Ethics under attack in SA business

ALEC HOGG: Cynthia Schoeman is the managing director of Ethics Monitoring, and she joins us. We pick up again on the Zunaid Moti saga. You might have remembered that on Monday evening Zunaid Moti was in the studio, telling us that the forensic investigator Paul O’Sullivan had a personal vendetta against him. Last night O’Sullivan was in the studio, making enormous allegations, including that Moti is a gangster and a thug, and he said that he will definitely be spending time in jail. Now all of this is relevant for the business community, because Zunaid Moti is the controlling shareholder of the JSE-listed company Andulela, and it's not a minnow. It's a R775m-capitalised business, plus he is the chairman of Abalengani Properties, which is funded by Investec. And that relationship has been through some rather interesting times as well.

Cynthia is on the programme to give us some insight into perhaps what this reflects on the business community as a whole, and what it tells us about ethics in business. We aren't really going through a good time, are we, Cynthia?

CYNTHIA SCHOEMAN: I must say, it certainly doesn’t reflect well. I rather think as one of the comments came out, it does look like the script for a new Mafia movie or something. But unfortunately it's happening here. And we are building on, I would argue, quite a poor base. I was looking recently and included in a talk the stats on the perceptions of corruption in South Africa that are done by Transparency International, which is a very credible survey, and our scores in South Africa are really bad. Out of a 10, which is good, we moved from in 2010 a 4.5 into 2011 a 4.1. So I grant you this is private sector and that comment’s on public sector, but I'm afraid the two do reflect each other and do create an overall perception of what, if you want, our ethical barometer is – and it's not great.

ALEC HOGG: I had a wonderful conversation today with Mark Lamberti in our series Upper Echelon – and it’ll be aired later in the week – and he was making the point that because business is under siege in many ways because of the outliers, because of the people who are giving it a bad name, business leaders should not only do good but be seen to be above reproach. Would you go along with that?

CYNTHIA SCHOEMAN: Absolutely. This has really become an issue of whether, as justice has always been, it really does need to be seen to be done as well. And I know that the banking saga has been a perfect example and it has really added to the public outrage factor enormously, especially when in that circumstance we say: “For goodness sake, having had so much of the blame placed on them in 2008, you'd think that any normal grouping of people would say, come on guys, now is the time to really make sure we are doing the right thing.” And we are going from one scandal to the other. So it certainly does need to be seen to be done, not to be negative in terms of what is being done.

I saw the survey that came out, what, it must have been the end of May, which looked at the number of companies that had set up a social and ethics committee, and out of those surveyed it wasn’t even half. Now, we can say, oh, for goodness sake, it's just another committee, but in fact it's a reflection of a commitment to formalising ethics and to raising it onto a really senior agenda in the company.

ALEC HOGG: Cynthia Schoeman gives a timely reminder to business that, with all these strange people out there calling themselves businessmen, we need to be even more vigilant in reflecting a better reputation, Dave?

DAVID SHAPIRO: Ja. You know what bothers me? It's that we have so many initiatives like the governance, the King Commission, etc, where we've got non-executive directors, and yet we still have all these frauds and scandals and corruption. Where’s the good that’s come from that, or is that making progress? I can never reconcile what we are seeing there with all these initiatives. And so much money is being spent on compliance and these issues, and yet we still have high levels of fraud. I talk internationally about that as well – I'm looking at the banking saga as well. I'm having difficulty, saying “is that the right direction, or do we focus a lot more on incentive issues, incentive plans?” – is that the source of it? Is that what really drives people – is it the incentives, share options and so on that make them as greedy as they are?

ALEC HOGG: Something that confuses me is that we know Brett Kebble was crook, and it's been very well documented. Yet he had JSE-listed companies of which he was the chief executive, and nothing was done about it. There were lots of whispers, no investigations, no going in there. The bomb burst and then people kind of picked up. However, in our company we've just appointed a new financial director, a very ethical chartered accountant, to go on a course, paid, which cost us R10 000/R12 000 – forced by the JSE to go on a course so that he’s ethical.

DAVID SHAPIRO: That’s what I'm saying – I assure you, Brett probably had a non-executive chairman and independent directors on his board. That’s the point I'm making.

ALEC HOGG: If what is being alleged about Zunaid Moti is even fractionally true, we've got a JSE-listed company worth nearly R1bn, people trade in it every day, being controlled by whom? A gangster and a thug, says Paul O’Sullivan. I hope it isn't a fact but O’Sullivan’s record is one that you should be taking very seriously.

Posted on MoneyWeb
18 July 2012