King stakes crown on his vision

IF I take off my shirt, you will see I am full of scars left by business decisions, says Mervyn King.

Best known for writing the codes on corporate governance, King has also been the chairman of FNB's Corporate and Investment Banking division, and a director of Brait and JD Group.

"Corporate governance does not equal good business judgment, and it is not possible for all directors to make good business decisions all the time," said King when asked about the recent collapse of African Bank.

He suspected the biggest problem at Abil was too forceful a CEO. King said: "There is still a lot of water to flow under that bridge."

Speaking at the Wanderers Club, the 77-year-old former judge said that while executive conduct did not equate to corporate governance issues, it could often lead to the destruction of one's reputation as seen with Telkom CEO Sipho Maseko, who was accused of falsifying his car registration.

"No corporate governance regulation could be written to make all executives act competently and honestly. It is only fair to employees that a company compiles its own 'codes of conduct' and that those codes be written into one's employment contract. This way everyone knows where they stand," said King.

King qualified at the University of Witwatersrand and specialised in commercial law to become a judge, but resigned reportedly after an altercation with then prime minister PW Botha.

He is best known for chairing the King Committee on corporate governance that issued three reports in 1994, 2002 and the latest in 2009 endorsing an integrated approach to corporate governance in South Africa.

Addressing a group of corporate governance professionals at a chartered secretaries conference, King said inclusive governance and taking into account the different stakeholders affected by the operations of companies were at the core of good governance.

"Corporate stakeholder relations are essential to the health of the business. And when certain stakeholders become unhappy it can turn into a disaster, like we saw at Marikana," said King.

The South African Post Office is another example of a breakdown in relations, where disgruntled employees have been on almost continuous strikes for two years.

"When you see a complete breakdown in employee relations as we do at the Post Office, that actually shows that organisation needs a very committed corporate stakeholder relationship officer, who needs to build that trust between the company and its employees," said King.

He said business could not operate in a financial vacuum. According to financial reporting today, only 20% of a company's value was represented by its financials; the balance included sustainability aspects of a firm.

"As we have all learned, the so-called nonfinancial aspects can actually destroy the financial side of the business. Like with Nike, if you use child labour to make your shoes [and] then boom - gone is your market capital."

The World Economic Forum has ranked South Africa No1 in the world for four years for its auditing and reporting standards. The country also achieved top rankings for efficacy of corporate boards, protection of minority shareholders' interests, regulation of securities exchanges and legal rights index.

No doubt King's corporate codes have played a major role in these rankings over the past 20 years of democracy.