“I know some of you thought I was proposing Dudu Msomi to facilitate our board committee performance review because I am sleeping with her. I do not know her from a bar of soap. I have just followed her work over the years and believed she should be part of the repertoire of strategy facilitators that we use because I believe she can help us. And from all your feedback on how she has handled this project, you seem to agree too”.
A bit of an uncomfortable moment for the people around the table. I was so happy that this Chair was honest, transparent and such a leader. Everyone rated him highly in the performance review and I was seeing a glimpse of why.
I am always so disappointed when I hear people who should have knowledge of corporate governance use “conflict of interest” erroneously as a way of not showing courage and taking leadership. Everyone can potentially know someone. Thus the definition is clear as to not paralyse decisions because we discount people because we know them, dated them, lived on the same street, went to the same school, or university, play golf with them, go to the same church and, and. Friendships and friendly associations result from working with people, with service providers that you grow to admire and respect, with individuals you meeting through professional associations or conferences. And many other situations.
If the mere knowing of someone discounted them, many public companies and institutions are in violation. Most of corporate South Africa was established and ticks because of the relationships that exist. Some relationships are definitely corrupt, quid pro quo relationships. But there are those that are based on merit and are formed after assessing what is in the best interest of the organisation based on each specific contract. Being cynical about every transaction and relationship is a reflection of your values, not necessarily the reality of what exists.
It is really unfortunate to adopt populist rhetoric and thinking. Proper knowledge and your own integrity should give people the spine to stand for what is right. Disclosing knowledge of someone is important because you must manage perceptions. It is secrecy that arouses suspicion because people usually know of the relationships that exist. But that does not mean you are conflicted. And that does not automatically disqualify someone or a company because they are “known” except in the capacity as specified in law.
I myself have and continue to propose friends for Executive positions, for projects and for board positions. Only when they are suitable. Including one or two that I have dated. Why would I have dated them if I did not respect their minds, skills and expertise? And they still have to pass the objective evaluation and be in the pot with others. I too would not want to destroy my reputation by compromising on professionalism by putting forth people who are not qualified. But I disclose the fact that they are friends or acquaintances. I am grateful that in my company I can make decisions that not only benefit acquaintances, but friends because if I don’t assist the people around me, what is the benefit of being a decision maker? And if and when I have partners in the business, I will disclose and recuse myself. For now, it is Me, Myself and I that decides.
As a business person, I am very grateful for individuals like this Chair. If you only knew how tough it is to be a woman in business. You will understand the depth of my Gratitude for men who are still in the majority of decision making positions fighting on our behalf without making sexual advances to promise favours and who are prepared to put themselves out there despite any cynicism that may be heaped upon them as to why they are fighting for a female service provider. 🙏🙏🙏🙏🙏
May more men have the courage. Without using the #MeToo era as an excuse to perpetuate women staying in the periphery of the economy as survivalist businesses. Or supporting women companies only when they are NPOs. It seems it is okay for some that we beg for donations and sponsorships. But it is not acceptable that we are paid for our brains. That is still perpetuating sexism too. 😇😇
Conflict of interest, when used in the context of section 75 of the Companies Act, the term “related person” not only includes a director’s spouse, parents, children
and siblings, but also includes a juristic person if the director directly or indirectly controls the juristic person or a second company of which
the director or a related person is also a director; or a close corporation of which the director or a related person is also a member.
In terms of section 75 of the Companies Act a director’s obligation to disclose a personal financial interest arises in respect of:
* a matter to be considered at a meeting of the board in which he/she
has a personal financial interest or in which he/she knows that a
related person has a personal financial interest; or
* any personal financial interest acquired by a director in an
agreement or matter, in which a company has a material interest or
knows that a related person has acquired a personal financial interest
in the matter after the agreement or matter has been approved
by the company (our emphasis). It should be noted that the disclosure required in terms of this section –
• relates to a personal financial interest in relation to an existing
contract or matter which has been approved by the board; and
• requires a director to disclose his or her personal financial interest in an existing contract or a related person’s personal financial interest in an existing contract – regardless of whether such personal financial interest is material to him/her so long as it relates to a matter in which the company has a material interest.
The term “personal financial interest” is defined in the Companies Act as “a direct material interest of that person, of a financial, monetary or economic nature, or to which a monetary value may be attributed, but does not include any interest held by a person in a unit trust or collective investment scheme in terms of the Collective Investment Schemes Act, 2002 (Act 45 of 2002), unless that person has direct control over the investment decisions of that fund or investment.”