Corporate governance in South Africa is not regulated as closely as it is in Europe and the United States and regulation in the information technology sector is marginal. That`s according to Marius Schoeman, Group Executive: Sasol Outsource at Business Connexion, the country`s leading provider of ICT-based business solutions.
"While there are regulations governing certain industries - notably financial services and telecommunications - in the IT field per se there is little in terms of regulated governance requirements. That leaves the issue of governance to be handled by individual companies according to their internally-decided principles," he says.
Governance, Schoeman makes the point, is the principle of running a business ethically and responsibly. The aim is to lower the risks of investors and increase profitability in a way that shows respect for the environment and the people of the regions in which it operates.
Internationally, regulations have been introduced to regulate these risks and establish principles of responsible management. The most notable is the Sarbanes-Oxley Act, which prescribes criminal and civil penalties for securities violations; advocates auditor independence/certification of internal audit work by external auditors; and demands increased disclosure regarding executive compensation, insider trading and financial statements.
"In this country, we have the King II recommendations which are generally accepted as the benchmark for corporate governance. However, the recommendations are not laws, and accordance is voluntary," says Schoeman.
While the challenges of certain vertical markets in terms of governance are different, he says the principles nevertheless are consistent. "For its part, Business Connexion certainly applies the King II recommendations. However, we have modified the provisions in some cases to better match the realities of our line of business - which is the provision of technology-based services," he explains.
Schoeman believes that ethics fundamentally underlie the principles of corporate governance. They go to the `personality` of the organisation - and while that may sound nebulous, the very concept of ethics is, in itself, not easily defined. "Ethics is an abstract concept. However, as a set of principles, ethics within any organisation should be driven from the top-down, yet pervade the organisation. Sound principles should underlie the conduct of every staff member," he explains.
In its efforts to ensure uniform and sound governance and ethical business practice, Schoeman says Business Connexion invests in training, awareness and the encouragement of debate. The key, he believes, is translating the abstract concept of governance into tangible situations, drawing out the understanding of ethics into practical applications.
And while the activities promoting ethics incur a cost, Schoeman says this can be put down to the cost of doing business. "There is no easy cost-benefit ratio for ensuring ethical behaviour, but the cost of not conducting business ethically can be enormous. We all know that reputation is critical to ensure business success, but reputation cannot be packaged and priced. Similarly, the value of ethics and effective governance may not have an immediate return, but these are critical aspects of running a sustainable business - especially in the long-term."
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