Last week Markus Jooste, the public mastermind of the Steinhoff corporate scandal, took his own life. This news was largely reported with a combination of preachy comeuppance and finger wagging. There was no empathy.
Primarily, Mr. Jooste had a family and people who loved him and will be devastated at this loss. My condolences go out to them. There is never justification for incivility.
Scapegoating the public face of a systemic failure in oversight is unfortunately common in situations such as Mr Jooste’s. Corporate South Africa is only too pleased to acquiesce to the media narrative that would have us believe that he was a malevolent confidence trickster who somehow managed to fool astute investors on three different continents. Not to mention the reputable audit and legal firms that signed off on all the Steinhoff investment schemes.
From a governance perspective, we should treat this scandal – and now this tragedy – as an opportunity for reflection.
Governance best practice recommends the appointment of more independent than executive directors to a board. This is a noble intention, in theory. In practice, when shareholding structures are as complex as they were at Steinhoff, the board is no longer an instrument of impartial oversight. It becomes a forum to determine control of a conglomerate of companies. There are several excellent resources, in print (such as this one by James-Brent Styan or Rob Rose’s) and documentary film, that deal with exactly how this catastrophic corporate failure occurred. From my perspective, there was a pronounced disconnect between the board of the ultimate holding entity and all its underlying assets. It would be naive to write yet another opinion piece about the failure of board oversight, flaws in internal accounting procedure and inuendo that apportions some of the blame to audit firms.
Ethical leadership is not something that can be codified. We do not need more legislation or checks and balances or structural changes. We need more directors who take their responsibilities seriously, who ask difficult questions, and who are willing to be unpopular. I take the title of this piece from Lewis Carroll’s novel of a similar name. Markus Jooste is the Jabberwock. The imaginary dragon. In Carroll’s novel, the protagonist must figure out that everything has been inverted. To slow down, she had to run. To understand an alien language, she had to hold it up to a mirror.
That is what your board should be doing. Holding up a mirror. Are the decisions that are being made in the best interests of the company? That is who a director owes a fiduciary duty to. Not to the shareholder. Not to the co-directors. Does your chairperson ensure that all directors are aware of this? If this isn’t happening at your board meeting, then why have a board?
In many instances it is because having the board, like having auditors, is a requirement rather than an opportunity. A well balanced, dynamic board populated with critical thinkers will improve your business. We have the data to substantiate this assertion. A misalignment is caused by a conflict of interest, misunderstanding of duty or unconscious bias.
If there is anything to be learned from this tragedy, it is that despite the best intentions, the best business minds and most astute investors and firms filled with specialists’ oversight, this happened. The culture of looking the other way and thinking that someone, somewhere will eventually say something is the real dragon. Not the Jabberwock or straw man that we apportion blame to so that we can continue with “business as usual”.