Judge Mandla Mbongwe in the Gauteng High Court did not hold back when he handed down a damning judgment in the urgent application launched by the suspended Public Investment Corporation (PIC) CEO, Patrick Dlamini. The court ruled in Dlaminiâs favour on all counts, declaring his precautionary suspension of 13 July unlawful, invalid and of no force or effect, setting it aside with immediate effect.
Because the board bypassed mandatory statutory and contractual prerequisites, the court ruled that âthe suspension was, therefore, ultra vires and invalidâ.
The judgment contains some of the most severe judicial rebukes of state-owned enterprise board governance in South African legal history:
On the boardâs rogue, unilateral conduct:âNone of these prerequisites were met. The board acted unilaterally, without ministerial approval, and in disregard of its own policies.ââWhistleblower protections safeguard whistleblowers from retaliation. They do not, however, confer powers of suspension on the board.â
On the misuse of whistleblower frameworks:âThe boardâs reliance on whistleblower principles cannot cure its lack of authority ... internal policies cannot override binding statutory or contractual provisions.â
On the failure of internal policies to cure illegality:
On the grave public-interest threat of sidelining the CEO:âIn the present matter, the invalid suspension of the PICâs chief executive officer and the sudden resignations of several board members pose a grave threat to the stability of government investments across numerous sectors of the economy.â
The âtoo ghastly to contemplateâ sovereign warning:âThe potential destabilisation of the PIC carries with it the risk of massive economic harm to the national economy; harm so profound that it is, in truth, too ghastly to contemplate.â
On the threat of systemic governance collapse:âIt is precisely a threatened systemic collapse in these aspects, coupled with the constitutional obligation to protect the economy and uphold good governance, that imbues the present application with the urgency it demands.â
Parting shots
This judgment is, as predicted, an absolute vindication of Dlaminiâs legal strategy and a severe condemnation of the previous boardâs rogue behaviour.
By attempting to use whistleblower principles as a weapon to bypass the minister of finance, the previous board â under the oversight of Deputy Minister David Masondo â triggered its own destruction, a sovereign rating risk, and a Financial Sector Conduct Authority probe.
But this victory does not dismiss the Acapulco sword hanging over the reinstated CEOâs tenure. There is still the R900-million damages claim against him and all the fiduciary duty questions to be answered. DM