EDITORIAL: Lying Dudu Myeni raises stakes for directors
Myeni will be remembered for something positive at least: a legal precedent which will shake up SA’s corporate governance landscape
It came as no surprise that judge Ronel Tolmay declared serial incompetent Dudu Myeni a delinquent director last week. It’s clear from the 114-page ruling that Myeni shouldn’t be trusted with running a school tuck shop, unless you’re OK with the kids going hungry and the cash float growing legs.
While you can’t blame Myeni entirely for SAA’s crash, Tolmay said her dishonesty "surely contributed significantly to the position SAA and the economy finds itself in today".
Not only did Myeni "sabotage" a deal with Emirates that would have brought in R1.5bn a year, she also nearly collapsed a deal in 2015 for SAA to swap Airbus aircraft that, had it failed, would have torpedoed the airline five years ago.
Tolmay said Myeni was "dishonest and unreliable", her answers in court were "confusing" and "incomprehensible", and her evidence was, in at least one respect, "clearly untrue". As a director, she exhibited "a gross lack of care", acted recklessly and breached her fiduciary duty.
Myeni’s response only underscored this impression of her character: "I am not the first or the last black person to be attacked in this way by agents of the colonial project," she said.
But while Myeni may well be the worst person to sit at the head of a boardroom table in SA, she will be remembered for something positive at least: a legal precedent which will shake up SA’s corporate governance landscape.
First, the finding is important since it’s the most stringent ruling yet against a director. The law allows a court to ban someone for more than seven years — but in this case, so awful was Myeni that she has been banned for life. Second, it was the Organisation Undoing Tax Abuse (Outa) which launched the action alongside the SAA Pilots Association, rather than shareholders.
Prof Michael Katz, the chair of law firm ENSafrica, who helped draft the Companies Act, says: "For the first time, the court recognised that people acting in the public interest, in this case Outa, were allowed to bring the action under section 157 of the Companies Act, rather than just limiting it to shareholders and trade unions under section 162." Ansie Ramalho, a former CEO of the Institute of Directors SA, says this will hopefully usher in a new era of accountability. "There is nowhere left for delinquent directors to hide. Traditionally, only shareholders had the power to hold directors to account," she says.
Mervyn King, who gave his name to SA’s governance codes, also welcomed the judgment. "Whether a company is seen to be a good corporate citizen depends on the conduct and conscience of its corporate leaders … on the evidence, Dudu Myeni was not a conscientious leader."
If Myeni doesn’t overturn it, Werksmans attorney Eric Levenstein said it "will be the lead judgment for some time to come on delinquency".
Still, there’s scope to push for greater accountability using the law.
Katz argues that it’s disappointing that boards and shareholders don’t take it a step further by suing errant directors for loss, as they’re entitled to.
"I’m more keen on actions to recover loss than just declaring someone delinquent, as many of the delinquents aren’t on boards anymore. But what isn’t happening is that they’re now being forced to pay for the loss they caused," he says.
When that starts happening, we’ll have the beginning of true corporate accountability.
Finally, there was a warning to the ANC too in the ruling. Tolmay said: "To serve on a board of an SOE [state-owned enterprise] should not be the privilege of the politically connected. [The] government has … an obligation to ensure that suitably qualified people with integrity are appointed."
It’s a lesson the ANC ought to take to heart.
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