By Koko Khumalo, CEO, Motlanalo Inc.
In April 2021 Motlanalo Inc. celebrated four years in business by convening an esteemed panel of business and public sector leaders as part of a ‘Voice from the Boardroom’ dialogue series on the topic of ‘Ethics, Governance and People’.
One of the most important experiences of my long professional journey has been my role as an Ethics Officer in a global audit firm. What I know for sure is that ethics underpins every aspect of good business practices, customer relationships and employee behaviour. Most people would agree with this statement, but what I have learnt is that the application of ethics means different things to different people, leading to inconsistent behaviour and decisions. I have also learnt that ethics is undoubtably the single most important differentiator that defines good corporate citizenship.
When I started Motlanalo in 2017 as a black women-owned audit firm, I made it my personal mission then to build a values-based firm that would demonstrate to our clients that Motlanalo is a respectable, trustworthy and ethically-led audit practice. From this desire stems our firm’s purpose of ‘Cultural Excellence in Business’. To celebrate our fourth anniversary, I felt it was important for Motlanalo to be proactive in elevating the importance of a dialogue between public and private sector professionals on ethics, especially at this critical time of uncertainty. Our view is shared by the HIA! Digital Network, a network of specialist professionals that Motlanalo is associated with, and sponsor of the webcast event.
“Organisations served by our members are constantly facing crises of ethics, governance and people that manifest themselves in different ways. These conflicting challenges threaten the success and sustainability of these businesses and we have seen first-hand, how failures in ethics and governance lead to poor business performance. For this reason, our members were keen to support this important dialogue led by Motlanalo, because real change requires ethical leaders with insight and courage,” said Viv Oates, founder of the HIA! Digital Network.
“Real change requires ethical leaders with insight and courage.”
Viv Oates
Founder, HIA! Digital Network
Cas Coovadia, CEO of Business Unity South Africa, stepped in as facilitator of the webcast to bring delegates a ‘Voice from the Boardroom’ on this topic.
“Ethics comes down to choices and behaviour. It is important for us professionals to question the role of leaders in promoting ethical behaviour and how leaders conduct themselves in their interactions and areas of involvement. When leaders do not act ethically, they have a significant impact on business, government, and on the country as a whole,” said Mr Coovadia.
“When leaders do not act ethically, they have a significant impact on business, government, and on the country as a whole.”
Cas Coovadia
CEO of Business Unity South Africa
We were honoured to convene the following panel of leaders, namely: Tsakani Maluleke, Auditor-General of South Africa, Ajen Sita, CEO of EY Africa, Busisiwe Mavuso, CEO of Business Leadership South Africa, and Kganki Matabane, CEO of Black Business Council. All the panellists in this webcast event unanimously agreed that as professionals from all sectors, we need more dialogue about ethics, governance and people, and closer cooperation between business and government is necessary to ensure the sustainability of South Africa.
I am pleased to bring you some of the highlights from the webcast to help continue the dialogue.
Advocate for doing the right thing
Tsakani Maluleke, Auditor-General of South Africa (AG-SA), outlined the backdrop of challenges faced by public sector entities in the current environment. She referred to the most recent AG-SA report, which explains that only 17% of the R1.7 trillion public finance in the 2019/20 financial year was delivered by public sector entities that met audit compliance standards. And only 49% of national and provincial departments were able to provide credible financial information for the same period. While there has been marginal improvement compared to prior years, Ms Maluleke says we still have a long way to go towards public spending accountability.
“These findings have all contributed to the financial health risks that are troubling public sector entities, particularly those in education and health,” she said.
Ms Maluleke challenged the audience by saying the issue is not just about accountability and corporate governance in the public sector. She suggested that as leaders, we should resist the temptation to lay blame solely on government for gaps in public finance governance and compliance, without looking at the broader ecosystem within which government and business co-exist and operate.
“When there are supply chain irregularities, we must remember that there are also private sector entities who are benefiting from flouting weaknesses in public sector procurement processes and policies.”
Crossing the ethical line is a choice that individuals make, most often fuelled by a personal desire for power and self-enrichment. Ms Maluleke posed the following questions to all professionals and business leaders:
- Do we stand up to advocate for the right things in our country? Are we using our positional power as leaders to improve the lot of others?
- What posture do we choose to adopt? One of value-add or personal extraction?
- Do we measure success by the contribution we make to our professions, our society and institutions, or by personal gain?
- Have we truly embraced a commitment to technical excellence?
- Do we, as professionals and leaders, hold ourselves to a higher standard? And do we walk the talk?
- Are we making good choices that will contribute towards creating a prosperous South Africa for all?
“Do we stand up to advocate for the right things in our country? Are we using our positional power as leaders to improve the lot of others? What posture do we choose to adopt? One of value-add or personal extraction?”
Tsakani Maluleke
Auditor-General of South Africa
Is sustainability possible without ethics and governance?
EY Africa CEO Ajen Sita connected the concepts of ethics, sustainability and governance, commonly referred to as ‘ESG’.
“The COVID-19 pandemic has brought the need for ESG into sharp focus. Social and economic disparities and injustices are more pronounced than ever before, including access to basic healthcare, medication and COVID-19 vaccinations. It is therefore not surprising that the public has lost trust in governments and business all over the world,” he said.
Unfortunately, the audit profession has not been spared, and calls for increased accountability and consequences for corporate failures have become more vocal.
“And rightly so,” said Mr Sita. “This is about holding all leaders to a higher standard. Ethics failures, weak governance, corruption and lack of accountability must be rooted out, to ensure the sustainability of our economy.”
“To my mind, every action can either be selfish or unselfish, self-serving or serving the greater good. It’s a conscious choice.”
In addition, corporate reporting requirements have become extremely complex in recent years, and this means fewer stakeholders truly understand the details of financial reporting. The public needs assurance that markets and public funds are in good hands. Stakeholders expect reporting that is accessible, transparent and easier to understand. They want to see fewer audit failures, and see action taken against mismanagement, misconduct and financial crimes.
“Indeed, over the past five years, many questions have been raised about the role of auditors in issues such as State Capture, auditor concentration, independence, governance and accountability. As a profession, our reputation as the protector of public trust has been decimated. The only way forward is to transform our profession for the greater good,” said Mr Sita.
Two years ago, EY entered a strategic partnership with Motlanalo. The partnership is designed to help Motlanalo tap into EY’s global resources including professional training, technology infrastructure, teaming and – most importantly – provide Motlanalo with access to high-profile private sector audits.
“Together with Motlanalo, EY jointly serves some of the largest companies in the continent. The South African landscape for black-owned firms changed significantly in recent years because of links to audit failures, and we want to assist Motlanalo achieve its goal to be the leading black-owned firm in South Africa. Some may say it is counter-intuitive to help build a firm that could be a future competitor, but we don’t see it that way. Our goal is to help build a high-quality, values-driven audit firm that is an asset to the country and instrumental in transforming our economic ecosystem. EY wants to be part of that change, and I encourage other companies and professional firms to consider doing the same,” said Mr Sita.
“Ethics failures, weak governance, corruption and lack of accountability must be rooted out, to ensure the sustainability of our economy.”
Ajen Sita
CEO, EY Africa
Is conscious capitalism compatible with ethical leadership?
Busisiwe Mavuso, CEO of Business Leadership South Africa (BLSA), talked about the ethical crisis facing the country. BLSA represents over 100 of South Africa’s leading corporate organisations, and Ms Mavuso has first-hand knowledge of the litany of challenges facing South Africa’s business leaders, not the least of which is keeping the lights on during the COVID-19 pandemic while operating in a highly uncertain political and economic environment.
Ms Mavuso aptly summarised ethics as ‘doing the right thing when no one is looking.’ She raised her concern about the mounting evidence of the ethical leadership void across all spheres of business and government that has brought us to this painful crossroads in South Africa’s democratic journey.
“I believe that ethics is inherent in leadership. And business has an important role to play in the prosperity of the country through ethical leadership. We cannot leave this ethical crisis to government alone to solve. If government fails, business will fail. And if business fails, South Africa will fail,” she cautioned.
The COVID-19 pandemic has intensified the deprivation of so many South Africans, with the most recent unemployment rate at an alarming 43%. Ms Mavuso believes that social justice should be a priority for business and government.
“We cannot have a situation where business is an island of prosperity in a sea of poverty. Government’s ethical leadership failures by no means absolve our collective inaction as business to make better decisions for society as a whole,” she stressed. “As the group that has economic power, business must work with government to go beyond profit interests for the national good.”
This concept of conscious capitalism can only be realised through definitive acts of ethical leadership. Purposeful economic inclusion of all stakeholders means that business has the opportunity to contribute towards the country’s long-term sustainability.
“Fence sitting is no longer an option,” she said. “Ethical leadership is mandatory if we are to save South Africa.”
“Fence sitting is no longer an option. Ethical leadership is mandatory if we are to save South Africa.”
Busisiwe Mavuso
CEO, Business Leadership South Africa
Running on all cylinders
Black Business Council (BBC) CEO, Kganki Matabane, brought the perspective of empowerment and inclusiveness to the discussion.
“When the B-BBEE Act was passed, it was intended to promote the economic participation of black people in the mainstream economy.
For many organisations, the compliance to the B-BBEE Act has become a tick-box exercise and this undermines the spirit of inclusiveness and socio-economic transformation of the country’s economy,” he explained.
“If you own a car with six cylinders and you continue to run it on only one cylinder, you will ruin your engine. We need our country to be running on all cylinders, to broaden the economic participation of more firms like Motlanalo in the mainstream economy. I want to thank EY and PwC for helping Motlanalo achieve this important four-year milestone, where today they are now auditing some of the biggest banks, private sector companies and public sector entities.”
Mr Matabane reflected that some 20 years ago, many of the black-owned audit firms were merging with the Big Four firms because of the entry barriers they faced accessing mainstream markets on their own.
“Through EY, Motlanalo is now able to serve these markets, and will, with the support of EY and others, go from strength to strength, opening the way for more black professionals to serve the country in a greater capacity. This is the spirit of empowerment and socio-economic transformation in its true sense. We need more such success stories in South Africa’s future, and we must be proactive about making it happen.”
“We need our country to be running on all cylinders, to broaden the economic participation of more firms like Motlanalo in the mainstream economy.”
Kganki Matabane
What should leaders be paying more attention to?
I am so humbled and grateful for contributions of Cas Coovadia and the panellists for sharing their insights. It left me with a great deal of food for thought, and these are my top five key learnings from the discussion:
- The time is now. In fact, it is now or never. I am reminded of the call: “If not us, then who? If not now, then when?” We can no longer be passive observers or react after the fact, when the mantle of responsibility requires us to continuously engage and challenge each other on the importance of ethics, governance, and our responsibilities as professionals towards our country and people.
- We must regain public trust as professionals by holding ourselves to a higher standard of professional conduct and taking accountability.
- Transform the audit profession. As a beneficiary of the enterprise development programme of the AG-SA, and support from EY and PwC, I can attest that without the incredible support Motlanalo received from the start of our journey, our success today would be limited. It requires an investment of time, money and commitment to make a real change. I am honoured to partner with those who share my belief that it is not too late to transform the profession and that we can achieve more together than on our own.
- Meaningful dialogue and partnership between government and business is required to create a positive economic environment and ethical culture for a sustainable South Africa.
- Ethical leadership has no grey areas. It is non-negotiable if we are to transform the country for future generations. It requires courage and commitment to a higher purpose, namely creating a better South Africa for all. We have a responsibility to those who follow in our footsteps, to leave a legacy of a better South Africa for our children.
In closing, my parents raised me to believe that education is the path to freedom, and I never tire of learning from others. I am thankful to our panellists for sharing their views and experiences, which left me inspired and encouraged.
It is clear to me that we need to continue to engage and challenge each other on matters of ethics, governance and people. It is time to reshape the narrative of South Africa’s future.
To watch a recording of this webinar event, please click here or to listen to the audio version, click here.
Motlanalo Inc. is a member of the HIA! Digital Network, a professional network of diverse specialist business consultants that help organisations improve sustainable performance.
This event was made possible with the support of RMB Private Banking and HIA! Digital Network.
