DBSA rumblings over alleged governance breaches

The Development Bank of Southern Africa (DBSA) is facing allegations of corporate governance breaches and abuse of power – including that its CEO took part in a process to identify new board members, notes a Sunday Times report. It says the boardroom rumblings come amid fresh concerns about the possible conflict of interest created by the appointment of ANC economic transformation sub-committee chair Enoch Godongwana as chair at the bank. The new directors – Gaby Magomola, Bongani Nqwababa and Maseapo Kganedi – were approved by SA Finance Minister Tito Mboweni. This was after a process that, for the first time in the history of the DBSA, was led by the board chair, the CEO Patrick Dlamini and company secretary Bathobile Sowazi. They are not members of the bank’s human resources & nominations sub-committee, the structure responsible for this function. The names were taken to the full board only after they had been to Mboweni. The Sunday Times says it was told that one of the long-serving board members noted it was a first for him in the six years he has served on the board. An internal letter of complaint by one of the committee’s then members, Letlhogonolo Noge-Tungamirai, claims the sidelining of committee members was in conflict with governance protocols. The bank defended the appointments, saying they were above board, transparent, and endorsed by Mboweni. ‘The process that was taken was the most transparent undertaking in the reconstitution of the board at the DBSA in the recent past,’ it said in a statement. It added: ‘Allegations that the board chairperson and the CEO spearheaded the reconstitution of the board unilaterally are false and grossly misleading. The actions taken with regards to board vacancies and reappointments of board members were transparent and in line with the DBSA Act and good corporate governance practices.’

The process could only have been made possible by the fact that Godongwana, as chair of the ANC’s economic transformation committee, is effectively Mboweni’s boss at Luthuli House, said United Democratic Movement leader Bantu Holomisa, who wrote to Parliament’s Public Accounts Committee about the matter. ‘It is not surprising but disappointing that the Minister cannot act against the chairperson,’ Holomisa said, adding that he has also asked President Cyril Ramaphosa to institute a commission of inquiry into the DBSA. The Sunday Times also quotes Democratic Alliance spokesperson on finance Geordin Hill-Lewis, who reportedly said the root cause of this risk to the bank lies in the conflict of interest created by Godongwana as Mboweni’s political boss. ‘This is the trouble with cadre deployment – political loyalty soon trumps adherence to the law, good governance and policy,’ he said. ‘The Finance Minister’s first duty is to uphold the law. If there has been any breach of law at the DBSA, the Minister must take action.’