RYK VAN NIEKERK: Banking group Absa announced today that it had fired Sipho Pityana from its board. Absa said in the statement that it took the decision after Mr Pityana met with the board to respond to allegations that he had not performed his functions as a director properly, and that he acted in his own interest and not in Absa’s best interest. According to the statement, the board considered his responses, but concluded he had acted in his own interest and that it created a material and sustained conflict between the parties.
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Mr Pityana’s dismissal followed after he sued the Prudential Authority of the Reserve Bank in October, claiming his nomination to become Absa’s chairman had been unfairly blocked after former Absa CEO, Maria Ramos, informally informed the authority’s head, Kuben Naidoo, of a sexual harassment incident and investigation involving him when he was the chairman of AngloGold Ashanti.
Mr Pityana said today that he will take this decision by the Absa board on review.
He is on the line. Sipho, thank you so much for joining me. A lot has happened over the past few weeks. Did it come as a surprise to you that the Absa board fired you?
SIPHO PITYANA: No, it didn’t at all. The Absa board right at the outset expressed a clear view that I shouldn’t challenge the regulator. Of course, in terms of the law I am entitled to do so, and so is the board entitled to challenge them. I’m an affected party in a material decision that the regulator took, and advised the board that in light of the fact that the feedback that they received from the regulator had directly constituted a direct attack on my integrity and standing and reputation, I therefore had no option but to challenge the regulator.
I also made the point to the board that beyond the attack on my person, the interference by the regulator in a role that is otherwise the preserve of the board should have meant that the board in fact also joined me in the action to challenge the regulator. I couldn’t persuade them to take that view, but my perspective remained that. That’s the first point.
The second point is that since I took that decision, as you would know, I was asked to resign from the board because the Absa board felt that by taking that decision I was in turn attacking the Absa board and implying that they, like the regulator, may have acted unlawfully, even though my court papers are very clear that I have cited them as an interested party. But I’m seeking no relief against them.
Thirdly, they also, as you know, recently removed me from the position of being lead independent director and chairman of the remuneration board, in order to express their displeasure at my determination to challenge the unlawful conduct of the regulator. So this time they’ve decided to remove me from the board, which I have to say is unbelievable that – in a country of a constitutional order – approaching the courts in pursuit of one’s rights is such an offence to a leading corporate of Absa’s standing that I would be removed from my board. I’m disappointed and I think it’s an outrage.
RYK VAN NIEKERK: The Prudential Authority responded to your initial affidavit and said your name was not put forward as a candidate to become Absa’s chairman by the Absa board. It said it could therefore not block your appointment. What is your response to this?
SIPHO PITYANA: It’s disingenuous, quite frankly. The fact of the matter is that if the board of Absa did not put my name forward for the chairmanship of Absa, the discussion that the regulator had with Absa would not have arisen. The inquiries that they had, which were irregular inquiries about my appropriateness for the role through the informal process that they undertook, would not have arisen.
The point that they are making, though, is that the submission of my name formally as a nomination in terms of the prescribed provisions of the law did not occur, and the reason it did not occur – and I think that [Wendy] Lucas-Bull makes it clear in her affidavit – [is] that the regulator, the Prudential Authority clearly indicated to them that they were concerned.
That’s what now Wendy says, but in the feedback that she gave me, she told me in no uncertain terms that the regulator made it clear that they would object to my candidature if the board put forward my name. The effect of that was basically that, as a result, the board decided to not proceed with my name.
So, in essence, this idea that I was never nominated is absolutely disingenuous if not dishonest, because they know that they stopped the board of Absa from submitting my name formally at all, by interfering with the process at the stage of the selection exercise, where they were not supposed to in terms of the law.
RYK VAN NIEKERK: Just take us back. If I understand you correctly, there was the intention to put your name forward to the Prudential Authority to become the chairman. That was officially discussed at a board meeting, but due to the informal interaction of Ms Maria Ramos with Kuben Naidoo, the head of the Prudential Authority, the authority then proactively said, no, we won’t accept his nomination.
SIPHO PITYANA: Exactly. It was more than an intention. There was a presentation of my name to the Prudential Authority, through what I refer to as an informal process, which saw the Prudential Authority give its own opinion with regard to that, and influenced by feedback that they say they obtained from Ms Maria Ramos in respect of whatever it is that allegedly occurred at AngloGold Ashanti.
So clearly you can’t have those kinds of conversations and not afford me as an affected party an opportunity to be heard. The processes around appointment of directors allow the Prudential Authority a role. They assign a role to it. The board must decide on the person that it deems appropriate for the role. Once it has done all the assessments and all of this, it then, in a prescribed form, submits the name of that person. And only at that point does the Prudential Authority get into the picture and scrutinise the name of that person, and investigates if there are issues that arise.
If there’s an issue arising from my tenure at AngloGold Ashanti, whether they obtain that from talking to Maria or anybody else, there is nothing that stops them from obtaining that – but through a proper process. And then that would allow me to put my point of view across.
In this instance that was not allowed; everybody else was talking to the Prudential Authority except me.
And once they will have taken a decision the law allows me, if I’m not happy with the decision that the Prudential Authority takes, an opportunity to object to it. They have to give reasons for the decisions they have taken. I can object to that, and there is a provision that an arbitrator may be appointed who then assesses my objection and comes to a view.
Now, all of those rights that I am accorded in law are denied because all of this matter is decided through an informal process that strips me of all of the rights that I’m accorded in law. In that situation, I’m entitled to approach the courts of the land to restore my rights and to restore my dignity.
RYK VAN NIEKERK: Did you object formally to the Absa board against this development?
SIPHO PITYANA: I did, and I made it clear to the Absa board that, in light of the fact that there has been an informal signalling by the Prudential Authority that they would object, it’s import is that, beyond just blocking my appointment as a chair of the board, the Absa board may in fact have somebody among its directors who may be considered not a fit and proper person. Now, if one takes their fiduciary responsibilities seriously, all the more reason why you would want to have the Prudential Authority make that view clearly, so that not only am I denied an opportunity to be the chairman of the Absa board, but I can be removed as a director of the board because no board, particularly no board of a bank, should have a director in its ranks that may not be a fit and proper person.
So the fact that they left it at the level of informal conversations denied shareholders and other interested parties in the business of Absa from scrutinising a director who potentially was not a fit and proper person, and left it in the realm of informality.
That in my view is negligent and derelict on the part of the board, because it must be so that you would want to ensure that if there is a sniff of a possibility of somebody not being fit and proper, you must want the Prudential Authority to follow through with that allegation.
RYK VAN NIEKERK: What was the board’s response to that point?
SIPHO PITYANA: They objected. They said that they don’t want to offend the regulator – which has made it clear that they would not support my nomination and they would object if it was tabled. I know that Naidoo in his affidavit said the request [for] the board to submit [to] Wendy Lucas-Bull makes clear that it was not a real invitation to submit, it was an irritated Prudential Authority who was saying, look, enough with this informal process. We have told you that we will object to this person if you submit their name and, as a consequence, we believe that if you are not persuaded by what we’ve told you, make a formal submission and we’ll do what we have to do.
In my view, the responsibility of the board should have been to follow through with that. But in their wisdom they decided not to. The fact of the matter is that whatever the board decided, the communication by the Prudential Authority of their intention to object – or of what they now call their concerns – about my potential possible appointment as a chairman prejudiced me, without ever affording me the opportunity to be heard.
That is a serious violation of my rights. It impugns my character without affording me an opportunity to defend myself. In that situation I’m only obligated and compelled to approach the courts to protect my name, my integrity, and everything that I’ve worked for.
RYK VAN NIEKERK: Who within the Absa board is driving this, and do you think the Absa board is united in the decision to fire you?
SIPHO PITYANA: Well, I don’t think that it matters, actually, whether it’s some or all. The reality of the matter, to the extent that it is decision of the board – whether it’s a majority decision or a unanimous decision – from where I sit I understand it to be a unanimous decision of the board. So, secondly, whoever it is behind it, it is just wrong.
RYK VAN NIEKERK: Of course the relationship between you and the other board members would have broken down as a result of what has transpired, and you have indicated in a statement that you would take the Absa board’s decision on review. Do you think it would serve a purpose to do that?
SIPHO PITYANA: Well, it’s interesting that you should say that, because yesterday in our conversation I asked the same question.
The only point of difference between myself and my colleagues on the board is this issue. I have not seen a manifestation of a breakdown in the relationship between myself and the rest of the colleagues on any other issue.
So independence of directors is about that from time to time you differ on issues, otherwise we shouldn’t be having boards made up of independent directors. So, if you have a board made up of independent directors, their relationship must be characterised by tolerance of differences of views, and those differences of views shouldn’t shape attitudes towards each other.
I was appointed on that board as an independent director to bring my perspective and independence of thought. I have to tell you that my sense is that other colleagues similarly bring their independence of thought on the board. As a result we will differ from time to time; there may be matters around which directors take a different view from the rest and vote against a resolution, or abstain.
That’s in the nature of boards of directors. They should never be made up of people who think alike and are aligned at all times. I am not an employee of Absa. I’m an independent director. [It’s] one of the strong reasons why I believe that a court of law should come to a view that, as an independent director, I should be allowed to express my independent view, and that it’s inappropriate for a board to remove one only because they disagree with this.
But, more fundamentally, I would like to believe that there is no court that would entertain the idea that the mere challenging of a regulator’s unlawful conduct constitutes a dereliction of duty. How can that ever be?
RYK VAN NIEKERK: You make some very serious claims against the Prudential Authority, including that they acted unlawfully. That is a very, very serious allegation.
SIPHO PITYANA: That is correct. It’s not one I make lightly. It is also so that if I didn’t believe that they acted unlawfully, I wouldn’t have taken them to court. I wouldn’t have taken the risk of upsetting the board, certainly the chairperson of the board, to the extent that I seem to have done.
But my view is that I strongly believe that the financial services environment is at the heart of the economy, and its conduct must be within the law. If it’s outside of the law it will [affect] every aspect of society, the economy, the public life, the exposure of ordinary citizens, and so on. You cannot have a regulator that is supposed to be the entity that you rely on to hold the line – with regard to the conduct of banks, insurers and others in society, in the financial services space – capable of acting outside of the law. What does that mean for the rest, because they’re supposed to hold the line?
So from my perspective, in thinking about the decision I take in this regard, all those considerations came to mind, and I believe that we cannot afford to have a regulator in the Prudential Authority of the South African Reserve Bank conduct itself unlawfully and get away with it. It could be wrong, it could be unacceptable.
RYK VAN NIEKERK: What would you want to be the outcome of this legal action? What do you think would be the best outcome for you?
SIPHO PITYANA: Well, I’ve asked the court to declare that the conduct of the regulator [was] unlawful and restate the parameters so that there isn’t a misunderstanding of what those parameters are, because, if it was as clear as I thought it should be, I shouldn’t be at different places with some of my colleagues on the board of Absa. And certainly I shouldn’t be at different places with the regulator.
If you read their papers, they agreed that they interfered with the process, but they don’t think that it was unlawful for them to do so. It seems that the Absa bank also holds the same view.
I hold a different view. I know that there are other people that have been affected similarly with regard to the conduct of the Prudential Authority in various instances as candidates for directorships on the board, because the regulatory framework that is used to decide whether a person is fit and proper to be a director is the same as one that is used to determine public officers of banks.
So I’m not the first person to encounter what I’m going through. I may be the first person to actually have the temerity to challenge it. And that’s why the Absa board is so upset.
There is one point that I would like to raise, though, which worries me about the reaction of the Absa board.
If we are to believe that the Reserve Bank is independent, as it should be in terms of the Constitution, why does my challenge of the Reserve Bank invoke such anger and upset on the part of the Absa board?
What does that mean in terms of public perception of separation between Absa and the Reserve Bank?
I would like to believe that if the Absa board believed in the independence of the judiciary of this country, they would wait, allow the legal processes that they were in the middle of – where they have also filed their papers opposing my motion – to complete and come to a view once those would have been [dealt with].
It seems to me that their rush – their mad rush to take action against me, putting pressure on me to try and stop me from taking the action that I believe is my constitutional right – is outrageous.
RYK VAN NIEKERK: Phew. Do you want to be reinstated on the board?
SIPHO PITYANA: Well, from my perspective, my application to court for a review of the decision of Absa yesterday [November 23] is to exactly achieve that.
It is to ask the courts that the decision of the board was unlawful and that I should be reinstated back in my position as a director on that board, as an independent director of the board, because to allow this would set a very dangerous precedent in terms of what becomes of directors.
You must remember that it is exactly because independent non-executive directors failed to exercise their independence – on the boards of Steinhoff, on the boards of Hulett Tongaat [sic], on the boards of a number of corporates that have failed phenomenally in this country – that we’ve seen these. It must be so that our guard must be up when the independence of directors is attacked in the way that my right as an independent director on the board of Absa is being attacked.
RYK VAN NIEKERK: We’ll have to leave it there. Thank you Sipho. That was Sipho Pityana.