Criminal case against SA school highlights liability risk for board members

Anton Meyer, Executive Head at SHA.

The recent criminal case launched by the Gauteng education department against the School Governing Body (SGB) and former principal of Glenvista High for the alleged squandering of millions of rands has raised questions over possible liability claims that may be attached to innocent trustee members.

This is according to Anton Meyer, Executive Head at SHA Specialist Underwriters, who says that all board members must be cautious of the civil risks involved in the event of alleged foul play when sitting on any governing body – be it a school or homeowners association. “The hidden risk for all trustees or board members in an event such as the case involving Glenvista High School, is not just potential civil damages. Following breaches of their duties towards the body and its stakeholders, the legal defence costs incurred by the individuals to ultimately defend themselves successfully must also be considered.”

Meyer explains that every individual on the board, including staff and parents, are at risk. “As board members, these individuals have a responsibility to act in the best interest of the board and this could extend to the monitoring of transactions to ensure that proper procedures are followed with regards to the safeguarding of funds. For this reason, allegations could extend past those individuals who were involved in committing a crime to those who can be proven negligent. By sitting on the governing body, these individuals have a responsibly to act in the best interest of the board and this could extend not only to the school but to all those with liquid interest in the school to ensure funds are used appropriately.”

He adds that board members should therefore ensure that the organisation has the necessary liability and crime policies in place to cover defence costs before agreeing to sit on the board. “However, it is equally important for individuals sitting on the board to invest in a personal liability policy to assist with possible legal defence fees.”

He explains that when the board is sued for a wrongful act, it is likely that the funds from the policy covering the organisation will be depleted by a select few, leaving the others exposed to cover their own legal fees. “A personal policy could also assist by paying out the cost for damages, provided the policy holder is not found guilty of criminal intent.”

Many parents opt to form part of the governing body of a school, but they do not necessarily understand the responsibility that is automatically assigned as a result, says Meyer. “Anyone who is considering joining such an establishment should speak to a broker about a Trustee, Directors and Officers (D&O) or Personal Management Liability policy that can be tailored to the individual’s specific needs,” concludes Meyer.