We will target autonomy, says new PIC board member Reuel Khoza

RYK VAN NIEKERK: On the line is Dr Reuel Khoza, he is one of the new directors appointed to the interim board of the Public Investment Corporation (PIC).

He is, if course, the current president of the Institute of Directors of Southern Africa, he’s also a former chairman of Nedbank and Eskom, as well as a director of a range of companies, including the JSE, IBM South Africa, Liberty Life, Standard Bank and Old Mutual. He is also a member of the King Commission and was closely involved with the formulation of the King III and King IV Codes of Good Governance.

Dr Khoza, welcome to the show. It has taken some time for the minister to appoint a new board for the PIC, what do you think of the composition of the board?

REUEL KHOZA: Ryk, thank you very much for the opportunity and thanks to your listeners too. I believe there has had to be reflections and thinking before they could move on to put the invitees, I think we are 14 all in all, together. If you look at the profile of each one of those individuals and the spread in terms of the public that are represented where PIC is concerned, I believe they did a commendable job.

RYK VAN NIEKERK: It seems to be very diverse, as you’ve alluded to, a significant representation from the private sector, most notably Maria Ramos and Irene Charnley, and there’s also representation from organised labour. Do you think that balance is critical?

REUEL KHOZA: I think the balance is crucial, South Africa is certainly notorious for adversarial relationships – that’s characterised our history. If you look at us historically, there was racial polarisation, lately you have, as it were, continuing from the history, the adversarialism between organised labour and owners of capital or management. The only way you can actually depolarise that is by way of getting people to get to know one another as human beings and getting them to work together in facing up to challenges.

I believe the diversity in the composition of the board is a huge positive.

RYK VAN NIEKERK: Have you followed much of the testimony put before the Mpati Commission into the alleged irregularities and misconduct at the PIC, did you follow the hearings?

REUEL KHOZA: I wish I could have had the time to watch and to follow. Unfortunately, one is actually heavily engaged in other enterprises and endeavours, some of which are business, others of which actually have to do with helping in the community. That being the case, my following of what is unfolding at that commission has been erratic.

New board members ‘sound’ practitioners of corporate governance

RYK VAN NIEKERK: But there definitely seem to be some corporate governance issues, how quickly do you think you can improve corporate governance through a new board and how quickly can you translate good governance within the institution to an improved public perception?

REUEL KHOZA: I think to the extent that one can change habits, to the extent that one can change the culture of any organisation, may it be non-governmental, may it be business, may it be governmental, one should be able to influence things in a manner that will actually be positive for the organisation.

The helpful aspects to that, is the fact that most of the people who have been appointed to the board are themselves, in my observation, very sound practitioners of corporate governance. So it will start with the board and, with the membership of the board being what it is, I believe in virtually no time it will cascade to the senior executives. From there, I want to believe, it will then cascade to the rest of the organisation.

My sense is that if the key task that the board is actually tasked with right now – that is, to recruit, screen and employ senior executives – if those are well chosen and the tone is set properly at the top, at board level, and the senior executives who come in, come in knowing that there shall be no scope for negligence, for corruption, for the kinds of things that actually appear to have characterised the PIC in recent times, it should be relatively manageable to change the culture and to turn the company around.

RYK VAN NIEKERK: Who appoints the new CEO – is it the board, or does it need to be ratified by the minister of finance or even the president?

REUEL KHOZA: I don’t know what the situation was at the PIC because it actually did have the chairman of the board historically being the cabinet minister or deputy cabinet minister, as it were. My understanding is that now they would like to have the PIC run like a major corporation, that one understands that the composite shareholder is, in fact, government, as represented by the minister of finance but that the board will, in fact, be autonomous.

If my assumption that the board will be autonomous [is correct], then my sense is that, in fact, it is the board who will appoint the executives and the executives will be accountable to the board and not to government or to a minister.

Autonomy will defeat cronyism

RYK VAN NIEKERK: The fact that the deputy minister of finance has been omitted from the board, as was the custom in the past, does suggest a departure from the view of the treasury to remain involved with the PIC but over the past few years we’ve seen a lot of government interference into entities and boards of state-owned enterprises. Do you think you will be able to be totally autonomous?

REUEL KHOZA: Well, that will certainly be the ideal. That will be the target, I believe, where the other board members have been appointed, alongside whom I have been appointed, that should actually be one of the cardinal objectives because take away that and you will have cronyism creeping in again, which you can ill afford as a political economy that has got to compete, and compete successfully, in the 21st century. So one just hopes that practical sense and a better appreciation of governance will prevail.

RYK VAN NIEKERK: When is your first board meeting?

REUEL KHOZA: We have not been told yet, but the board kicks in on Friday, July 12, and it will be in place until July 12, 2020. It is charged with clearly defined parameters, I don’t know very well, but first in terms of the duration, it’s clearly just 12 months. The terms of reference and the kinds of challenges that it’s supposed to tackle, that too I believe is fairly clear.

My sense, and this has not been communicated explicitly, is that appointing senior executives is key and that, secondly, the PIC cannot be frozen, as things appear to have been in recent times because the organisation was somewhat headless, it could not move to address the challenges of the day. So I believe those two cardinal functions will be what the board will be charged with, but we have to wait for the briefing because there’s no chairman at this stage.

The chairman will be elected by the board during the first board meeting. We still await the invitations to the first board meeting, which will be initially chaired and the parameters sketched, as it were, by the minister of finance [Tito Mboweni] and he might even preside over the election of the chairman, prior to him disappearing to go and deal with matters of state.

RYK VAN NIEKERK: How were you appointed? Who phoned you and how long did this whole negotiation take place before you shook Mr Mboweni’s hand?

REUEL KHOZA: It was fairly brief, days rather than weeks. In the spirit of ‘Thuma mina’, I, in principle, indicated that I would be available, and I was given a fairly short time to go and sleep over the matter before the announcement followed. I was actually approached by the minister, Tito Mboweni, who I have known for decades, as it were, from the days of the struggle when it was fashionable to go and meet with the ANC in exile, throughout his various positions in the cabinet, as well as his stint in the private sector. So he called me and indicated that there are others who are being invited and that I was just one of those who are being invited.

RYK VAN NIEKERK: Just lastly, one of the big agenda points on virtually all asset managers’ agenda is prescribed assets; do you have a position on prescribed assets and how it may affect the PIC?

REUEL KHOZA: Generically yes, but I don’t believe I have an inside knowledge of how it might affect the PIC.

RYK VAN NIEKERK: That was Dr Reuel Khoza, he’s one of the new directors appointed to the interim board of the Public Investment Corporation.