Tue. Jan 21st, 2020

PSA concerned about continued lack of good corporate governance in private sector

The Public Servants Association (PSA) remains concerned about the continued lack of good corporate governance and poor ethics in the private sector. The narrative that corruption and poor ethics are only found in the public sector has been debunked in recent years with major private companies such as Steinhoff and KPMG being implicated in accounting fraud and dodgy dealings

This behaviour continues to make the country a seemingly risky investment destination against a background where the economy is struggling, and job losses are increasing. As allegations of impropriety are laid bare at various commissions of inquiry currently taking place, the PSA is calling for law enforcement to start taking real action against perpetrators.

The PSA pointed out that despite various governance regulations such as King Codes of Corporate Governance and international financial reporting standards, ethical behaviour in corporates do not seem to be improving. Worryingly, accounting firms that should uphold high ethical standards have done their fair share in eroding corporate governance. What we have seen in cases such as those of Steinhoff and KPMG are ethical failures at multiple levels: Failure by auditors to perform their duties, failure by Boards in their oversight role, and failure by the executive to perform its stewardship.

The PSA believes that ethical leadership is key to good governance. This is more of an internal imperative, and something that must be wired into the normative make up and organisational culture in business and in government administration. Responsible corporate citizenship that assumes interdependence between corporates and citizens, imposes responsibility on corporates to act in ways that reinforce society’s ethical standards. Measures such as King IV, which place emphasis on principles rather than legalism, are designed to nudge corporates towards higher ethical standards. It is important for corporates to understand the unique and powerful role they occupy in society, and act in ways that strengthen rather than weaken public virtues and trust.

Leave a Reply

Your email address will not be published. Required fields are marked *