AUGUST 2020 SUPPLEMENTARY/AEGROTAT EXAMINATION

TAKE HOME ASSESSMENT QUESTION & ANSWER BOOKLET

PROGRAMME MASTER OF BUSINESS ADMINISTRATION NQF 9

MODULE GOVERNANCE AND SUSTAINABILITY

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INSTRUCTIONS TO CANDIDATES:
1. This is an official assessment of REGENT Business School and only bona-fide students are entitled to write the
assessment for the modules they are registered for.
2. Students are required to type in the answers in the question & answer booklet below each question.
3. No handwritten submissions will be processed.
4. The completed assessment must be submitted within the stipulated timeframe.
5. Students are reminded to submit their work as their own – no group work is permitted.
6. Students are reminded to convert their completed assessment to PDF before uploading onto the student portal.
7. Candidates are required to answer ALL questions.
8. This is an open book examination.

DATE: 04 August 2020 TIME: 08h00 – 13h00

DURATION: 5 hours MARKS: 100

EXAMINER: JE David MODERATOR: K Kharsany

FOR OFFICIAL USE ONLY

QUESTIONS 1 2 3 4 5 6 7 8 9 10
EXAMINER
MODERATOR
QA

This question paper consists of five (5) typed pages excluding the cover page
QUESTION ONE [40]

Read the following case study and answer questions 1.1 and 1.2 below:

STATE CAPTURE INQUIRY: OPPERMAN ADMITS ESKOM, TEGETA

DEAL WAS ‘FISHY’
EWN Clement Manyathela 2019

JOHANNESBURG - Eskom's Gert Opperman says when he knowingly approved an irregular pre-
payment deal between Gupta-owned company Tegeta and the power utility, he genuinely
thought Eskom would get value out of the arrangement.

Opperman testified at the state capture commission about the R659 million payment Eskom made to
the company to help it purchase Optimum coal mine.

The payment was made even though the Gupta company had not provided any services to the power
utility. Treasury investigated the payment and found it to be unlawful.

Opperman says he knew from the beginning that something was fishy about the pre-payment to
Tegeta because he was expected to sign it without sufficient documentation.

“In my nine and a half years in this capacity, it was the first time I had to do this.”

Deputy Chief Justice Raymond Zondo asked Opperman this question: “Were you concerned in any
way that by signing you were allowing yourself to be a party to something in particular?”

Opperman replied while he raised his concerns about the deal with his managers, he didn’t get
satisfactory answers. “When I read the agreement, I felt comfortable that we would get the value for
what was paid.”

Source: https://ewn.co.za/2019/03/09/state-capture-inquiry-opperman-admits-eskom-tegeta-deal-was-fishy. Accessed on 1 February 2020.

1.1 Gert Opperman appeared before the State Capture Inquiry in connection with the Eskom and
Tegeta and, among other things, said that “… he knowingly approved an irregular pre-
payment …” and that “… he genuinely thought Eskom would get value out of the
arrangement.” Off course, he was one among many at Eskom that placed the organisation is
a precarious position.

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 Reflecting on the case study, critically argue whether the personal judgement of Opperman that
Eskom would get value for what was paid is acceptable. In so doing, support your arguments
using established mechanisms and tools for good governance. (25)
1.2 Opperman makes certain contradictory and suspicious statements in the above case study.
Identify these statements and then:
i) argue whether behaviour can be evaluated through actions and words; and
ii) using the arguments expressed in (i) above, critique Opperman’s behaviour based on
his evidence at the State Capture Inquiry. (15)

QUESTION TWO [20]

Examine the Triple Bottom Line (TBL) as an approach toward the sustainability of an organisation
and critique its feasibility in achieving the desired results.

QUESTION THREE [40]

Read the following and answer the questions that follow:

Valuing Social Capital

Events over the last year have revealed that a number of cracks in the veneer of South Africa’s post
apartheid social compact. More than two decades following the transition, the country’s progress
towards the ideals of a world-class economy and racially inclusive society is the subject of much
current debate. In particular, the recent #feesmust fall and #rhodes mustfall movements have signalled
a growing chasm between key parts of society and its institutions.
Social capital can be defined as the relationships between individuals and/or groups, and the resulting
ability to secure or obtain resources, knowledge and information to enhance individual and collective
wellbeing. In South Africa many commentators have argued that reserves of social capital - and thus
the means of achieving collective goals – may be dangerously low.
A scan of recent business news makes it clear that such schisms are not unique to the world of
government or higher education institution s and their stakeholders. Local and international illustrations
of broken trust and failure of stakeholder relations in the private sector abound. Cases such as Lewis
store’s perceived customer deception, Volkswagen’s fraudulent carbon emissions reporting, and
MTN’s clash with regulators in Nigeria, its largest market, demonstrate the impact that inattention to
social capital can have on a business.
Social capital is essentially about relationships, an area of familiar, but often taken-for-granted territory.
By placing the six forms of capital (of which social capital is one) at the centre of their reporting
framework, the International Integrated Reporting Council (IIRC) has raised the profile of non-financial
resources within the business community. While businesses and managers are generally familiar with
the notion of stakeholder engagement, their emphasis is often more on the means, or identifying and

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consulting stakeholders, than the ends, or the nature and quality of relationships at the core of social
capital.
Three major dimensions can guide the determination and measurement of social capital:
• Firstly, social networks refer to the shape and structure of connections that an organisation may
have. Social networks relate to influence and expectations.
• Secondly, trust and reciprocity underscores the quality of relationships. The degree of trust in a
relationship and a shared willingness to provide support are essential elements of social capital.
Trust is a key feature of business interactions with external stakeholders. Internally trust can
facilitate interactions between employees and management.
• Thirdly, the notion of shared norms and values emphasises the importance of established
standards of behaviour and beliefs among members of a group or network. While diverse norms
and values have been shown to inspire creativity and innovation, common norms and patterns of
behaviour are generally linked to effortless communication, increased efficiencies in decision-
making and problem solving, and streamlined organisational change.

In South African social networks, many have criticised the rise of so-called ‘tenderpreneurs’ who
leverage their personal, professional or political connections, and position in social networks to unfairly
secure business and benefits to themselves, their families, friends or own firms. While such strategies
may generate lucrative short-term returns, there are increasing examples of how unethical behaviour
can ultimately lead to the downfall of not only individuals and companies involved, but also the
networks they belong to. The impact of Bernie Madoff’s fraudulent investment practices on Wall Street
provides an example. The admission by his sons resulted not only in devastation to his firm and family,
but also to numerous benefit organisations and foundations within the Jewish community that had
entrusted him with their wealth.
The MTN saga in Nigeria offers another case in point. On the one hand, the company’s standing in
Nigeria and South Africa has allowed the company to capture immense value in both markets and,
through proximity to the government, benefit from favourable bilateral and trade relations between the
two nations. However, on the other hand, commentators have noted the socio-economic environment
in Nigeria, including macroeceonomic, security and regulatory issues in the country, and an unreliable,
and potentially blurred relationship between company and regulator were likely major factors in raising
the stakes of the dispute and, ultimately, losses for the company.
Closer to home, Lewis furniture stores’ and global automotive giant Volkswagen’s manipulation of
customers and regulations further afield illustrate the impact of loss of trust between consumers,
authorities and the company, as well as to the general public. Contrary to the view of creating value
through products and services to the mass middle market in the former case, or global environmental
leadership in the latter, these companies are now being seen as actively destructing the public good.
The outcome is not only immediate and financial, but also long term and reputational.

3
Increasingly, current and anticipated losses (or benefits) to brand value and total value creation by
companies are becoming the focus of various types of assessment by stakeholders. In the case of
Volkswagen, for example, concerns were repeatedly flagged regarding the company’s environmental,
social and governance performance (ESG) in ratings and research passed on to institutional investors
, ultimately removing the company from leading indices before the news of the scandal broke.
Strategies that identify and value social capital effectively can harness significant opportunities for
value creation, capture and innovation. Among the best known cases of this occurring within
companies are those such as Uber and Facebook which not only model their business around social
networks, but also leverage network reach to generate greater returns within and beyond the firm,
including to customers.
An African proverb says: If you want to go fast, go alone; if you want to go far, go with others. While
businesses and their stakeholders are becoming increasingly aware of the interdependence of
organisations and society, a critical first step to valuing and measuring hidden company resources
lies in assessing a firm’s social capital. By developing a better understanding of how relationships
contribute to business inputs and outputs and integrating the consideration of social capital into core
business strategy and decision-making, companies are more likely to find mutual success across the
networks and communities to which they belong.
Adapted from an article by Kristy Faccer which featured in the Trialogue Annual
Sustainability Review 2016

3.1 “Cases such as Lewis store’s perceived customer deception, Volkswagen’s fraudulent carbon
emissions reporting, and MTN’s clash with regulators in Nigeria, its largest market,
demonstrate the impact that inattention to social capital can have on a business.”
Investigate the utilitarian and deontological approaches (Kant, justice and rights) to business
ethics and relate this to the three organisations mentioned. (20)

3.2 “In the case of Volkswagen, for example, concerns were repeatedly flagged regarding the
company’s environmental, social and governance performance (ESG) in ratings and research
passed on to institutional investors , ultimately removing the company from leading indices
before the news of the scandal broke.”

Sustainability governance — the “G” in the ESG triad of environmental, social and
governance issues — is an increasingly important issue..

With reference to this, elaborate on the relationship between governance and sustainability
by assessing the ESG triad. (10)

4
3.3 “..... businesses and their stakeholders are becoming increasingly aware of the
interdependence of organisations and society.....”

Assuming that this interdependence requires organisations to display socially responsible

behaviour, examine the broader view of Corporate Social Responsibility (CSR) by making
reference to Carroll’s four-part definition of CSR. (10)

END OF QUESTION PAPER