>\n
Read:<\/p>\n
PIC seeks private fixers after governance meltdown<\/p>\n
One of the things we also pick up in the public sector is the pattern of a whole board suddenly being replaced by a whole new board.<\/p>\n
So you don\u2019t really have staggered rotation, which is actually the ideal situation. So have some individuals who have served for a long time who understand the entity as you introduce new people who are getting to know the entity and bringing in new ideas and new thoughts.<\/p>\n
In the public sector, I often see a whole board resigns or is removed, and then there\u2019s a whole new board to take over, and that also is not ideal.<\/p>\n
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JEREMY MAGGS: Because that has an impact on institutional memory, for instance.<\/p>\n
PARMI NATESAN: Absolutely. You want a balance between institutional knowledge, which the longer-serving directors bring, and on the other hand, fresh and new ideas and new thinking of how to take this organisation forward, which new board members would then have. So it\u2019s ideal to have a balance of the two.<\/p>\n
JEREMY MAGGS: Which does raise the awkward question: how will we know whether the new board, when it\u2019s appointed, represents genuine reform rather than just another cosmetic reset?<\/p>\n
PARMI NATESAN: It\u2019s so difficult to know because, as I say, there\u2019s no transparency around the criteria being used to fill these positions. And this is not a PIC issue alone. This is generally on many boards and especially in the public sector.<\/p>\n
We have director competencies, which we clearly use to assess people against when we, for example, award them our director designations. These competencies are the things that should be tested before appointments are made.<\/p>\n
So now a new board will come in, but who knows what criteria was used to assess their effectiveness.<\/p>\n
JEREMY MAGGS: Aside from that competencies list, and this is a final question to you, is there a single safeguard then that would make the next board less vulnerable, say, to political interference?<\/p>\n
PARMI NATESAN: A single safeguard, maybe not. It would be ideal if the new board was appointed with a bit more of an independent panel assessing them, rather than just a single individual making an appointment, because I think that alone creates the perception of political affiliation.<\/p>\n
JEREMY MAGGS: Parmi Natesan, thank you very much indeed, the chief executive officer of the Institute of Directors South Africa.<\/p>\n
#PIC #turmoil #highlights #independent #board #appointments<\/p>\n","protected":false},"excerpt":{"rendered":"
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