When Governance Fails, Everyone Pays

South Africa knows this cost well. The collapse of Steinhoff, accounting irregularities at Tongaat Hulett and the findings of the State Capture Commission exposed different failures of leadership and oversight. Together, they raise a question that every governing body should confront: can we demonstrate that our governance works in practice?

Having a board, policies, committees and reporting structures is an important starting point. Effective governance also requires reliable information, independent scrutiny and the willingness to act when the evidence is uncomfortable.

King V gives organisations a timely reason to examine those disciplines—and the evidence behind their governance disclosures.

At a glance

• Governance failures affect people far beyond those responsible for the decisions.

• Five practical weaknesses deserve attention: delayed information, incomplete decision records, inadequately managed conflicts, unresolved actions and warnings that do not receive an effective response.

• King V introduces a dedicated Disclosure Framework to support more consistent and comparable governance reporting.

• Technology can support visibility and accountability, but effective oversight still depends on ethical leadership, judgement and action.

The consequences extend beyond financial losses

When Steinhoff’s share price collapsed in December 2017, the damage extended beyond its shareholders to retirement investments and confidence in corporate reporting. In December 2019, following a briefing by the Public Investment Corporation and Government Employees Pension Fund, Parliament’s Standing Committee on Finance expressed concern about recovering approximately R20 billion lost in the matter. That figure concerned the PIC/GEPF context discussed by the committee; it was not a measure of total losses across all investors.[1]

Tongaat Hulett offers another warning about the consequences of unreliable financial information. Accounting irregularities and subsequent restatements undermined confidence in reported performance. The company entered business rescue in October 2022 amid financial distress. Its announcement also identified working-capital constraints and other pressures, illustrating why the causes and consequences of a corporate crisis must be assessed carefully.[2]

In the public sector, the State Capture Commission documented how compromised appointments, procurement and institutional oversight weakened accountability. The damage extended to public institutions and their ability to serve the people who depend on them.[3]

These cases differ in their facts, responsibilities and legal outcomes. They nevertheless underline a common governance challenge: formal arrangements offer limited protection when information is unreliable, scrutiny is compromised or concerns do not lead to effective action.

Five weaknesses boards should examine

The following five areas provide a practical lens for assessing oversight. They are a synthesis of governance lessons, rather than a claim that every case involved the same failures.

1. Information arrives too late

Directors need information that is timely, relevant and sufficiently reliable to support informed decisions. When reporting is delayed, filtered or disconnected from operational reality, the governing body may be responding to yesterday’s risks.

The discipline goes beyond producing more reports. Boards need to understand where information comes from, challenge inconsistencies and seek independent assurance where appropriate.

The question to ask: Are material developments reaching the governing body early enough for it to act?

2. Decisions lack a reliable record

Accountability becomes difficult when an organisation cannot establish what information was available, what concerns were raised or why a decision was made.

A reliable record should capture the substance of significant decisions, including relevant considerations, approvals and responsibilities. It should help explain the decision in context without becoming a substitute for sound judgement.

The question to ask: Could we reconstruct a significant decision and explain its basis?

3. Conflicts are declared but inadequately managed

A declaration of interest begins a process. Its value depends on how the organisation assesses the conflict, manages participation in the decision and records the steps taken.

Boards should be able to demonstrate that their arrangements address both actual conflicts and circumstances that could reasonably undermine confidence in the process.

The question to ask: Can we show how declared interests affected participation and decision-making?

4. Resolutions lack follow-through

A resolution in the minutes does not establish that anything has changed. Agreed actions need clear ownership, realistic deadlines and a route for escalation when progress stalls.

Repeatedly carrying the same unresolved matter from one meeting to the next can create the appearance of oversight while leaving the underlying risk untouched. Completion should also be assessed for effectiveness: an action marked closed may not have resolved the problem.

The question to ask: Do we know which commitments remain outstanding, why they are delayed and whether completed actions worked?

5. Warnings do not receive an effective response

Risk reports, compliance concerns and whistleblowing disclosures have limited value if they fail to reach the appropriate people or receive objective consideration.

Organisations need safe reporting channels, clear escalation responsibilities and appropriate protection for those raising concerns. The governing body should understand how significant matters are assessed and followed through, while respecting confidentiality and due process.

The question to ask: Can serious concerns reach independent oversight and receive a documented, proportionate response?

These weaknesses reinforce one another. Poor information weakens decisions. Incomplete records obscure accountability. Unresolved actions allow risks to persist. Examining them together helps a board assess the quality of its oversight across the organisation.

King V: credible disclosure needs credible practice

The King V Report on Corporate Governance for South Africa was released on 31 October 2025, superseding King IV. Disclosure on its application is effective for financial years commencing on or after 1 January 2026, with early adoption encouraged.[4]

A significant development is the dedicated King V Disclosure Framework, which supports greater consistency and comparability in how organisations explain their application of the Code.[5]

Effective governance, ethical leadership and accountability were already central to King IV. King V should therefore prompt organisations to examine the substance of their practices, alongside the revised reporting framework.

The practical implication is straightforward: credible disclosure needs a credible foundation. A statement about oversight is stronger when the organisation can explain how risks are escalated, how decisions are informed, how responsibilities are assigned and how effectiveness is assessed.

That foundation is built throughout the year. It depends on everyday working practices, supported by appropriate records and scrutiny. Preparing the annual governance disclosure should draw on those practices rather than require a last-minute effort to reconstruct them.

Documentation matters, but it is only part of the picture. A complete record can show that a process was followed. The governing body must still assess whether that process supported sound decisions and meaningful outcomes.

Connecting governance to everyday work

Governance information often sits across separate teams and systems. Risk registers may be maintained independently of performance reports. Compliance concerns may appear in one committee’s papers while related actions are tracked elsewhere. Meeting minutes may record commitments without giving leadership a clear view of what happened next.

Connecting these activities can help governing bodies understand the relationship between risks, decisions, responsibilities and results.

This is the thinking behind Augility. Its governance, risk, compliance, audit, BoardHub and performance capabilities support teams in organising oversight information, assigning responsibilities and monitoring progress. Bringing these disciplines into a connected platform can make it easier to prepare for meetings, follow up on agreed actions and examine the information behind reported performance.

For directors and assurance teams, the value lies in practical questions:

• What information informed the decision?

• What was agreed, and who owns the next step?

• Which actions are overdue or require escalation?

• What evidence supports the reported position?

• Did the response address the underlying issue?

Technology supports these disciplines. Ethical leadership, independent judgement and the willingness to challenge remain essential. A platform cannot guarantee that misconduct will be prevented or that every decision will be sound.

Its contribution is to help people maintain the visibility, records and follow-through that effective oversight requires.

Make oversight effective before a crisis

The lessons from South Africa’s governance failures extend beyond the organisations involved. They concern the responsibility entrusted to anyone who makes decisions on behalf of others.

Boards should regularly test whether significant risks are visible, difficult questions are welcomed and commitments lead to action. They should also examine whether their information and assurance arrangements help them recognise when the organisation’s reported position differs from its operational reality.

Strong governance helps organisations identify problems sooner, respond more effectively and account for the choices they make. Its effectiveness is demonstrated through decisions, conduct and outcomes over time.

Governance is demonstrated by how an organisation makes decisions, how it responds when things go wrong, and what it can show when accountability is required.

Explore connected oversight with Augility

See how Augility can support your governance, risk, compliance, audit, board management and performance priorities. Book a focused demonstration.

Sources

1. Parliament of South Africa, 3 December 2019: Finance Committee Expresses Displeasure on the Slow Pace to Recover R20 Billion Lost in Steinhoff.

2. Tongaat Hulett, 27 October 2022: Tongaat Hulett Limited and Tongaat Hulett Development Enter Business Rescue in South Africa.

3. Judicial Commission of Inquiry into Allegations of State Capture: Reports.

4. Integrated Reporting Committee of South Africa, March 2026: FAQ: King V and the Integrated Report; King V launched in South Africa, 4 November 2025.

5. Institute of Directors in South Africa: King V publications and King V Disclosure Framework.