Of Hyenas and Corporate Governance
Dr Alex Magaisa
The folks at PSMAS are still taking the p*ss.
So Cuthbert Dube, the erstwhile CEO has reportedly been “retired”, whatever that means. The Board Chairperson, a Mrs Namasasu has been removed from her position (But do tell us please, is she still on the Board? Pay attention to detail we must).
Anyway, we are told in her place now sits Mr Luxon Zembe, who like Cuthbert Dube has the burden (or privilege, depending on the work-benefits balance, which usually tilts heavily in favour of the latter) of sitting on multiple corporate boards.
They include CBZ Bank, Schweppes Zimbabwe Ltd and as The Herald tells us “is associated with several other boards, including the Zimbabwe Institute of Management, the National Manpower Advisory Council, and the Institute of Directors.” Clearly, like Cuthbert Dube, a very busy man whose skills, it would seem are much in demand and presumably rare. But that really is the least of our concerns.
Now, I have met Luxon Zembe and he seems a decent enough gentleman.
That he chairs the chairs the National Corporate Governance Code Committee and was involved in crafting the Code of Corporate Governance for Parastatals and State Enterprises should be very handy in his new role. But I will not permit all that to impair my vision and judgment in this bizarre matter. It’s nothing personal, no.
An official is quoted as having said the PSMAS board appointed Mr Zembe in order “to bring a fresh perspective” at the company.
That’s rather odd wouldn’t you think, considering Mr Zembe is not so fresh on the PSMAS board itself?
He has been a board member since 2012! So no, he is not new at all. He has been a member of the very same board which apparently slept on the job while the company was paying out ridiculously high and unsustainable wages to its senior executives.
It is this same board which presumably should have approved and probably did approve these silly wages and generally held the entire executive to account. So, a fresh perspective, really?
And it’s quite funny isn’t it, that a board which should, in any normal environment raise their hand and take responsibility for neglecting the company, actually have the audacity to actually sit, deliberate (while drinking Mazoe Orange squash and nibbling biscuits, as they do in those boardrooms) and appoint one of their own to take charge of the company’s direction going forward.
And call that “fresh”? How is a hyena expected to superintend, investigate and sit in judgment of fellow hyenas over the disappearance of goats? And you expect a fair and impartial process and outcome?
Like we have said already, it should be handy that Mr Zembe chairs the National Corporate Governance Code Committee. It sets the standards expected of directors including their common law and statutory duties and responsibilities to the company.
Handy because he could (hopefully for no fee) give a very brief lecture to his fellow directors, after which they might all (if they have a conscience and moral fibre) do the right thing and throw in the towel to allow a really “fresh perspective” at PSMAS. (Unlikely because such a culture seems alien to us. Hatinyari bodo.) Because as elementary students of corporate law and governance should know, directors owe fiduciary duties to the company.
These duties include the duty to act in the best interests of the company, the duty to avoid conflicts of interest, and the duty to exercise reasonable care, skill and diligence.
It is impossible to imagine how allowing payments of such obscene (I admit this word is now overused but I can’t think of a more suitable substitute) wages could be in the best interests of PSMAS.
Or to believe that the directors can actually plead that they exercised reasonable care, skill and diligence in the execution of their functions. It is arguable that they failed the company on multiple counts let alone the contributors of PSMAS who ultimately are its intended beneficiaries.
Where were they when all this profligacy was taking place? Are they being honest to the company? But even if they escape the dishonesty charge, it’s hard to think of how they can defend the charge of negligence.
What happened under their watch is inexcusable and they simply failed or neglected to do their job. And now they have the nerve to say they want to bring in a “fresh perspective” by appointing not only one of their own as their new Chairman but also a former Managing Director of a subsidiary, a Dr Farai Muchena, as the acting CEO of PSMAS, who by the way was reportedly earning at least $190,000 (US Dollars to be sure) per month in his old role. This is called recycling and it has nothing to do with friendliness to the environment.
It’s a joke, we know but one is very bad taste.
But there is no shortage of remedies if the affected are serious. We don’t quite have details on the shareholding structure at PSMAS, which would be handy. In a legal scenario which would appear to vindicate sceptics who might quickly deploy the old adage that that law is an ass, the rule is that because it is the company that has been wronged, therefore only the company has the right sue the wrongdoer.
But as the company is not actually a person with a mind and body of its own to take legal action, it must rely on human agents. It becomes absurd to the layperson when they hear further that directors are the agents of company.
The lay observer would justifiably ask how the directors of PSMAS can sue themselves for their own wrongdoing! Surely hyenas are not going to sue themselves for devouring goats left under their watch?
One of this law’s solutions to this apparent absurdity is that shareholders can take a Derivative action against the directors, in which case they will be taking action on behalf of the company.
As litigation lawyers know too well, it is not an easy remedial procedure but few cases are more deserving of its deployment. The shareholders (whoever they are) in this case must surely consider action against the Board for breach of their duties to the company?
In other news, we heard that the Harare City Council used its powers to suspend the Town clerk, who along with his fellow executives were earning “Happy” wages (i.e. close to $40,000 per month – this is now to be known as the “Happy” wage zone).
It didn’t take long before Ignatius Chombo, the long-serving Minister in charge of local authorities (among other responsibilities) reversed the decision, much to the chagrin of the Capital’s citizens and its councillors.
But then again, if a hyena must choose between a hyena and another beast of the forest, it is more likely to favour its own. After all hyenas are known to hunt in packs…
Some have called for a Commission of Enquiry appointed by the President. Erm … Not until they have dusted up those volumes (wherever they are locked up) such as the Dumbutshena and Chihambakwe commissions on Gukurahundi and others that have yet to see the light of day.
Then, perhaps the Commission of Enquiry idea will be given the weight it deserves … Why can’t the Anti-Corruption Commission, a constitutional body, perform its constitutional mandate?
Happy week, Cdes…
