Minister Gungubele ordered to reinstate axed Sita board

The showdown between the State Information Technology Agency’s (Sita) fired board members and Communications Minister Mondli Gungubele took a turn when a court decided that they should be reinstated.

Following their expulsion in July 2023, the directors of the disbanded board, Makano Mosidi, Olwethu Ketsekile, and Rendani Ramabulani, filed a lawsuit against Gungubele to obtain an interim interdict.

Mosidi was the board chairperson.

Gungubele fired the board members after Dr Bongani Mabaso was appointed chief executive on a compensation package contract worth R4.5-million, which was outside the company’s salary range.

In accordance with the judgment, on April 12 2022, the former Sita board started a hiring process for a managing director.

On November 18 2022, the board wrote a letter to the then minister of communications, Khumbudzo Ntshavheni, stating the outcome of the recruitment process and making a recommendation on the appointment of the suitably qualified candidate.

The board told Ntshaveni that Mabaso’s remuneration expectation was R3.5-million, which was within the confines of Sita’s salary range and remuneration policy.

Following the cabinet’s approval of the appointment, Ntshavheni conveyed the message to the board.

Offer letter

However, on December 8 2022, the directors called a special board meeting and resolved to deviate from the cabinet’s decision and company policy by offering the Sita managing director a salary of 13% higher than the Sita grade.

This resulted in the board resolving to draft and submit an offer letter with a salary package of R4.5-million to Mabaso by the close of business on December 9 2022.

Mabaso accepted the offer and agreed to commence his duties in April 2023.

However, after President Cyril Ramaphosa appointed Gungubele to succeed Ntshavheni, Mosidi wrote to him on March 9 2023, informing him that although the request to begin the managing director recruitment process had been approved, Sita had not received any word regarding the approval of the terms and conditions.

Mosidi, in a letter to Gungubele, explained why the current offer to Mabaso was almost 13% higher than the Sita grade.

“During the negotiation process, it transpired that the candidate’s current salary is R2 500 000, which excludes the annual short-term and long-term incentives, plus R3 000 000 of unvested shares in Standard Bank, while the maximum of the F3 band at Sita is R3 976 409,” reads the letter in part.

“This deference translates to 38% above the maximum F3 salary; however, subsequent to negotiations, the candidate indicated his willingness to settle at R4.5-million, which is 13% above the maximum of the band.”

Failure to comply

Gungubele informed the board that although the cabinet had approved Mabaso’s R4.5-million package, it was concerned that the board failed to comply with Sita’s memorandum of incorporation in the correspondence from the minister dated May 25 2022.

He told the board that before it finalises the appointment of Mabaso, it should comply with the provisions of the memorandum.

The letter reads further: “The board of Sita failed to comply with the MOI [memorandum of incorporation], which is a serious dereliction of duties and governance transgression.”

After the board failed to comply, Gungubele requested written submissions on why the board failed to comply and further went beyond the scope of the Sita salary band to offer the R4.5-million salary.

Said Gungubele: “The above clauses emphasise the board’s obligation to report and obtain approval from the minister prior to appointing a candidate. However, the board failed, refused, and/or neglected to do so.

“In fact, your correspondence of May 30 2023, in reply to my query unequivocally demonstrates your dismal failure to comply with the MOI.

“It is against this background that I am of the view that you have wilfully or negligently committed misconduct in terms of Clause 12.6 of the agreement read with Section 83 of the PFMA [Public Finance Management Act].

“Such conduct by the board cannot be condoned, especially given the government’s financial constraints. The government and its entities have an obligation to exercise financial prudence.

“It is not in the interest of our department or the government as a whole to have an accounting authority that does not act in the best interest of the entity in line with the Companies Act.

“As the board, you have a duty to follow legal precedents in the decisions you make. In this instance, I believe that you failed to do so. This therefore serves as my notice of intention to remove the board.”

The board was appointed illegally

Mosidi hit back, saying she rejected the conclusion Gungubele reached that she and the board have breached their fiduciary duties and that they are failing to take any form of accountability.

When arguing in court, the trio said Gungubele could not claim that there were consultations and concurrence with the cabinet at the time when he penned his letter to them.

They also argued that, when appointing the new Sita board, Gungubele did not follow or comply with the constitutional prescripts.

They said Gungubele neither issued a public advertisement calling upon nominations for the appointment of the interim board nor did he embark on any transparent process.

Pretoria High Court judge J Yende said on Friday that the members of the board should be reinstated.

Appointments suspended

“The decision by the minister of communications and digital technologies dismissing the members of the board of directors of Sita on July 18 2023, or July 21 2023, will be suspended pending the finalisation of Part B hereof,” ruled Yende.

Yende also ordered that Gungubele’s decision to appoint the interim board of directors for Sita on July 21 be suspended.

“The removal and/or dismissal of the board of directors for Sita on 18 July 2023 or 21 July 2023 shall be suspended, and the board of directors of Sita removed or dismissed on 18 July 2023 or 21 July 2023 shall be reinstated with effect from 18 July 2023 pending the finalisation of Part B hereof.”

After the new board was appointed, Mabaso eventually left in December following allegations that there were board members who were undermining his authority by interfering in his duties.

Mabaso was announced last week as the Altron Group chief technology officer.

DA MP, Tsholofelo Bodlani, said: “The DA notes that the order is interim in nature and it still must be finally determined by the court.

“The minister’s meddling in the board’s functionality has brought us here. The board, although it must account to the executive authority, must have its independence guarded.

“In this case, especially against an overzealous minister who has no clue of the importance of the communications industry for our country’s prospects, the DA is watching with keen interest,” said Bodlani.

Sita’s spokesperson, Tlali Tlali, said: “The appointment and/or rotation of non-executive directors falls within the purview of the shareholder representative, as the entity [Sita] does not appoint non-executive directors who serve on its board.

“We therefore request that you direct your enquiry to the shareholder department for a response.”

Gungubele’s spokesperson, Hitekani Magwedze, said: “We can confirm that the minister has received the judgment, and at this point both himself and his team are studying it.”

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