From the editor

July 2003 News

Welcome to another issue of Safeguard, a Hi-Tech Security Solutions supplement aimed specifically at the security and risk management services industries in order to promote security's role in corporate governance.

Following the release of the King II Report, good corporate governance seems to be all the rage these days. Yet, as Mariaan van Kaam of VoiceIT South Africa, points out, what many companies overlook is the vital role that security plays in this process - a role that might in the very near future have legislative impact. "High profile cases of blatant fraud, both locally and internationally, have focused security's role in corporate governance," says Van Kaam.

"More and more, people are asking the question of how could employees - management or otherwise - get away with their fraudulent activities for so long?" The answer lies in sloppy corporate governance policies, which have allowed dishonest individuals to take advantage of the system to their own benefit. Van Kaam points out, however, that that is a trend that is going to change as shareholders could start taking direct legal action against company directors and managers in their personal capacities for any fraud or mismanagement that takes place. King II, the Public Finance Management Act and the Money Laundering Act are a few of the initiatives raised recently to address this problem.

Worldwide, the trend towards legislated personal responsibility is on the uptake. "In the USA, for example, recent legislation has compelled CEOs to personally vouch for the veracity, timeliness, and fairness of their companies' public disclosures, including their financial statements, and the Securities Exchange Commission has been given the power to freeze improper payments to corporate executives when a company is under investigation," explains van Kaam. The new laws have led to a spate of arrests and trials of company executives and employees, all with the idea of trying to prevent another Enron type scandal.

Here in South Africa, we have the King II report, which although not legislated, carries a moral weight that without doubt can be used as a basis for any court action by shareholders for compensation in the event of loss due to poor corporate governance.

While it is more commonly known that King II requires specific accounting policies to be followed, it is less well known that it also includes an obligation on the part of directors to ensure that all reasonable steps have been taken to ensure that physical company assets are protected and that ethical and integrity standards are upheld through leadership, awareness, communication and training, among others. And as Van Kaam correctly points out: "companies now have to draw guidelines on security polices, and will have to implement them in terms of a broader coordinated sustainable integrated reporting system."

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We would like to hear your thoughts about Safeguard. Send us your comments and suggestions about the editorial content and layout style of this publication to, and we will do our best to accommodate them.

Gerard Peter, Editor

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