What’s on my mind…

He says that the issues uppermost in his mind are numerous, although most are focused on corporate governance.

He was speaking at the Institute of Directors business update presentation in Johannesburg recently.

Some time ago the PIC indicated that they were developing corporate governance guidelines at the AGM level. “This has been a mammoth task, with local and international research undertaken,” says Molefe.

As an aside he quoted from an article in a leading business publication that called boards of directors corporate decorations, hired hands and the MD’s cronies.

“Some directors have watched idly as businesses go to the wall. Only when pushed by investors and activists were they cajoled and started practicing governance by embarrassment.”

He cited Calpers, an organization which the PIC greatly respects, which some time ago published a list of businesses that that had displayed lagging financial performance. There were two retail companies, a bank and seven other companies. Following the publication of their names they agreed to certain basic changes to their business, at board and senior management level.

After the changes Calpers said they were pleased with the response and willingness to work with Calpers, and the willingness translated into bottom line improvement.

While he mentions this success, Molefe says that he has misgivings about the embarrassment approach, as this could be construed to be nasty and could lead to several unintended consequences.

“There is a quiet revolution happening in the boardrooms in South Africa. There is a progressive approach, and more importantly the majority of businesses have embraced the transformation agenda and understand that its critical to business survival, and the survival of the nation.

“This is demonstrated by transformation charters that have evolved, although there are still a few companies that aren’t a part of the transformation.

“There is no focus list planned in SA. We want to privately engage businesses,” says Molefe.

Turning to the listed entities in South Africa, he says that the spate of foreign listing of a few years ago and criticized the deafening silence of the performance of these companies.

He welcomed Barclays deal and said that the major Absa shareholders are going to give this proposed deal their overwhelming support at the next AGM, and this includes the PIC.

“There is a difference between the entry of a small players into big markets and big players into a small market.”

“Perhaps this is what was meant by the economies of scale, and perhaps this will focus on the fact that companies should focus on Africa strategies where we are relatively big players.”