SABC - effective corporate governance framework for state-owned enterprises is key

The SABC is also subject to the provisions of the Companies Act. As with Section 11 of the Broadcasting Act, which grants the control of the corporation to the board, Section 66 of the Companies Act clearly stipulates that the business and affairs of the SABC must be managed by or under the direction of the board.

Typically, the founding legislation has imbedded in it multiple reporting and accountability lines. This arrangement makes a reconciliation with other standards of good corporate governance practice challenging. In this case, the Minister of Communications has functional and financial responsibility over the SABC in terms of Section 18 of the Broadcasting Act, but no corresponding and direct accountability over the appointment of the board.

Only the "appointing body" may remove a member of the board from office

As the shareholding and functional ministry, she is nevertheless expected to exercise all the rights afforded to shareholders in terms of the Companies Act as well as exercise oversight over the performance of the corporation. Board members, including full-time directors in the positions of the chief executive, chief operating officer and chief financial officer, who constitute the 12-member board and are charged with the direction and or management of the corporation, are appointed by the president on the advice of parliament in terms of section 13 of the Broadcasting Act. Only the "appointing body" may remove a member of the board from office.

These multiple reporting lines, accountabilities as well as overlapping roles and responsibilities, can result in a diffusion of roles and responsibilities, conflicting bureaucratic aims and interests - a fertile ground for accusations of meddling, incompetence and inefficiencies.

Good corporate governance hinges on foresight and leadership in resolving some of the conflicts for the benefit of the institution, but, in cases of recurring problems like those at the SABC, short of amending and reconciling the relevant pieces of legislation, only a well-negotiated and clearly articulated corporate governance framework will work. This framework would clearly articulate the terms of which the respective rights and roles, as well as the principles upon which the line Minister will exercise the oversight role. Shareholder compacts while providing for key performance areas unfortunately do not provide for this fundamental governance aspect. Good fences make good neighbours.

For more information:

Thina Siwendu, Director, Corporate and Commercial, Cliffe Dekker Hofmeyr,

Tel: +27 (0)11 562 1326, or email: thina.siwendu@dlacdh.com

Andrea Collocott, Head: Marketing, Cliffe Dekker Hofmeyr,

Tel: +27 (0)11 562 128, mobile: 071 541 01001 or email: andrea.collocott@dlacdh.com

Angela Graham, Tel: 073 505 9012 yeahwrite@worldonline.co.za