A MORAL COMPASS FOR ORGANISATIONS
By Christi Naudé
“Cooking books and cooking minutes," are one and the same thing, I concluded, closing James-Brent Styan’s captivating business thriller on the furniture retailing giant Steinhoff International.
Moneyweb editor Ryk van Niekerk aptly describes the book as “a chilling insight into the rise and demise of one of South Africa’s investment darlings.” It surely is a wake-up call for many organisations. If near half of the market value of a company like Steinhoff could be wiped out overnight, we should be very afraid.
I am still mesmerised by all the alleged trickery, falsehood, scandals and skeletons. Buzzing through my mind are many a locked-up accounting secret: fake debtors, frenzied deal-making, overstatement of income and assets, concealed balance sheets and the shocking revelation of a shell company in the Isle of Man, nogal.
Like a good thriller, there are also the alleged human flesh and flaws: “Bullying tactics, buddy-buddy capitalism, a larger than life CEO, misplaced trust.”
Some questions keep popping up about South Africa’s biggest corporate scandal, “Did the boards (Steinhoff has a dual board system) look the other way?”; “Where were the auditors?” And, (as I train minute takers), "How accurate, unbiased and truthful were the minutes of the Steinhoff board and status report meetings?" And, (as I train minute takers) "How accurate, unbiased and truthful were the minutes of the Steinhoff board and status report meetings?"
Meeting minutes can be very revealing. It is easy to pick up when entities underrate the skill of minute taking and regard it as a burden. Harder to pick up when the minutes are used as a tool to conceal trickery and fraud.
A case that jumps to mind is the KZN Transport fitness deaths, where the Commission of Enquiry found fake minutes that were apparently manufactured after the fateful event that cost the lives of eight people.
When there are the chairs who pre-sensor draft minutes before circulation and amendments that are made to draft minutes to what members and management wish had happened at the meeting.
“I wish could show you my initial minutes before the chair changed them,” a minute taker once told me, lamenting that crucial information that was removed and that the minutes was now not a true reflection of what was agreed to at the meeting.
ce also recall the case where the chair added an absent member to the attendant list after the meeting to make up the required member numbers for the quorum.
Minute taking is multi-tasking at its best. You must listen through all the noise, analyse and summarise and take notes. Then there is the dilemma all minute takers face: what to record and what to leave out.
Too much detail could land an organisation in court, especially when it comes to defamation, as in the matter between a CEO and an operations manager, who had been suspended.
The operations manager’s absence at a meeting with clients was recorded in the minutes as “Mr … informed the meeting that Mr … of the South African local office had been suspended from his position because he had misappropriated …. funds to a company of which he holds a directorship.”
The suspended operations manager was subsequently telephoned by a member to ask him “hoekom het jy gesteel?” and to inform him that he was persona non grata at that particular company.
Providing too little detail, especially when complex and risky matters are discussed, can be just as fatal for an organisation. Apart from time being wasted and work not being done, one wonders how much thought was applied by members.
I am curious to see the minutes of the meeting where the Steinhoff directors decided to take over the US company, Mattress Firm at a premium of 115%. Was it a case of groupthink where perspectives were not challenged? If not, were the pros and cons of the decision recorded? Were any objections noted?
Steinhoff appeared to tick all the compliance system boxes. But as the Rand Daily Mail of 18 June pointed out in "The Steinhoff Saga: The board that looked the other way," the board's attempts to provide ethical and effective leadership, and more specifically to ensure that the company's ethical character is subject to close scrutiny."
Parmi Natesan of the Institute of Directors in Southern Africa (IoDSA) said the King IV Report on Corporate Governance™ links governance practices and principles with the governance outcomes of ethical culture, good performance, effective control and legitimacy.
Meetings must be structured carefully to ensure that members have the right types of conversation, and do not confine themselves to ticking the boxes.
Central to this is well-documented meetings. Not only are accurate, unbiased and sincere minutes useful for future deliberations, disagreements, litigation and investigations, but it can be indicative of an institution's moral compass.