By Professor Parmi Natesan
September is Tourism Month in South Africa but instead of that being the focus, South African Tourism (SAT) made negative headlines for excessive board meetings and overspending on board fees.
The Institute of Directors in South Africa commends Minister of Tourism Patricia de Lille for taking this governance concern seriously. De Lille dismissed the chair and deputy chair from their leadership roles on the board, seemingly holding them accountable for the 54 meetings in the six months from March to early September 2024, having spent R900 000 of their R1.44 million annual budget for board fees.
We have seen excessive board meetings in the public sector in the past, often without it being addressed. Overspending is a risk when non-executive director fees are based on a per-meeting calculation, but it can be contained.
Many companies would rather pay an annual retainer fee for a reasonable number of meetings and then a smaller per-meeting fee for additional special meetings as needed for good reason.
The chair is crucial to determine whether such additional meetings are necessary. While South Africa’s Tourism Act requires the SAT board to meet a minimum of four times a year, it doesn’t specify a maximum number.
The meeting frequency may change from year to year and increase over a short time, particularly if there is a crisis or reputational matter to solve. However, 54 meetings in six months – an average of about two meetings a week for 7 months – sounds too excessive to justify.
The question is whether thee two weekly meetings were necessary to discharge the board’s oversight duty, or if they were coming up with reasons to have extra meetings to collect fees? That would be unethical and not acting in the best interests of the company, enriching themselves at the expense of the company.
Yet the fact that SA Tourism’s chief financial officer resigned recently, reportedly due to the interference of the chair and deputy, points to a third possible reason for an increased frequency of meetings: the board being too operational and instead of focussing on oversight, encroaching on management of the organisation. This might indicate a lack of experience and understanding of the role of non-executive directorship.
As representative of the sole shareholder, Minister De Lille has the authority and duty to appoint and remove a board that will act in the best interests of the organisation and, ultimately, benefit the South African public. She dissolved the previous board in April 2023, after SA Tourism had proposed to spend R910m to sponsor UK football club, Tottenham Hotspur.
Most recently, the minister launched a full-scale investigation into the excessive board meetings and appointed a new chair but has allowed the previous chair and deputy to remain ordinary board members.
King IV is not explicit on the previous chair remaining on the board, but this is not good governance and could impact board dynamics.
My concern is whether the problem of excessive meetings will be solved simply with a new chair, if all the same board members stay on, despite all being party to the excessive meetings.
Therefore, her key recommendation is due diligence in appointing the right people to the board versus political appointments. When all board members are ethical and competent, understand their duty and don’t take advantage, matters like these could be avoided.
Professor Parmi Natesan is the CEO of the Institute of Directors in South Africa.
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