A SENSE of irony has seeped out of a survey looking at JSE-listed companies with the best corporate governance and risk-management processes.
Most of them are involved in some of the most contentious issues in South Africa’s corporate landscape.
The risk maturity study, conducted by the Centre for Business Mathematics and Informatics at North-West University with strategic consultancy IQ Business, looked at companies in the JSE top 40 index to assess how well they had adopted and communicated their vision of risk, governance and compliance principles, and how this related to market performance.
According to the findings, the best performer in corporate governance was Anglo American Platinum, and the best performer in corporate risk management was MTN. The best performer in corporate compliance was Exxaro Resources, which was also the best in overall integrated governance, risk and compliance ranking.
Anglo American and BHP Billiton came in at second and third place respectively in the latter category.
But the survey did not take into account reputation. BHP Billiton has been on the receiving end of public ire due to its deal negotiated with state utility Eskom that guarantees it below-market electricity prices.
Anglo American Platinum has been one of the companies at the centre of the longest-running strike in South African history, which has been going on since January.
Cellular network operator MTN has provoked public outrage due to its fight against lower call rates on South African networks.
IQ Business risk specialist Rob Brine said on Wednesday the survey had been conducted by a North-West University postgraduate student over six months last year.
Mr Brine said the survey consisted of questionnaires, which were sent to the companies, and an open-source work that included measuring how many times the companies issued Stock Exchange News Service announcements to inform their shareholders about their activities and risks they faced.
A rating model was used in conjunction with a maturity survey distributed to 382 listed companies to assess integration of governance, risk and compliance, as well as critically examine the relevance of those factors in listed companies.
University of Cape Town Graduate School of Business director Walter Baets said the problem with all kinds of procedures to govern risk and manage corporate governance was that they rapidly became a tick-box exercise and were useless.
“If those procedures, or governance and risk management, are not used or applied in the spirit they are intended, then a company can use them to hide misbehaviour.”
Prof Baets cited the government’s introduction of tender processes as a means to halt corruption in state procurement, but the tender processes themselves had become a vehicle for corruption. “A company must have a long-term view about its purpose in society and behave that way. Otherwise it will just focus on profits and shareholder interests, and that is a very short-term view.”