/ 26 April 2018

Outa governance is ‘out of line’

Wayne’s world: Wayne Duvenage
Wayne’s world: Wayne Duvenage

The Organisation Undoing Tax Abuse (Outa), a champion of good governance at state bodies, has itself experienced major internal governance issues, according to documents obtained by the Mail & Guardian.

In the past 18 months, Outa has seen the exit of five directors and a chief operating officer. Four of the directors and the chief operating officer left Outa within a year of joining, citing concerns about Outa frontman Wayne Duvenage’s alleged lack of consultation with the board prior to spending significant amounts of money.

But Outa says its governance structures are sound. Duvenage told the M&G that the organisation’s “rapid growth required strong and decisive leadership because we were dealing with our supporters’ donations and taking on serious matters against corruption in government”.

Originally called the Opposition to Urban Tolling Alliance, Outa challenged the e-tolls system implemented by the South African National Road Agency Limited (Sanral) in Gauteng. After registering as a nonprofit company in 2012, Outa called for contributions from the public to raise the R3.1‑million it needed to fight Sanral in court. It was largely run by volunteers who earned no salary, including Duvenage.

The organisation grew substantially and remains entirely funded by the public. Outa’s financial statements show that, by December 2016, its total income stood at just over R21.4‑million and it had built up a litigation fund of R9.2‑million.

Outa has since expanded its scope and focus. It also advocates for good governance by state entities, running campaigns on state capture, energy, transport, communication, water, the environment and government policy.

But documents and emails obtained by the M&G, as well as several interviews with former directors and employees, indicate that the organisation has its own history of governance problems. Some of those who have left Outa have expressed concerns about its financial management during their tenure.

Rob Handfield-Jones resigned from Outa in July 2017 after about five months of service. In an internal email to the board and management, he stated that the “board is impotent and has no power to hold the executive to account” and that “the Outa board is, for all practical purposes, a rubber stamp”.

Handfield-Jones referred to a contribution of R100 000 made to the Ahmed Kathrada Foundation: “That enormous sum was spent on a whim without any reference to the board, which approves the budget. I have tried without success to locate a budget line in the last budget presented at the board meeting, which would encompass this expenditure in the month in question.”

This payment is also mentioned in a submission dated September 2017 to the Outa board by former director and executive committee member Rob Hutchinson. In his submission, Hutchinson made various allegations against Duvenage and asked the board to investigate them.

He claimed the amount donated to the foundation was not approved by the board, and that a R100 000 donation to the Save South Africa campaign, as well as a payment of R380 000 for advertisements in the Sunday Times and on News24 relating to the Future South Africa lobby group, were made without board approval. In his submission, Hutchinson requested that the board investigate whether Duvenage had made a unilateral decision to spend these amounts.

But Outa nonexecutive chairperson Ferial Adams said Duvenage did not act on his own. She said the decision to participate in forming FutureSA, a broad-based civil society group initiated and co-ordinated by the foundation, was taken by Duvenage, two directors (including Hutchinson, at the time Outa’s executive director for marketing and communications) and two senior managers, including the chief operating officer.

She said they were authorised to make the decision: “Management and certainly the CEO [chief executive officer] are mandated to authorise this expense and these are decisions that do not require ratification by the board.”

Duvenage told the M&G that the “SaveSA and FutureSA marches were unifying moments in our democracy. This would not have been possible without the collaboration and sharing of costs.”

The foundation said it was aware of the payment made to it, and had assumed that Outa’s internal processes were in order. The SaveSA campaign did not respond to queries.

In his submission, Hutchinson also asked the board to investigate the allegation that Duvenage allocated himself a salary of R160 000 without board approval.

Duvenage’s countersubmission confirms the amount. The M&G spoke off the record to an independent tax consultant, who said the salary was in line with industry norms for the chief executive of a nonprofit of Outa’s size, especially as Duvenage had worked for no remuneration for three years.

Adams said Duvenage’s salary had been approved: “At the time of decisions on the directors’ respective remuneration, all salaries were agreed to by the board members.”

Hutchinson was ultimately dismissed and his case is before the Commission for Conciliation, Mediation and Arbitration.

But other former directors also have concerns. Tiaan le Roux served as director and executive committee member for about 11 months, resigning in October 2016. Le Roux told the M&G that, when he had worked at Outa, Duvenage was responsible for the final approval of all financial expenditure and was the sole originator of significant financial expenditure, without accounting to the executive committee or the board.

“We were often made aware of certain expenditure only after the fact and were often never consulted, or consulted as an aside,” said Le Roux. “We had no access to bank statements or detailed reports on expenditure, and were not part of the authorisation procedure. The candidates and members of the board were de factonominated by Wayne and decided on by Wayne.”

But Adams said that, as Outa’s chief executive, Duvenage operated within the organisation’s policies and limits of authority: “During the initial growth period and still largely the case today, all expenses are (rightfully) approved by the CEO.”

Adams said that “the board is supplied with the financial statements, including balance sheets, on a quarterly basis and to the exco [executive committee] every month”. She said Outa’s financials were audited externally and the board could access the bank statements at any time.

Adams added that “every board appointment has been approved by the entire board”. She said the two most recent nonexecutive members were selected from more than 40 individuals, and shortlisted candidates were interviewed by both the executive committee and the board.

Ivan Herselman, who spent just under a year as an Outa board and executive committee member, resigned in October 2016. He told the M&G that, as the organisation grew, Duvenage “became possessive over executive and board decision-making”, including those that fell outside his field of expertise, which led to internal friction.

“After-the-fact attempts at seeking input and approval from the executive and board became more common occurrences as the conflict increased. This was very ironic, given that the organisation was founded to challenge the e-tolls: a complex decision to fund infrastructure, which was made in a nonconsultative fashion,” said Herselman.

Duvenage said in response that his “oversight as the CEO of Outa’s rapid structural changes required tough decisions that didn’t suit everyone. Some people who couldn’t accept the change or transformation saw this as autocratic, while others saw it as visionary and necessary.”

In email correspondence from March 2017, former chief operating officer Mike Roussos also raises concerns about the board’s role. Roussos had been approached by Duvenage to replace him as chief executive.

But in the email, Roussos told Duvenage that Outa’s “corporate governance structures were such that it would be very difficult for me to join and be the CEO … The reality is that you [Duvenage] are in effect both the chairman and CEO and the board played a very limited role. All these roles would have to change before it made sense for anyone to come in as CEO.” Roussos was instead appointed as Outa’s chief operating officer, but left the organisation shortly after the correspondence.

In his August 2017 email, Handfield-Jones voiced similar concerns about the board’s authority and lack of King IV compliance. “It [the board] is not constituted with a majority of nonexecutive directors and lacks several other critical elements, like a nonexecutive chair, an elected CEO and an independent lead director,” he wrote.

“The board has no oversight capacity at all. If we are going to fight organisations like Sanral, our on-paper governance structures should at least be equal to theirs, preferably superior. They are neither.”

Adams told the M&G that, “as the founding chairperson, Wayne Duvenage also fulfilled the role of CEO, which is permissible and common in organisations of this size at the time. However, the plan was always to appoint a nonexecutive chairperson. Subsequently, I was appointed to the chairperson position in the fourth quarter of 2017 and Wayne Duvenage’s formal title was amended to CEO. In addition, Outa’s board has decided to expand its number to eight directors, four of which are nonexecutive and four executives, with the chairperson role remaining in the arena of the nonexecutive director.”

Adams said that, since Outa’s inception, “quarterly board meetings have been held, culminating with regular annual general meetings. This is still the case, and in addition the exco meets on a weekly basis.”

On Herselman comparing Outa’s behaviour to that of Sanral, Adams said: “Outa is a nonprofit organisation and not a government entity and there is no basis for the comparison.”

Adams said that, in terms of the Companies Act, the application of King IV is discretionary but that, in late 2017, the board commissioned the Institute of Directors in Southern Africa to assess Outa’s governance. Following this, in March the board decided to become compliant with King IV.

* In late 2017, the M&G reached an agreement with Outa for the sponsorship of a supplement but it was never published. The M&G then agreed with Outa that Outa would be refunded a portion of the money while the rest was paid towards adverts that appeared in the M&G.