Corporate (2) SECTION A [40 MARKS] Read the case extract below and answer ALL the questions that follow. GOVERNANCE BODY WARNS AGAINST MABUZA'S DUAL ROLE AT ESKOM Having Eskom chair Jabu Mabuza also serve as the power utility's interim chief executive falls short of best practice guidelines outlined in Judge Mervyn King's reports on corporate governance, the CEO of the Institute of Directors of Southern Africa Parmi Natesan has warned. Eskom announced on Monday evening that Mabuza would serve as the interim CEO of the state-owned entity for three months, after Phakamani Hadebes resignation left the position vacant. At a briefing on Tuesday, Mabuza said he would be a "placeholder" CEO for the next three months in order to maintain "leadership stability" at the debt-laden power utility. "Selflessly I accepted this burden from the minister," he said, adding he would not serve longer than three months. Eskom started advertising for a new Group CEO in late July. 'Rigorously separate' Natesan cited Principle 10 of the King IV report, which says the CEO and chair of an organisation are quite distinct. And it adds: Good governance requires that the two positions be kept rigorously separate." "The chair leads the board in exercising oversight over management, and should be independent, while the CEO leads the management team. The CEO and his or her team are accountable to the board, and this separation of powers is vital to ensure the necessary checks and balances are in place," Natesan said. She stressed, however, that in Eskom's situation, it may have been a case of weighing the organisation's unique circumstances. The concerns raised were over governance best practice, not Mabuza's calibre as a person or executive, she added. "In the circumstances in which Eskom finds itself, appointing the chair as CEO as an interim measure, with the purpose of creating a stable transition period until a new CEO is appointed, may be in the best interests of the organisation," she said. Natesan urged Eskom to "properly address" a number of issues, namely to take clear steps ensuring that the lead independent director "plays an active role where necessary"; that the appointment of a permanent CEO is transparent; and that Mabuza's tenure as interim CEO not be extended while he also serves as chair. ANC deputy secretary general Jessie Duarte, meanwhile, said at a briefing on Tuesday that it is of concern to the party that "the same person will chair and be the CEO of Eskom". "We will raise the matter and concern with [Minister of Public Enterprises Pravin Gordhan]," he said. Case Extracted from :https://www.news24.com/fin24/Economy/governance-body-warns-against-mabuzas-dual-role-at-eskom-20190731-2 QUESTION 1 (40 Marks) 1.1 Is there anything wrong for Jabu Mabuza to assume a dual role of being both CEO and Chairman of the Eskom Board? Justify your response. (10 marks) 1.2 In light of the case extract, critically discuss the principles of the King IV report and their significance for corporate governance. (15 marks) 1.3 You have been requested by the Minister of Public Enterprises to present a report aimed at ensuring that corporate governance is improved in state owned enterprises such as Eskom. Using recommendations from the UK Walker review as your framework, discuss the contents of your report and how these can be implemented. (15 marks) SECTION B [60 MARKS] Answer ANY THREE (3) questions in this section. QUESTION 2 (20 Marks) Using relevant examples and illustrations critically discuss the sphere of corporate governance. QUESTION 3 (20 Marks) Time and time again investigations into a wide range of crises (including some within the financial services sector) have revealed that socio-technical factors are the underlying (i.e., root/core) causes of almost all disasters and crises (Tricker, 2014). Do you agree with this statement? Explain using relevant examples by referring to any two crises/ disasters of the 21st century. QUESTION 4 (20 Marks) Risk management is a process which entails the recognition, identification and assessment of risk, and the development of strategies to mitigate it. As with the fundamentals of risk management as a concept, managing personality risks involves recognising, identifying, assessing and mitigating risks associated with personality (Konzelmann, 2015). In light of the statement above critically discuss the following; 4.1 The relationship between corporate governance and risk management. (10 marks) 4.2 The relationship between corporate governance and personality. (10 marks) QUESTION 5 (20 Marks) Compare and contrast the following of models and theories of corporate governance; use illustrations to demonstrate your theories. 5.1 Stewardship theory and Agency theory. (10 marks) 5.2 Resource dependency and Enlightened shareholder theory. (10 marks)