News & Press: IoDSA in the Press

Diko, Masuku issue highlights how governance failure impacts service delivery

Monday, 03 August 2020   (0 Comments)
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The furore around the awarding of a contract to a politically connected individual’s company shows that government has not yet accepted its role as custodian of good governance for South Africa Inc—and the extent of public disenchantment with perceived corruption. That this flouting of basic governance principles around conflicts of interest was shown by people in the highest echelons of government in a matter directly related to a severe national crisis was especially worrying, says Advocate Fay Mukaddam, Chartered Director and Technical Advisor at the Institute of Directors in South Africa (IoDSA).

The scandal involves the awarding of a R125 million contract for personal protection equipment to a company owned by Madzikane Diko, the husband of the Presidential Spokesperson, Khusela Diko. The Dikos are close friends of Gauteng Health MEC Bandile Masuku, who is leading the province’s response to COVID-19, and his wife, City of Johannesburg MMC, Loyiso Masuku.

“That this tender for vital personal protective equipment was bid for, and granted, despite a clear conflict of interest is hugely disappointing, and points to a cynical disregard for the most basic rules of governance,” she says. “Leaders cannot take refuge in claims of ignorance or that they did not think things through: the rules are very clear here, and our leaders are expected to follow them. Following proper due diligence processes is critical when awarding tenders, of course, but when these are short-circuited as they were because of the urgency, we have to rely on leaders to do the right thing.”

Vikeshni Vandayar, Executive: Governance and Corporate Services at the IoDSA, says that public servants need to recognise that they have a duty to act in the best interests of SA Inc., and that government’s money derives directly from taxpayers and they thus have a duty to ensure it is managed effectively to the betterment of South Africa Inc and its citizens.

“One could say that public servants have what amounts to a fiduciary duty to the public when it comes to disbursing public funds. Government is ultimately the custodian of governance for the country as a whole— the improper application of COVID-19 funds is having a direct and calamitous effect on frontline medical staff and their patients,” she says. “If a board does not provide ethical leadership and set the tone, the whole company will suffer; the same is true of the state. An incident like this compounds the socio-economic crisis we are facing, and directly impacts government’s credibility around service delivery.”

Advocate Mukaddam says that while it must be recognised that people have to earn a living, perception was important. One of the trade-offs inherent in good governance is that those with connections to state officials may not enter into business relationships with the state. These conflicts of interest must not only be identified by role players, but they also need to be resolved satisfactorily; it is important, too, that transgressors are seen to be held accountable.

“It’s common cause that corruption has infected the body politic to an unbelievable extent, with grave consequences for the social compact generally, and for service delivery in particular. One can take some heart from the fact that the ANC has forced Ms Diko and both Masukus to take a two-week leave of absence and appear before the party’s Integrity Committee, while the Chair of SCOPA is calling for a criminal trial,” she says. “Swift action will help, but the credibility of the provincial and national government, and particularly their response to the pandemic, has been damaged.

“Poor governance and unethical leadership have consequences.”