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Who’s the Boss takes my mind back to the 1980’s when Tony Danza took the job as a live-in housekeeper after retiring from baseball. The show premise was based on role reversal and despite us being 30 years on, one could argue that something similar may be brewing at the Financial Services Board over ‘Twin Peaks’ regulation, and one sure question around is: Who’s the boss? Finance Minister Pravin Gordhan is carrying the weight of this country on his shoulders at present and the weight seems to get heavier by the day. (2016 Budgets, ‘junk’ status…) Last week Allan Greenblo published a piece looking at corruption allegations and mismanagement at the FSB following senior executive Rosemary Hunter’s court application. Below he focuses on the leadership concerns around ‘Twin Peaks’, and who really is listening to who as the lines of responsibility are blurred. It could open another Sars Wars scenario, as Gordhan is facing a similar battle with commissioner Tom Moyane with regards to restructuring. It’s another potential banana skin but at least Gordhan won’t be going into this new battle blind. Gloves are on. – Stuart Lowman
By Allan Greenblo*
With his eyes open or closed, Finance Minister Pravin Gordhan could find himself walking into a trap. Created by default and certainly not by design, his governance confrontation at the SA Revenue Service can be replicated precisely at the envisaged Financial Sector Conduct Authority.
It arises from the absence of a conclusive answer to what should be a simple question: Who’s the boss?
The division is in lines of responsibility. They become confused when the minister appoints a commissioner who must in turn report to the minister, but day-to-day operational duties rest with the commissioner.
The contradiction would probably would have escaped notice had it not been for the January blow-up at SARS. When Gordhan called on SARS commissioner Tom Moyane to stall the implementation of a restructure, Moyane effectively told Gordhan to take a hike.
The argument is that the commissioner, not the minister, runs SARS. Reporting to the minister on policy and performance is quite distinct from the minister having a right to intervene in micro-management or even in strategic decisions.
Now check the Financial Sector Regulation Bill, tabled in October and intended for enactment later this year. In setting up the Financial Sector Conduct Authority, the finance minister is to appoint the FSCA commissioner “who will be responsible for the day-to-day management and administration of the FSCA”.
In making the appointment, the minister and commissioner must agree in writing “on the performance measures that must be used to assess (the commissioner’s) performance and the level of performance to be achieved against those measures”. That’s it, and rightly so. An unwholesome situation would arise were the commissioner’s performance rendered better or worse by ministerial overrides.
But it leaves the minister exposed. With the FSCA, unlike SARS, operational responsibility goes beyond a domestic employer-employee arrangement. Ultimately it is the minister, not the commissioner, who has to provide the world with confidence in the conduct of SA’s financial institutions. Should the commissioner fall down on the job, the most the minister can do is institute the processes of an independent inquiry to remove him.
Now shift the focus to current goings-on at the Financial Services Board, being readied for absorption into the FSCA. The allegations on affidavit by FSB deputy executive officer Rosemary Hunter, against some of her most senior colleagues, might not make it much easier for the minister to appoint from present FSB ranks a commissioner and up to four deputy commissioners “with appropriate experience in the financial sector” as the legislation requires.
Once the Hunter case is underway, with allegations and counter-allegations to be cast hither and thither, the personnel switchover from the FSB to the FSCA could become more difficult still. And central to it, reverting again to ministerial powers of intervention, is why then finance minister Nhlanhla Nene had sat silently on the sidelines once Hunter had given him every opportunity and argument to push for a resolution.
In the FSB’s present incarnation, the minister appoints an 11-member board. Sitting below it is an eight-member exco. The FSCA will change it to a commissioner structure, the commissioner to chair an exco that “must oversee the management and administration of the FSCA to ensure that it is efficient and effective”.
Efficient and effective? Well, let’s see how efficient and effective it will be once all FSB staff are transferred (as per s285 of the Bill) to the FSCA. Or how top people will emerge from the probity criteria once Hunter has had her day in court. Or why the FSB integrated annual report, for the year to end-March 2015, is still publicly unavailable.
Some things won’t change, like the power to raise levies (from you and me) for funding of its operations. There never has been accountability to levy-payers by the FSB, and neither is there to be by the FSCA. Unlike JSE-listed public companies, stakeholders have no say on remuneration levels. It goes without question that the FSB’s top executive be paid a multiple of top civil servants’ remuneration.
Ah well, just a few more items for the plate of poor Pravin. But importantly now, in moving the Twin Peaks regulatory model to implementation, his recent experience at SARS cannot blind him to potential risk at the FSCA.
- Allan Greenblo is editorial director of Today’s Trustee (www.totrust.co.za), a quarterly magazine mainly for principal officers and trustees of retirement funds.
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