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King III in the Public Sector
Newspapers and financial magazines in recent times have reported and published articles on various governance failures in the South African government, specifically in its parastatals or state-owned enterprises. And this fuels this perception.
Why is there such a keen focus on governance at present? The King Report on Governance for South Africa and the King Code of Governance Principles, together referred to as King III, was issued in September 2009 with its effective date of 1 March 2010. It describes governance in three key aspects: leadership, sustainability and corporate citizenship.
In order to understand governance in government, it is necessary to understand the following key aspects.
- Effective leadership results in the achievement of the highest level of social, economic and environmental performance (according to King III). This stands first and foremost. Yet this is also the first point at which failures appear: board in-fighting and disagreements with executive management; mismanagement of state resources; irregular tender awards; and alleged conflicts of interest in the highest office.
These examples are what get reported, yet “leadership” flows down to the very roots of government, to those manning the service desk or doing the bank reconciliation in the back office. To put it in other words: To lead is to act ethically, with responsibility, accountability, fairness and transparency. We expect our elected leaders and those appointed by them to leadership positions, to act in this manner. Yet it is also what we have to expect from ourselves. To quote LeadSA: “We all have the ability to lead”.
The question of leadership in government is a complex one: Our electoral system is split between national/provincial and local government elections, therefore our leaders are elected disjointedly as government has three distinct spheres, being: national, provincial and local, backed by constitutional mandates and perceived autonomy. These boundaries often overlap, but who takes the lead in addressing the issues of the day? Political leadership often stands in the face of economic, social and environmental leadership, to drive party-political mandates; the core principle of transparency might also be threatened by the Protection of Information Bill, should it come into effect.
However, all is not “all” wrong. Government ascribes to Batho Pele: “People first”. To quote: “… an initiative to get public servants to be service orientated, to strive for excellence in service delivery and to commit to continuous service delivery improvement. It is a simple and transparent mechanism, which allows citizens to hold public servants accountable for the level of services they deliver.” (Batho Pele Handbook - A Service Delivery Improvement Guide). This is a leadership message communicated since the early days of our democracy. We also see corruption being tackled at some of the highest offices in government. The Public Finance Management Act (PFMA) and its municipal equivalent (MFMA), are well-known for their high governance requirements, and government frequently gets measured against these by the Auditor-General and other bodies, such as the Parliamentary Standing Committee on Public Accounts (SCOPA).
- Sustainability, both environmental and economic, has stormed to the front of the priority queue of government. President Zuma attended the Copenhagen Climate Change Conference in December 2009 and put up South Africa's hand as a developing country, agreeing to the Copenhagen Accord to commit to mitigating actions to reduce carbon emissions. The recent introduction of a CO2 emissions tax on vehicles is but one action introduced to date. Economic development as a priority also features throughout government, with some examples being: the establishment of the National Planning Commission to set a national development plan; and the Local Economic Development (LED) plans or Integrated Development Plans (IDP) in local government.
- Corporate citizenship in a government context is more of a principle, rather than an actual reference to “corporate”. What is implied is the recognition of constitutional rights and responsibilities. This requires no elaboration as the Constitution was born from the first democratic government of South Africa and now even directs government itself.
What is government to gain from “good governance”? Among other benefits,
- service delivery will improve;
- government priorities will be achieved as targets, and accountability for achieving those targets will be clear;
- poverty alleviation through improved economic development (again with the necessary level of accountability);
- moving up in status from a “developing” economy to a “developed” economy;
- improved policy-making and implementation - nationally, provincially and locally; and
- improved audit outcomes, e.g. unqualified audit reports.
King III priorities for government to achieve good governance, are:
|
KING III CHAPTER |
PRIORITY? |
|
Ethical leadership and corporate citizenship |
Yes. This represents a significant challenge in the face of varied and regular reports on corruption in government. |
|
Boards and directors |
Yes. However, to the extent that conflict exists between governance responsibilities and legislated fiduciary and other duties of these or similar bodies/persons, the rule of law prevails - but if there is a case of a “higher requirement” it is encouraged to be followed. |
|
Audit committees |
Yes. Independent audit committees are a priority. |
|
The governance of risk |
Yes. Managing risk would require an integrated and co-operative approach between government (amongst itself) and civil society. |
|
The governance of information technology |
Yes. To move to a developed economy state, this is of utmost importance. |
|
Compliance with laws, rules, codes and standards |
Yes. The priority should be accountability, which emanates from this regulatory universe. |
|
Internal audit |
Yes. However, internal audit must be improved to be more effective and its reports/recommendations heeded. |
|
Governing stakeholder relationships |
Yes. Citizens of South Africa are more than just taxpayers; they are the “owners” of the country. As shareholders/members of a company elect the managers/board, so too did the citizens elect those in power to “look out for their interests”. |
|
Integrated reporting and disclosure |
Yes. The current PFMA/MFMA requirements ensure high standards, yet sustainability reporting should be a key and necessary revision to the regulations of these Acts. |
By no means does this editorial attempt to find a practical approach in applying King III in government in the space of one page. Yet it should be stressed that good governance, simply put, is to “do the right thing”. While political-will exists to correct past inequalities, the same political-will is needed to take South Africa forward on the road to the achievement of good governance. asa
Sources:
King Code of Governance for South Africa 2009, Institute of Directors Southern Africa
Batho Pele Handbook - A Service Delivery Improvement Guide – Department of Public Service and Administration
LeadSA (website) – Various media companies
Delivery, the magazine for local government – String Communication. asa
Christoph Braxton CA(SA), BCom (Hons); Post-grad Dip (Auditing), is Assurance Audit: Associate Director at PwC, southern Africa.
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Article Comments
1st of all ,I like this piece and think more like it should be wtrtien by other leaders,and what I'm about to share is only my opion .One of the things that caught my eye when I saw your status on Facebook was that you researched for your denomination about this topic,I think that is the primary concern that causes confusion in the Body of Christ,denominations presents groups,that form their own views ,that causes controversies,that brings about confrontation ,that creates division,that eliminates any opportunity of unification that could bring any resemblance of a body that's working cohesively to build hope for people in dire straights.As long as the the enemy causes these issues in the church ,there can never be real productivity to command change and restore hope ,that gives sinners a chance for salvation,NOTHING PERSONAL ,JUST MY OPION
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