Ethics and Corporate Governance in South Africa: A Comprehensive Study

This essay provides a comprehensive overview of ethics and corporate governance in South Africa, tracing the evolution of ethical considerations from tribal and family morality to religious and philosophical influences. It examines the impact of Apartheid on ethical development, discussing key legislation and its effects on the population. The essay delves into the different forms of morality present in South Africa, including religious and philosopher-based ethics, and their influence on the business environment. It further explores the concept of professional ethics, particularly for Chartered Accountants, and highlights instances of corporate failures in the 21st century, emphasizing the importance of ethical conduct. The analysis encompasses the historical context, ethical frameworks, and the ongoing challenges faced by South Africa in fostering a robust ethical culture within its corporate sector. The essay aims to offer insights into the complexities of ethical decision-making and its impact on society.

Running head: ETHICS AND CORPORATE GOVERNANCE BUSINESS ETHICS
ETHICS AND CORPORATE GOVERNANCE BUSINESS ETHICS
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Introduction:
The article aims at focusing on the evolution of Ethics in South African Perspective.
Ethics also known as moral philosophy refers to the branch of philosophy that deals with
defending, systemizing and recommending concepts of the right and the wrong conduct.
Thus, at levels ethics deals with fundamental issues related to the practical decision making
process whose major concerns includes the ultimate value and the standards through which
the actions of the humans judged either right or wrong. This is based on an editor’s
perception that moral behaviour and ethics has been better during the second half of the 20th
century compared to the first 18 years of 21st century. The article commences with the
discussion on the origin of ethics in South Africa that gradually leads to the discussion on
tribal/family morality, religious morality, philosopher based ethics and business ethics or
corporate governance. There is also discussion on the professional ethics or conduct for the
Chartered Accountant. The article also puts forward examples of entity disasters during the
first eighteen years of the 21st century under the headline ‘where were the ethics?’
Discussion:
Origin of Ethics in South Africa
South Africa represented a multiracial country where there has been preponderance of
numerous Non Europeans in the ratio of 4: 1 (Russell, 2013). This made the situation of the
country unique in comparison to other colonial countries. The problem lay in the fact that
majority of these Non Europeans consisted of people who just emerged from the state of
barbarism. This led to the emergence of doubts as to how the fruits of the western civilization
proceeded and preserved. In contrast to most colonial countries, the Non-Europeans and
Europeans have been living in the country for over three centuries and have contributed to the
country’s development in their own manner and ability. Moreover, the Non- Europeans had

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no homeland and somehow had to find a means of working and living together. The country
has also accepted these people as a part of the nation and aided them in serving the country to
the best of their abilities. With the implementation of Policy of Apartheid, these people were
considered as strangers who were tolerated in the nation for a certain time and purpose
(Vandenbosch, 2015). Moreover, it also brought along that the Non Europeans can never
remain as a part of the country and granted the same privileges and rights as Europeans. This
implied that they would have a permanent subordinated position. However, initially the
attempt of the apartheid remained in dividing the country for granting the Non Europeans
some existence where they would be able to exercise their abilities in full force amongst
people of their community.
However, with time it became evident that the protagonists of the apartheid did not
really accept the fact that South Africa is a multiracial country (Sehoole, 2013). They had the
intention of destroying the multi racial character and thereby replacing it with a society that
remained intolerant towards the Non Europeans. There was no consideration of
enlightenment or development and it seemed only the colour determined the fate of the
nation. Even the Prime Minister of the country admitted the policy of Apartheid to be based
on the colour.
In present times, the Policy of Apartheid in South Africa refers to the government
policy granted by legislation to segregate South African population economically, socially
and politically based on racial groups (Aleinikoff & Klusmeyer, 2013). The aim of this
segregation, whether considered partial, total, temporary or permanent, was the realization of
the complete development of Non Europeans. However, the motivation of such policy lay in
the claim that it represented the only means by which each of the groups of the multi-racial
population could develop themselves on the own lines without being unaffected by the
oppression and prejudices that could retarded advancement. Therefore, no injustice is done to

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the policy of apartheid if it is defined as that policy that has the final aim of completely
segregating the multi-racial population into separate groups whether on a short time or long-
term basis. Questions being raised on the fact that if the policy of apartheid focuses on
separate independent existence of the Non-Europeans then why there is so much of stress on
the racial factor. Also, based on the logical lines of the policy then it should also be
segregation of groups based on the language. However, actually the Policy of Apartheid put
forward a direction or an attitude that determined the future relations between the Europeans
and the Non Europeans (Clark & Worger, 2016).
However, people of South Africa often wonder why the Policy of Apartheid received
so much support. There were various reasons put forward for apartheid and they seemed
closely linked (Vandenbosch, 2015). The primary reasons lay in the ideas of racial superiority
and fear. There has been a thought prevailing across the world where racism is influenced by
an idea where one race remained superior to the other. Such ideas prevailed amongst all the
groups of population. The other main reason for Apartheid, considered as fear made the white
people worry about losing not only their jobs, but also their culture and language as their
number represented minority. This does not however provide a justification but helps in
explaining the thought behind supporting the Policy of Apartheid.
There were numerous laws passed in the creation of an apartheid state. The article
mentions few pillars on which the Policy of Apartheid rested. There was the implementation
of the Population Registration Act in the year 1950 that demanded registration of the people
as per their racial group (Sisk, 2017). This implied that the department of the home affairs
would have record of the people based on their colour and race. This formed the basis of
differential treatment based on the group of the population and defined the application of
apartheid. However, it was not always easy in deciding and differentiating the racial group
that gave rise to problems. There was also the implementation of the Group Areas Act in the

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year 1950 (Clark & Worger, 2016). This act led to the physical separation between the races
particularly in the urban areas. The act also led to the removal of some of the groups of the
people in the areas marked separately for the particular racial group. There was also the
implementation of the Bantu Self Government Act in the year 1959 that made it compulsory
for the different racial groups to stay in different areas (Van Wyk, 2013). There was only a
smaller percentage of South Africa left for the non-Europeans to consider as homelands. The
Act also made sure that all the non- Europeans remain out of the city. The most famous
removal took place in the District 6, Sophiatown and the Lady Selborne. Non- Europeans,
who were mostly the blacks, were allotted place for staying mostly outside the town. These
people could only rent and not buy any sort of property as they mostly belonged to the
Europeans. Thus, the act brought in much resentment and hardship as people lost homes that
they once owned for several years and moved to the underdeveloped areas that remained far
off from the place of the work.
Tribal/Family Morality
A shared morality acted as the cement of the society in traditional South Africa.
Traditional values included honesty, hospitality, charity, generosity, truthfulness, loyalty,
solidarity and respect for the elders. People also had personal values like reliability, honesty,
generosity, courage, temperance, humanity, social value and justice that helped them to
integrate with other people. Apart from these, Langan (2015) also mentioned that South
Africans also had virtues and moral values like benevolence, compassion, concern for others
and kindness that were conducive in promoting the welfare of the others. There was also
existence of co-operation, interdependence and reciprocity in the South African community.
However, the society also defined various sanctions for ensuring proper behaviour. One of
them included public ridicule that caused guilt, shame and fear and prevented any sort of
antisocial behaviour. According to Dumisa & Amao (2015), there was however distinction

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between religious and social sanction. Religious Sanction referred to practice of curse
through either magic or punishment by ancestors. The positive social sanction included,
honouring and praising the brave, parental gifts to the reliable children, confidence between
the children and the parent. On the other hand some of the negative social sanction included,
renunciation from clan or family, disinheriting, swearing of the curses and oaths, ostracism,
scandalising or public disgrace and execution for notorious criminals.
The present scenario in South Africa is somewhere between both the worlds that is
unable to completely part with the older world and is yet to implement the new (Awajiusuk,
2014). In confusion between the two worlds, a dichotomy permeated into the moral
behaviour of the people that led to the divided souls amongst the people of South Africa.
Religious Morality
Religion and Morality refers to the relationship that exists between the morals and
religious values (Magesa, 2014). Many religions put forward value frameworks concerning
the personal behaviour meant for guiding the adherents between the right and the wrong.
These frameworks are interpreted by different sources like holy books, religious leaders and
written and oral traditions. Some of these frameworks share tenets with the frameworks of
secular value including free thought, utilitarianism and consequentialism. However, Religion
and morality are not synonymous. Morality do not depend on religion however for some
reason this dependability is an automatic assumption. According to Niebuhr (2013), religion
and morality has different definitions and have no connections with one another.
Conceptually and principally, morality and religious value system represents two separate
action guides or value systems although there are some who believes that the concepts
overlap. Morality represents a set of habits, customs that helps in shaping the thoughts of the

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people about the ways of living, and considering what is good for the human life. On the
other hand, the concept of religion remains disputed.
South Africa had experienced considerable amount of religious diversity. With the
waves of different settlers like the French, English, Dutch and the German settlers, the
country has experienced every form of Christianity and Judaism (Chidester, 2014). The
slaves and workers from the India and Malaysia followed their individual forms of Hinduism
and Islam. The determination of the religion between various religious communities
depended on the unequal power of balance. The manner in which religion was presented in
classes posed as a greater challenge for the teachers. This is because the belief in the
dominance of white race has inevitably affected the lives of the people. Hence, for decades,
the education system of the state supported the principle where only the religion and culture
of the white Christians found a place in the curriculum of the school in spite of the fact that
only a small minority belonged to such religious tradition. Most of the pupils felt devalued as
the values and traditions of the families were not worthy of even mentioning. Even, today the
religion in Africa influences the lives of many South Africans and is considered pagan and
uncivilized.
Philosopher Based Ethics
The moral philosophy of Ethics involves defending, systematizing and recommending
the concepts of the right and the wrong behaviour. However, in present times the
philosophers divide the ethical theories in three general subjects that include Meta-ethics,
normative ethics and the applied ethics. Meta-ethics refers to the branch of the analytic
philosophy that helps in exploring the foundations, status and scope properties, words and
moral values (McCloskey, 2013). On the other hand, normative ethics represents the branch
of the philosophical ethics that examines the questions that arises when considering how a

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person must act while speaking on moral terms. Normative ethics thus represents the distinct
form of Meta-ethics since its helps in examining the standards for the extent of wrongness or
rightness of the actions (Kagan, 2018). Normative ethics is distinct from the descriptive
ethics. Descriptive ethics represents the empirical investigation of the moral beliefs of the
people while the normative ethics believes in whether such belief is correct to hold.
Normative ethics are known as prescriptive. Applied ethics refers to the branch of the ethics
that deals with analysis of specific moral issues on public and private life. For instance,
bioethics community deals with the identification of correct approach of moral issues in life
science like the allocation of limited health resources, euthanasia or use of the human embryo
in the fields of research. Environmental ethics is a field of applied ethics that is concerned
with the ecological related to the responsibilities of the corporations and the government in
cleaning the pollution. Applied ethics is different from normative ethics that it is concerned
with the standards for the right and the wrong behaviour and meta-ethics that is concerned
with the nature of ethical properties, attitudes, statements and judgements. However, the
emerging typology of applied ethics makes use of six domains that helps in improving social
issues and organizations at both the national and the global level (Hayry, 2013). This
includes:
 Professional ethics or the ethics for improving professionalism
 Decision ethics or ethical decision processes or ethical theories
 Business ethics or morals based on individuals for improving the ethics of a
business environment
 Social ethics or ethics amongst nations as being one global unit
 Organizational ethics or ethics amongst the organizations
Business Ethics (Corporate Governance)

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Business ethics refers to the study of the proper business practices and policies
regarding potentially controversial issues like insider trading, corporate governance, bribery,
discrimination, fiduciary responsibilities and corporate social responsibility (Crane & Matten,
2016).
Therefore, business ethics helps in ensuring a required level of trusts between the
consumers and various forms of the market participants related to the business. For instance,
the portfolio manager must provide equal consideration to the portfolio of the family
members as well as the small individual investors (Price & Van der Walt, 2013).This ensured
fair treatment to the public. The concept of the business ethics rose in the year 1960 with the
companies becoming more aware of the rising consumer based society that portrayed
concerns about the social causes, environment and the corporate responsibility. Business
ethics is something that lies beyond the moral code of simply right or wrong since it helps in
reconciling what the company’s needs to do on a legal frontier while maintaining competitive
advantage over the other businesses. Firms in South Africa however display business ethics
in various ways.
Corporate governance in South Africa referred to the systems of processes, practices
and rules by which a company is not only controlled but also directed. This involves,
balancing of the interest of the various stakeholders of the company like shareholders,
customers, management, suppliers, financiers, community and the government (Du Plessis,
Hargovan & Harris, 2018). Corporate governance also puts forward a framework for attaining
the objectives of the company so it practically includes all spheres of the management from
internal control to action plan to corporate disclosure and performance measurement.
The purpose of the corporate governance of South Africa lies in facilitating effective
and prudent entrepreneurial management that helps in delivering long-term success of the

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company. Thus, corporate governance represents the system with the help of which the
companies are not only controlled but also directed. The boards of director represent the sole
body of governance in any company. The role of the shareholder in respect to governance
determines the appointment if the auditors and the directors along with satisfying them with a
suitable structure of governance. The responsibilities of the board however include setting of
the strategic aims of the company, providing a leadership for putting them into effect and
supervising the business management and stewardship of the shareholders.
Corporate governance puts forward the doings of a company and the manner in which
it sets the values for the company and it required distinction from the day-to-day operational
management by the full time executives of the company (Waweru, 2014). However, good
governance has wider influence on non-listed sector since it is solely about improving the
accountability and transparency within the existing systems. One of the appealing
developments in the last couple of years has been the manner in which the label of the
corporate governance is used for describing the accountability and governance issues beyond
corporate sector.
There are however eight elements of a good corporate governance. This includes:
 Responsiveness
 Equity and Inclusiveness
 Transparency
 Effectiveness and Efficiency
 Orientation of Consensus
 Participation
 Accountability
 Fair Legal Frameworks enforced by the independent regulatory body

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Thus, the aim of the corporate governance is to enhance the company’s accountability for
avoiding massive disasters like the energy giant Enron.
Professional Ethics (Code of Professional Conduct for CA (SA))
A remarkable mark in the accountancy professional depends on the acceptability of
the responsibilities for acting in the interest of the public (Barac & Du Plessis, 2014). Thus,
the responsibility of a professional accountant does not exclusively depend on satisfying the
needs of the individual employer or client. Thus, while acting for public interest the
professional accountant should not only comply but also observe with ethical requirements of
the code.
However, this code has three parts, Part A, Part B and Part C. Part A helps in
establishing the basic principles of the professional ethics for the professional accountants
(Soni, Maroun & Padia, 2015). On the other hand, Part B and Part C illustrate the conceptual
framework applied in the specific situations. The basic principles that the professionals are
required to comply with includes:
Objectivity: The professional chartered accountant should not allow any kind of bias,
undue influence or conflict of interest in overriding business or professional judgements.
Integrity: An accountant practicing professionally should not only be honest and
straightforward in all the business and professional relationships
Due Care and Professional Competence: The professional account must have a
continuing duty in maintaining professional skill and knowledge at the required level for
ensuring that the employee or client is able to receive professional service rooted in the
current developments in legislation, practice and techniques (de Villiers & Alexander, 2014).

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Thus, a professional accountant must act in diligent manner that should be in accordance with
the professional and applicable standards while ensuring professional services.
Confidentiality: The confidentially of the information should be respected by the
professional accountant which they should not disclose to the third parties without specific or
proper authority until there comes professional and legal duty or right for its disclosure
(Maroun & Gowar, 2013). Moreover, acquired confidential information due to professional
and business relationships should not also have a personal usage.
Professional Behaviour: The professional accountant must comply with the relevant
regulation and laws and thereby avoid any kind of action that discredits their profession.
Part B and C focus on the conceptual framework that requires the professional
accountant in identifying, evaluating and addressing the threats in compliance with the basic
principles (Ackers & Eccles, 2015). If the identified threats are clearly insignificant then the
professional accountant must apply the safeguards for either eliminating the threats or
reducing them at an acceptable level so that there is no compromise with the fundamental
principles. The professional account have the obligation of evaluating any threats in
compliance with the fundamental principles provided the professional accountant knows the
relationship or circumstances that might compromise the compliance with the basic
principles. However, the professional account might unintentionally violate a provision of the
code but such unintentional violation depends on the significance and nature of the matter
might not compromise with the fundamental principles. However, once there is a discovery
of the violation, prompt correction ensured with application of necessary safeguards.
Thus, Part B and C of this code include such examples that illustrate the application of
the conceptual framework. The examples are not an exhaustive list for all the circumstances
experienced by the professional accountant that might lead to the creation of the threat of