Media-reported corporate governance transgressions in broad-based black economic empowerment deals in the South African mining sector
Abstract
The study explored the nature of publically identified corporate governance transgressions relating to deals designed to promote black economic empowerment (BEE) at 22 South African mining companies. A review of South African English language newspaper articles was undertaken for the period 1 January 2010 to 31 December 2011. Reported transgressions were assessed against a framework developed from relevant codes and legislation. Political interference/nepotism/fronting was the most-cited category of behaviour promoting governance transgressions, followed by fraud/ structuring of controversial BEE deals, and mismanagement/negligence. Public concern about governance of BEE deals in the mining sector and, accordingly, about the contribution of BEE to the broad socio-economic upliftment of historically disadvantaged South Africans, is highlighted.ÂReferences
Andreasson, S. 2006. The African National Congress and its critics: ‘Predatory liberalism,’ black empowerment and intra-alliance tensions in post- apartheid South Africa. Democratization, 13(2):303-322.
Andreasson, S. 2011. Understanding corporate governance reform in South Africa: Anglo-American divergence, the King Reports, and hybridization. Business and Society, 50(4):647-473.
Bednar, M. K. 2012. Watchdog or lapdog? A behavioral view of the media as a corporate governance mechanism. Academy of Management Journal, 55(1):131-150.
BEECom. 2001. Report of the Black Economic Empowerment Commission. Johannesburg: Skotaville Press.
Benjamin, C. 2013. Mining sector globally under strain. Mail and Guardian Business, 25-31 January:4.
Butler, A. 2010. From sports reporter to connected enforcer. [Online] Available: http://www.businessday.co.za/articles/Content.aspx?id=131179 [Accessed 28 January 2013].
Capps, G. 2013. Victim of its own success? The platinum mining industry and the apartheid mineral property system in South Africa’s political transition. Review of African Political Economy, 39(131):63-84.
Chamber of Mines of South Africa. 2012. Facts about South Africa’s mining: Putting South Africa first: Mining’s contribution to South Africa. [Online] Available: http://www.bullion.org.za/resources/ sub-categories/?section [Accessed
August 2013].
Chau, S. L. 2011. An anatomy of corporate governance. IUP Journal of Corporate Governance, X(1):7-21.
Clarke, J. L., Evenett, S. J. & Lucenti, K. 2005. Anti-competitive practices and liberalising markets in Latin America and the Caribbean. World Economy, 28(7):1029-1056.
Core, J. E., Guay, W. & Larcker, D. F. 2008. The power of the pen and executive compensation. Journal of Financial Economics, 88(1):1-25.
Croucher, R. & Miles, L. 2010. Corporate governance and employees in South Africa. Journal of Corporate Law Studies, 10 (Part 2):367-389.
Dansereau, S. 2010. Comparing duelling approaches to the transformation of South African mining: Corporate social responsibility or labour restructuring? Labour, Capital and Society, 43(1):65-98.
Danso, R. & McDonald, D. A. 2001. Immigration and the print media in post-apartheid South Africa. Africa Today, 48(3):115-137.
Davie, K. 2010. SA and Latin America: The danger of populist economics. [Online] Available: mg.co.za/article/2010-10- 29-sa-and-latin-america-the-danger- of-populist-economics [Accessed 8 March 2013].
Detomasi, D. A. 2006. International regimes: The case of Western corporate governance. International Studies Review, 8(2):225-251.
Diale, A. L. 2010. The role and importance of whistle-blowing in building organisational integrity in the public sector: A theoretical exposition. Journal of Public Administration, 45(1.1):295-305.
Dick, W. 2010. Feeling the heat. Business Day Supplement:12.
Doke, L. 2013. Industry hits the right notes, but is it enough? Mining Indaba. Supplement to the Mail and Guardian, 15-21 February:1-2.
Dyck, A., Volchkova, N. & Zingales, L. 2008. The corporate governance role of the media: Evidence from Russia. Journal of Finance, 63(3):1093-1135.
Ernst & Young. 2013. The business risk report: Mining and metals 2012-2013. [Online] Available: http://www.ey.com/miningmetals [Accessed
February 2013].
Fauconnier, A. & Mathur-Helm, B. 2008. Black economic empowerment in the South African mining industry: A case study of Exxaro Limited. South African Journal of Business Management, 39(4):1-14.
Fig, D. 2005. Manufacturing amnesia: Corporate social responsibility in South Africa. International Affairs, 81(3):599-617.
Fleming, S. & McNamee, M. 2005. The ethics of corporate governance in public sector organizations. Public Management Review, 7(1):135-144.
Francis, R. & Armstrong, A. 2003. Ethics as a risk management strategy: The Australian experience. Journal of Business Ethics, 45(4):375-385.
Franzosi, R. 1987. The press as a source of socio- historical data: Issues in the methodology of data collection from newspapers. Historical Methods, 20(1):5-16.
Friedman, S. 2010. The worst threat to democracy that money can buy. [Online] Available: http://www.businessday.co.za/articles/ Content.aspx?id=92123 [Accessed 28 January 2013].
Fülöp, M. T., Span, G. A., Pop, A. & Popa, I. E. 2010. The similitude and dissimilitude of OECD, Romanian and German corporate governance codes. International Journal of Business Research, 10(2):185-189.
Haffajee, F. 2010. Political dynasties keep the poor impoverished. City Press, 25 April:21.
Hattingh, S. 2010. Mineworkers’ direct action: Occupations and sit-ins in South Africa. Journal of Labor and Society, 13:343-350.
Hodgson, G. M. 2006. What are institutions? Journal of Economic Issues, 40(1):1-25.
Hoffman, E. A. 2008. A wolf in sheep’s clothing: Discrimination against the majority undermines equality, while continuing to benefit few under the guise of black economic empowerment. Syracuse Journal of International Law and Commerce, 36(1):87-115.
Iheduru, O. C. 2008. Why ‘Anglo licks the ANC’s boots: Globalization and state-capital relations in South Africa. African Affairs, 107(4280):333-360.
Institute of Directors (IoD). 2009. King Report on governance for South Africa. Johannesburg: Institute of Directors.
Jesover, F. & Kirkpatrick, G. 2005. The revised OECD principles of corporate governance and their relevance to non- OECD countries. Corporate Governance: An International Review, 13(2):127-136.
Jones, R. & Welsh, M. 2012. Toward a public enforcement model for directors’ duty of oversight. Vanderbilt Journal of Transnational Law, 45(2):343-403.
Keightley, R. 2011. Fat cats, slim pickings: An examination of corporate corruption and the efficacy of existing countermeasures in South Africa. Journal of Contemporary Law Studies, 11(2):343-368.
Khan, A., Muttakin, M. B. & Siddiaui, J. 2013. Corporate governance and corporate social responsibility disclosures: Evidence from an emerging economy. Journal of Business Ethics, 114:207-223.
Le Roux, F. 2010. The application of the third King Report on Corporate Governance to small and medium enterprises. Research report submitted in partial fulfilment of the requirements for the degree Master’s of Business Administration. Stellenbosch: Stellenbosch University.
Lindsay, D. 2011. BEE reform: The case for an institutional perspective (pp. 236-255). In J. Daniel, P. L. Naidoo, D. Pillay
& R. Southall (Eds.), New South African Review 2. Johannesburg: Wits University Press.
MacMillan, K., Money, K., Downing, S. J. & Hillenbrand, C. 2004. Giving your organization spirit: An overview and call to action for directors on issues of corporate governance, corporate reputation and corporate responsibility. Journal of General Management, 30(2):15-42.
Magzamen, S., Charlesworth, A. & Glantz, S. A. 2001. Print media coverage of California’s smoke-free bar law. Tobacco Control, 10(2):154-160.
Marais, J. 2011. Zuma Inc. hits skids. Business Times, 29 May:1-3.
Masondo, D. 2010. BEE has evolved into a family affair: ZEE. City Press, 5 September:25.
McKinsey and Co. 2002. Global investor opinion survey. [Online] Available: http://www.mckinsey.com/ clientservice/organizationleadership/ service/corpgovernance/pdf/ globalinvestoropinionsurvey2002.pdf [Accessed 23 February 2013].
MacPherson, I., Brooker, R. & Ainsworth, P. 2000. Case study in the contemporary world of research: Using notions of purpose, place, process and product to develop some principles for practice. International Journal for Social Research Methodology, 3(1):49-61.
Mears, R. 2006. The state of the economy as a basis for human development: Evaluated against the accelerated and shared growth imitative for South Africa. Africa Insight, 36(3-4):199-213.
Miles, M. B. & Huberman, A. M. 1994. Early steps in analysis (pp. 50-89). In M. B. Miles & A. M. Huberman (Eds.), Qualitative data analysis. Thousand Oaks, CA: Sage.
Mokgata, Z. 2010. Shiva Uranium looks to fresh start with another Zuma link. Business Times, 23 May:7.
Ndlangisa, S. 2010. NUM blasts ArcelorMittal’s BEE deal. City Press, 15 August:6.
O’Leary, Z. 2005. Researching real-world problems: A guide to methods of inquiry. London: Sage Publications.
Organisation for Economic Cooperation and Development (OECD). 2004. OECD Principles of Corporate Governance (revised ed.). Paris: OECD Publishing.
Ponte, S., Roberts, S. & Van Sittert, L. 2007. Black economic empowerment: Business and the state in South Africa. Development and Change, 38(5):933-955.
Presidency. 2010. Development Indicators (2010). Pretoria: The Presidency of the Republic of South Africa.
Qoza, S. 2010. BEE flopped in its finest hour. City Press, 26 December:11.
Redmond, P. 2012. Directors’ duties and corporate social responsiveness. University of New South Wales Law Journal, 35(1):317-340.
Reed, D. 2002. Corporate governance reforms in developing countries. Journal of Business Ethics, 37:223-247.
Republic of South Africa. 1996. Constitution of the Republic of South Africa, Act No. 108. Pretoria: The Government Printer.
Republic of South Africa. 2003. Broad-Based Black Economic Empowerment Act No. 53. Gazette No. 25899. Pretoria: The Government Printer.
Republic of South Africa. 2004. Prevention and Combating of Corrupt Activities Act No. 12. Gazette No. 26311. Pretoria: The Government Printer.
Republic of South Africa. 2008. Companies Act No. 712. Gazette No. 32121. Pretoria: The Government Printer.
Roman, C., Roman, A. G. & Boghiu, A. 2012. The new governance and globalization. Theoretical and Applied Economics, XIX(1):113-126.
Rossouw, G. J. 1997. Unbundling the moral dispute: About unbundling in South Africa. Journal of Business Ethics, 16:1019-1028.
Salgado, I. 2010. ArcelorMittal in R96bn BEE deal. The Star, Business Report, 11 August:15-16.
Sartorius, K. & Botha, G. 2008. Black economic empowerment ownership initiatives: A Johannesburg Stock Exchange perspective. Development Southern Africa, 25(4):437-453.
Schlemmer, L. 2004. Business in change: Corporate citizenship in South Africa. Occasional Paper 2. Johannesburg: South Africa Foundation.
Sergeant, B. 2010. Govt. would do well to respect SA miners. Citizen – Money Web Business, 20 July:18.
South Africa. 2013. Mining and Minerals in South Africa: Factsheet. [Online] Available: http://www.southafrica.info/business/ economy/sectors/mining.htm [Accessed 11 June 2013].
Tangri, R. & Southall, R. 2008. The politics of black economic empowerment in South Africa. Journal of Southern African Studies, 34(3):699-716.
Taylor, S. D. 2007. Business and the state in Southern Africa: The politics of economic reform. Boulder, CO: Lynne Rienner.
Terblanche, B. 2012. Unpacking the draft rules of empowerment. Mail and Guardian Business, 19-25 October:7-8.
Thomas, A. 2012. Governance at state-owned enterprises. What do annual reports and the print media tell us? Social Responsibility Journal, 8(4):448-470.
Vaughn, M. & Ryan, L. V. 2006. Corporate governance in South Africa: A bell- wether for the continent?’ Corporate Governance, 14(5):504-512.
Whitehead, T. & Kotze, M. 2003. Career and life balance of professional women: A South African study. South African Journal of Human Resource Management, 1(3):77-84.
Wieland, J. 2005. Corporate governance, values management, and standards: A European perspective. Business and Society, 44(1):74-93.
Wiesenfeld, B. M., Wurthmann, K. A. & Hambrick, D. C. 2008. The stigmatization and devaluation of elites associated
with corporate failures: A process model. Academy of Management Review, 33(1):231-251.
Young, S. & Thyil, V. 2008. A holistic model of corporate governance: A new research framework. Corporate Governance, 8(1):94-108.
This journal is an open access journal, and the authors and journal should be properly acknowledged, when works are cited.
Authors may use the publisher's version for teaching purposes, in books, theses, dissertations, conferences and conference papers.
A copy of the authors’ publisher's version may also be hosted on the following websites:
- Non-commercial personal homepage or blog.
- Institutional webpage.
- Authors Institutional Repository.
The following notice should accompany such a posting on the website: “This is an electronic version of an article published in the African Journal of Business Ethics, Volume XXX, number XXX, pages XXX–XXX”, DOI. Authors should also supply a hyperlink to the original paper or indicate where the original paper (http://ajobe.journals.ac.za/pub) may be found.
The following Creative Commons license applies:
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
