High Profile employee who has misrepresented their qualifications and the Employer’s vetting obligations

Thabi Leoka’s fall from grace is the latest in a long list of employees and high-profile individuals who have misrepresented their qualifications or “propped up their qualifications” on their CVs to secure positions, usually of high-level positions with correspondingly high remuneration.

On 22 January 2024 it was announced that Ramaphosa had “axed” her from the Presidential Economic Advisory Council after the news broke that she is accused of faking her PhD degree from the London School of Economics. She has subsequently resigned from the boards of Anglo Plats as well as MTN.  

Integrity and honesty is the cornerstone requirement for many of these positions, such as Municipal Chief Financial Officer particularly the fiduciary duties ascribed to directorships of boards, irrespective whether as an executive or non-executive director.

Irrespective of whether the individual meets the minimum criteria for the post, or because she was a “consummate professional and her integrity was beyond reproach” as disclosed by Netcare the very act of misrepresenting qualifications is in and of itself dishonest. Indeed Netcare’s response is a misnomer given that integrity is underpinned by honesty.

It is no wonder that Joe Public has lost faith in the system and these high profile appointments as nothing more than “window dressing”, nepotism etc.

It does beg the question, how is it possible that someone like Thabi Leoka was appointed to the Presidential Economic Advisory Council, and the respective listed companies’ boards such as Amplats, MTN, and formerly Netcare and Remgro, without due diligence and a proper vetting being done before her placement her in these positions requiring the highest standard of trust.  

As from 2019, the National Qualifications Framework Amendment Act stipulates that it is a criminal offence to misrepresent qualifications. The punishment for doing so may be a hefty fine and / or imprisonment for a period of up to five years. The National Qualifications Framework, furthermore, advises employers to conduct verification checks with the National Learners’ Records Database before appointing potential employees.

It is the employer’s obligation to perform due diligence when hiring individuals, especially those in positions of trust, and it cannot be overemphasised the need to thoroughly verify all qualifications and other details in CVs before making an appointment.

The Board of any company is further encumbered, over and above its common law duties, by the statutory fiduciary duties of directors as provided for in the Companies Act.

The directors fiduciary duties compel them to act honestly, in good faith and in a manner that they reasonably believe to be in the best interest of, and for the benefit of their companies.

Further section 76(4) provides that “in respect of any matter arising in the exercise of the powers or the performance of the functions of a director, a director will have satisfied the obligations in section 76(3) of the Act, if the director: has taken reasonably diligent steps to become informed about the matter; has made a decision, or supported the decision of a committee or the board with regard to that matter; and had a rational basis for believing, and did believe, that the decision was in the best interests of the company.”

In further compliance with this section, “a director is required to communicate to the board, at the earliest practicable opportunity, any material information that comes to his or her attention, unless he or she: reasonably believes that the information is publicly available or known to the other directors; or is bound by a legal or ethical obligation of confidentiality.”  

Employers are obliged to report this kind of misrepresentation to the state under the Prevention and Combatting of Corrupt Activities Act. An employee who participates in fraud, such as in cases of misrepresentation of quoalifications, should be criminally liable for such deception.

It is trite that an individual who misrepresents her/his qualifications to secure a position may be held criminally liable, but what about the liability of the other directors in the above circumstances?

The potential liability of the directors of a board, who have breached their fiduciary duties in not exercising due diligence and thoroughly vetting any person before appointing to its board is also regulated by the Companies Act.

In general, a director may be held liable for any loss, damages or costs sustained by the company as a consequence of any breach by the director of their duties, under common law as well as in terms of the Companies Act particularly section 76. A director may also be held liable “where that director: purports to bind the company or authorise the taking of any action by or on behalf of the company without the requisite authority; acts in the name of the company in a way that is false or misleading; or knowingly or recklessly signs or consents to the publication of a financial statement which is false or misleading.”

It is self-evident that before appointing anyone to a company’s board that proper due diligence is exercised otherwise the other directors may well face action for their breach of their fiduciary duties by failing to so act and not only the director who has misrepresented her qualifications and brought the name of the company into disrepute.

*Please be aware that this article is intended for informational purposes only and such does not constitute legal advice. If you require specific legal guidance or further information, we encourage you to reach out to us for expert assistance. We can be contacted at Allardyce & Partners 011-234 2125 or enquiries@allardyce.co.za and labour@allardyce.co.za.

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