Chief Justice Mogoeng Mogoeng is seen inside the Constitutional Court. File picture: Boxer Ngwenya

Johannesburg - Chief Justice Mogoeng Mogoeng yesterday came down hard on business for lack of transformation and fronting practices.

In an address at a conference to launch the King IV Report on Corporate Governance (King IV) in Johannesburg, Mogoeng zoomed in on some of the shortcomings of the business sector. These, he said, limited its ability to criticise the government.

Mogoeng’s comments come as South African business leaders are increasingly becoming assertive about current affairs in the country. Approximately 81 chief executives of listed and unlisted companies recently pledged their support for Finance Minister Pravin Gordhan.

That was in response to the criminal charges against Gordhan which the National Prosecuting Authority has since dropped.

Disparities

But Mogoeng yesterday reminded the business community of its own Achilles’ heel. He said companies should not ignore black and women employees. He questioned pay disparities based on race and gender. “How can you justify paying someone more purely on the basis of colour and gender?” said Mogoeng.

He also urged the business community to deal with cartel conduct. He said collusion was shameful and tainted the image of business.

“It makes a mockery of the powerful principles that King IV comes up with. It is wrong and we should not tolerate it any longer. Expose the rotten apples to kill the perception that you are all involved,” Mogoeng said.

He said his comments were not meant to condemn business, but were a “brutal introspection that we need”. The business sector was crucial in addressing unemployment in the country. “If there is a sector that will take us out of that unfavourable situation, it is business. Let us clean up our act,” he said.

Mogoeng urged companies to confront fronting. According to the Department of Trade and Industry, fronting entails claims of compliance with the black economic empowerment policy based on misrepresentations of facts.

He moved to allay fears about stability in the country. He assured business that there was “absolutely no reason” to worry about the future of South Africa.

He said the country’s institutions had demonstrated ability and willingness to uphold the constitution.

“Does the business sector... have reason to doubt whether South Africa is a safe destination? I think not, because of the supremacy of the constitution. Institutions in South Africa are strong and whatever other institution you might be having in mind now as not being strong, what is it that it can do that is contrary to what the constitution requires? Nobody can defy the prescript of the constitution and get away with it,” Mogoeng said.

In his address at the conference, president of the Institute of Directors in Southern Africa, Reuel Khoza, criticised the practice of “cadre deployment”, which he said entailed the reservation of jobs for politically-connected individuals. “Our government is replete with such people,” he said. Cadre deployment elevated mediocrity to the status of virtue, Khoza said.

The International Integrated Reporting Council said yesterday that South Africa was the first country in the world to adopt integrated reporting as a mainstream component of corporate governance. The council’s chief executive, Richard Howitt, said that South Africa had a unique history where inclusion and integration were fundamental to building the pillars of modern corporate governance.

“Increasingly, economies around the world are discovering that a more inclusive approach, respecting the multiple resources that contribute towards value creation, is the best way to achieve resilient, long-term performance,” Howitt said.

BUSINESS REPORT