WEIGHING THE COST OF “BEE FRONTING” ON BEST PRACTICES OF CORPORATE GOVERNANCE IN SOUTH AFRICA  
Aubrey Sibanda*
Lecturer, School of Undergraduate Studies, North West University, Mafikeng Campus 	
  
1.	Introduction
It is undebatable that the concept of corporate social responsibility has been subsumed as an integral aspect of corporate governance in South Africa and globally. Corporate social responsibility is accentuated as no longer an option to be debated by the country’s business fraternity as it is a moral, political and economic imperative. This assertion is informed mainly by the political history of South Africa.  Pursuant to the dismantling of Apartheid in South Africa, the government prioritised addressing the socio-economic ramifications of the country’s turbulent past, one of them being the “bottlenecked” participation of the black population in the national economy. A major policy thrust consistent with this national agenda is the Black Economic Empowerment policy, which initially focused on increasing equity ownership and executive representation of black South Africans in major companies. As a result of implementation glitches dominated mainly by the inability of the BEE policy to broadly distribute wealth to a spectrum of the black society, BEE was reformulated into the “Broad Based Black Economic Empowerment” programme. The latter spread the economic empowerment of black South Africans across seven dimensions, namely; management representation, employment equity, skills development, preferential procurement, enterprise development and corporate social investment.

In 2003, the Broad-Based Black Economic Empowerment Act was promulgated to provide legal backing to the underlying aim of the B-BBEE programme. A key feature of the legislation is its empowerment of the Minister of Trade and Industry to steer the implementation of B-BBEE by issuing Codes on Good Practice of Black Economic Empowerment. Among other aspects, the Codes on Good Practice of Black Economic Empowerment include indicators to measure compliance with the B-BBEE Act. The generic scorecard is a prominent establishment of the Codes on Good Practice of Black Economic Empowerment. It provides a means by which the company’s compliance with the Broad-Based Black Economic Empowerment Act is measured through the accumulation of points upon the implementation of reforms that recognise the economic empowerment dimensions envisaged by the legislation.
 
The implementation of the Broad-Based Black Economic Empowerment Act has not been an easy process. Some business entities are accused of contravening the legislation by deliberately misrepresenting facts about the extent of their compliance with the empowerment obligations outlined in the B-BBEE scorecard. The practice of “fronting” as it has come to be known is one of the loopholes by which the obligations conferred by the B-BBEE Act have been circumvented. Due to its complexity and multi-faceted manifestations, the mapping out of strategies to curb fronting practices has been an equally cumbersome process. In 2009, the Department of Trade and Industry released the Guidelines on Complex Structures and Transactions and Fronting  as an initial official step to control fronting. This process was followed by the criminalisation of the practice in the Broad-Based Black Economic Empowerment Amendment Act which came into effect in 2015.

This article investigates the practice of fronting, particularly its effects on best practices of corporate governance in South Africa. The investigation comes against the backdrop that South African companies are perceived as being among the best governed in the world’s emerging economies. Central to this discussion is the view of the practice of fronting as an assault on principles of good corporate governance which hinges on an unfaltered exercise of the fiduciary responsibilities of directors, stakeholder governance and ethical leadership. The article comprises of five major headings, namely; a brief overview of corporate social responsibility in South Africa which is the rationale behind the Broad-based Black Empowerment Act, the definition of fronting by the DTI Guidelines, a consideration of the effect of fronting on best practices of corporate governance in South Africa, an evaluation of the legal framework provided by the recently-promulgated Broad-Based Black Economic Empowerment Amendment Act to combat fronting and the conclusion. I acknowledge that the concepts of corporate governance and fronting have received wide but often separate academic attention from South Africa scholars respectively. Nonetheless, this article draws a novel connection between the two concepts by considering how fronting impacts the foundational principles of best corporate governance in South Africa.

2.	Corporate Social Responsibility in South Africa: The Influence of the Broad-Based Black Economic Empowerment Act of 2003
Corporate social responsibility is a subject of voluminous scholarly debate. Its roots can be traced back to the stakeholder theory which is anchored in the idea that a company exists to serve the interests of different stakeholders that are influenced by its operation, for example, its employees, customers, the environment and others. The theory stands in direct contrast to the shareholder supremacy theory which views the primary reason for the existence of a company as being to maximise profits for its shareholders who are in its context, its owners. Within the milieu of the stakeholder theory, there are different motivations for the obligations of the business towards the society which is the environment within which it operates and also an important stakeholder. 

Corporate social responsibility denotes that in an effort to protect public interest, a company does more than the law requires. It is noted that the pressing needs of society, such as poverty and health demands, can compel businesses to act in “a socially responsible manner”. Furthermore, from a moral perspective, society expects that private citizens which include businesses have an obligation to act in responsibly. The views on what constitutes “responsible corporate behaviour” are also antithetic. According to Hodes, [a] company is said to be socially responsible when directors manage it in such a way that the company" voluntarily expends its resources to do something not required by law and without immediate economic benefits". Parkinson, whose view on corporate social responsibility is often referred to by numerous scholars, defines it as a reflection of the company’s sensitivity to the impact of the company on third parties, which he refers to as “profit-sacrificing social responsibility”.

Bringing the corporate social responsibility debate to South Africa, Mongalo cites the collapse of the “shibboleths of apartheid” as having instigated the country’s business entities to embrace the stakeholder theory as they realised that they did not operate in a vacuum. Although the policy of Apartheid had been dismantled, its lingering effects, particularly the economic isolation of black South Africans, was among the imminent challenges that demanded urgent attention. South Africa’s new government had to embark on broad strategies that included utilisation of corporate social responsibility as a vehicle to bring about economic equality and social transformation. The Black Economic Empowerment Programme was among the first policies to be mooted to address the country’s economic disparities along the corporate social responsibility dimension. The raison d'etre of the BEE policy was to uplift the economic welfare of black South Africans through them acquiring considerable equity ownership and attaining executive representation in major companies. The policy culminated in its underlying objectives being accorded legislative backing in 2003 with the promulgation of the Broad-Based Black Economic Empowerment Act, which encourages the concept of corporate social responsibility in South Africa.
South African legislation is regarded as not placing an obligation on companies to fulfill their corporate social responsibility per se. However, corporate social responsibility language is used to bring about measures to achieve some of the corporate social responsibility objectives. It is further submitted that the historical legacy of Apartheid provides a special role for the state in regulating corporate behaviour.  Given the monumental task of redressing decades of social and racial imbalances in South Africa, corporate social responsibility efforts in this context cannot be purely voluntary and must include government regulations to motivate and enforce corporate social initiatives. This explains the compulsive nature of the of the B-BBEE Act which ensures that companies directly or indirectly consider the broader South African community within its political and socio-economic context. On a direct level, the B-BBEE strategy of a company will ensure an increase in black participation in terms of ownership, management, expertise and control of the company. On an indirect level, preferential procurement, involvement in enterprise development and socio-economic upliftment projects will ensure that the community at large reaps the benefits of socially responsible corporate conduct.

The strength of the B-BBEE Act in embedding the social responsibility of businesses in South Africa cannot be overlooked. The legislation binds the public sector, which mainly consists of governmental departments, public entities or state-owned enterprises and organs of State. Similarly, private companies are also bound by legislation when they require licences, concessions or authorisation, bids to provide goods and services to government, wish to acquire state-owned enterprises, or try to enter into public-private partnerships. The corporate social responsibility implications of the B-BBEE Act are further cemented by punitive measures suggested in the B-BBEE Amendment Act for firms which seek to circumvent or not comply with the objectives of broad-based black economic empowerment programme.

3.	Defining “BEE Fronting”
The Guidelines on Complex Structures and Transactions, and Fronting released by the Department of Trade and Industry in 2009 are an important source to refer to in defining fronting. Section B of the document defines fronting as “as deliberate or attempted circumvention of the B-BBEE Act or the Codes”. Fronting commonly involves reliance on data or claims of compliance based on misrepresentations of facts, whether made by the party claiming compliance or by any other person. Three practices are singled out by the DTI Guidelines as constituting fronting namely: 
(a)	Window-dressing. This includes cases in which black people are appointed or introduced to an enterprise on the basis of tokenism and may be discouraged or inhibited from substantially participating in the core activities of an enterprise; and discouraged or prohibited from substantially participating in the stated areas and/or levels of their participation; 
(b)	Benefit Diversion. This includes initiatives implemented where the economic benefits received as a result of the B-BBEE Status of an enterprise do not flow to black people in the ratio as specified in the relevant legal documentation; and
(c) Opportunistic Intermediaries. This includes enterprises that have concluded agreements with other enterprises with a view to leveraging the opportunistic intermediary's favourable B-BBEE status in circumstances where the agreement involves significant limitations or restrictions upon the identity of the opportunistic intermediary's suppliers, service providers, clients or customers; the maintenance of their business operations in a context reasonably considered improbable having regard to resources; and terms and conditions that are not negotiated at arms-length on a fair and reasonable basis.

Apart from its provision of the definition of fronting which is hinged on the above-mentioned trends, the DTI Guidelines also list different indicators that provide a basis to allege or suspect that a particular company could be involved in fronting. Verification agencies, procurements officersor other corporate decision makers are encouraged in terms of the DTI Guidelines to report any detection of fronting to the Department of Trade and Industry. The proposed Broad Based Black Economic Empowerment Amendment Act also contains stern provisions on the role of verification agencies in reporting fronting as it holds them accountable in instances where an entity is guilty of fronting but managed to obtain a B-BBEE verification certificate from a verification agency. It follows that due care and vigorous review will be expected from verification agencies in assessing an organisation’s compliance with the B-BBEE Act. 

4.	Assessing the Damage of Fronting to the “Health of Corporate Governance” in South Africa
Having given a background on fronting, it is expedient now to consider how the practice affects key elements of corporate governance. As a point of departure, the concept of corporate governance has to be defined. Corporate governance has been broadly described in vast academic literature. The most common definition often used is given by the Cadbury Committee in the United Kingdom in its report on the financial aspects of corporate governance released in 1992, which explained the concept as “a system by which companies are directed and controlled”. Although there is a variation of views on what the key principles of corporate governance entail; concepts such as shareholder protection, stakeholder protection, corporate disclosure, the responsibilities of the board of directors, corporate disclosure and ethical leadership are often mentioned, although unsystematically in numerous academic discussions that focus on the tenets of good corporate governance. 
This article will consider the effects of fronting on corporate governance being guided by the principles stated above. It should however be explicitly understood that although the discussion may sporadically refer to the legal liability of directors for non-observance of some of the cited corporate governance principles, that is not its underlying object as this subject falls beyond the scope of the article. Reference to cases of director liability will only serve to substantiate arguments on the wrongfulness of the practice of fronting particularly when its effects on the principles of good corporate governance are considered. 

4.1	Fronting vis-à-vis the Fiduciary Responsibilities of Directors 
The board of directors is recognised as “the focal point of corporate governance” in South Africa. Like other jurisdictions, South African company law recognises fiduciary duties which directors owe to the company as a result of their relationship with it. South African law in that respect has been heavily influenced by English common law which identifies the duty to act in good faith and in the best interests of the company as the overarching fiduciary duty from which other duties of directors flow from. The duty to act in good faith and in the best interest of the company has also been partially codified in the Companies Act. This duty shall receive further attention below considering its affinity with the thesis of this paper. 

The crux of the directors’ duty to act in good faith and in the best interests of the company is that directors are considered to be trustees of the assets of the company which is under their control. Owing to this special relationship with the company, directors are bound to exercise the power conferred upon them in good faith to the best interests of the company. A director’s duty is thus to act in what he or she honestly considers to be in the best interests of the company. 

Does the practice of fronting contravene the underlying object of the director’s duty to act in good faith and in the best interests of the company? This article answers the above question in the affirmative as shall be substantiated later. I certainly acknowledge that BEE fronting does not on face value appear to be harmful to the interests of company considering the economic benefit which companies may derive from the practice. In opportunistic intermediary transactions for example, enterprises conclude agreements with other actors in their industry with the view of leveraging their B-BBEE status to suit the B-BBEE requirements of an identified economic opportunity. Having stated the above, the follow-up questions that arise is: Can a director be allowed to engage in illegal practices such as BEE fronting as long as he can prove that he is acting in good faith and to the best interests of the company?

In providing an all-encompassing answer that further addresses both questions posed above, due attention has to be given to the provision of section 76 (3) (a) of the Companies Act, 2008.  A vital aspect of the legislative provision is how it connects the director’s duty of good faith with his duty to exercise his powers for a “proper purpose”.  The result is that it does not suffice for a director to exercise his power for the benefit of the company but he is also expected to exercise such power for a “proper purpose”.  “Proper purpose” has always been taken to mean that directors must exercise their powers for the purpose for which the power was given to them and not for a collateral or ulterior motive. This rule is far reaching in that if directors act for a collateral or improper purpose they can still breach this duty irrespective of the fact that they have acted in a manner that benefits the company. Section 76 (3) (a) presents the duties of good faith and proper purpose as separate and distinct, and yet cumulative, with the result that even if the directors have subjectively honestly acted in the interests of the company, they could yet be objectively be in breach of their duty to exercise their powers for a proper purpose. Against this background, a director who sanctions fronting activities by the company even to its benefit has to be held liable for breach of the duty to exercise his power for a proper or legitimate purpose.  Furthermore, the illegality of fronting makes it difficult for such a director to seek refuge under the Business Judgment Rule which was introduced in the Companies Act, 2008 to spare directors of personal liability in the absence of willful misconduct or willful breach of trust. 

4.2	Fronting vis-à-vis the Interests of a Company’s Stakeholders 
Both the BEE policy and its legislative pronouncement in the B-BBEE Act embody the full acceptance of stakeholder consideration as a fundamental aspect of corporate governance in South Africa.  The first King Report on Corporate Governance in South Africa captures the essence of stakeholders in corporate governance in a global context by stating that:

“ [C]onsequently the concept of corporate governance has grown. Other interested parties or stakeholders have become part of corporate governance in the different systems of corporate governance prevail in different countries. The different stakeholders include shareholders, employees, bankers, suppliers, consumers, environmentalists, the community or country in which it operates and the State.” 

Concomitantly, King II encourages stakeholder recognition under the auspices of the inclusive approach to good governance, which requires that the purpose and values of the company be communicated to all stakeholders.  The inclusive approach to good governance is intimately connected to the “triple bottom line approach” which is also a pertinent feature of King II.  The later requires the governance of companies to be cognisant of economic, environmental concerns and social concerns. Corporate governance has therefore become a vehicle to achieve societal transformation which also encompasses addressing the remnants of Apartheid such as the limited availability of economic opportunities to black people. Similarly, the King III Report on Corporate Governance and the Companies Act, 2008 advance the triple bottom line approach. In the Companies Act, 2008 the “enlightened shareholder value model” recognised by the legislation is the heartbeat of stakeholder governance. In terms of the enlightened stakeholder value model, companies can pursue the best interests of their shareholders but with a long term consideration of various stakeholder interests such as their social environment. Section 7 of the Act epitomises the model by its affirmation of the significant role which companies can play in socio-economic development. 

The effect of fronting on stakeholder governance in corporate governance has to be studied. My argument is that the practice goes against the spirit of stakeholder recognition in South African corporate governance. When companies engage in the practice of fronting, it is a blatant denial of economic opportunities to the broader population of previously disadvantaged racial groups who are important stakeholders the B-BBEE Act seeks to empower. Futhermore, the company also escapes the social obligation to act as a vehicle for socio-economic development which is a philosophy that features both in the Companies Act, 2008 and the King Reports on Corporate Governance as highlighted earlier. 

4.3	Fronting vis-à-vis  Ethical Corporate Leadership
As pointed out earlier, the stakeholder theory places an obligation on business entities to look beyond the sole object of making profit but to also consider the social implications of their activities. This has resulted in the adoption of ethical and moral considerations seeping through corporate governance. Ethics are understood as the means by which individuals come to construe, decipher, act upon themselves in relation to the true and false, the permitted and forbidden, the desirable and the undesirable. In the context of business, ethics have been defined as terms of personal values and virtues that should be applied to business practices, societal or religious values that should be applied to business practices and decision-making that will ensure that business activities are beneficial to individuals and society alike within the framework of a competitive market-driven economy. Business ethics are considered as a means to inculcate within the company’s employee population, a sense of how to do business responsibly. Ethical behaviour is marked by unselfish attributes that balance what is good for an organisation with what is also good for the stakeholders which includes the society. 

South Africa has witnessed the adoption of ethics as a vital aspect of its corporate governance. There has been a notable thrust to ensure that corporate governance reflects the value system of the society in which it operates.  King III defines responsible corporate citizenship as an ethical relationship of responsibility between the company and the society in which it operates. Consequently, the board is obliged to provide effective leadership based on an ethical foundation by considering the impact of the company and its business on internal and external stakeholders as well as the economy, society and the environment. It is the duty of the board to ensure that the company is, and is seen to be a responsible corporate citizen and the company’s ethics are managed effectively. King III also encourages the board to develop a code of ethics which embodies the four virtues of good governance namely, fairness, accountability, responsibility and transparency. Apart from the provisions of King III, the Companies Act entrenches ethical corporate leadership through section 72 which mandates state-owned, listed and other companies with a public interest a score of more than 500 points to establish a social and ethics committee. The committee serves as the ethical conscience of the company as it operates within the parameters of the triple bottom line approach.

Fronting has been bluntly described as “a cynical manipulation of regulatory requirements that amounts to defrauding the government, and defeats the aims of BEE”.  Belshaw and Goldberg also lament the creation of “unsustainable token empowerment entities” as a consequence of fronting. The fraudulent nature of the practice certainly antagonises it with the ethical fabric of corporate governance.  An ethical compass enables the board to ensure that the company does not harm its stakeholders. Considering that that fronting deprives society of economic empowerment which is the underlying purpose of the B-BBEE Act, it follows that the practice epitomises intentional harmful corporate conduct that demeans ethical corporate leadership as the latter treasures society as an important stakeholder. This argument is supported by the perception that by implementing the B-BBEE programme, a company fulfills an ethical economic obligation necessitated by South Africa’s socio-political history. Lastly, fronting torpedoes values of fairness, accountability, responsibility and transparency which inform good governance in the context of ethical leadership.

The ethical foundation of corporate governance in South Africa is also influenced by the values of Ubuntu which denote an African humanism emphasising empathy, understanding, reciprocity, harmony and cooperation. The principles of Ubuntu permeate various forms of governance and policy making in South Africa which also include the regulation of corporate behaviour. In the gamut of corporate governance, it has been stressed that through Ubuntu, corporate structures are not overthrown but there is consensus on what is fair and right and to see attuned leadership in action. When considered in view of this assertion, fronting also flouts values such as empathy and communalism that underlie the social contract on which the concept of Ubuntu is premised. The values of Ubuntu remain cardinal to effective corporate leadership in South Africa. 

5.	A Commentary on the Legal Framework to Combat Fronting under the B-BBEE Amendment  Act
This segment of the article commends the provisions of the B-BBEE Amendment Act providing a legislative framework to combat fronting. Whilst accepting the legal framework as a positive feature of the Act, its positive contribution to corporate governance is hinged on it being robustly supported by efforts from other important actors such as directors and shareholders. This shall be considered later in the discussion. 

A significant feature of the Broad-Based Black Economic Empowerment Act is its criminalisation of fronting. Section 13O (1) of the Act criminalises fronting alongside other forms of dishonesty related to it. The latter practices include misrepresentation or attempted misrepresention of the broad-based black economic empowerment status of an enterprise or entity, the provision of false information or misrepresented information to a B-BBEE veriﬁcation professional in order to secure a particular broad-based black economic empowerment status or any beneﬁt associated with the compliance with legislation and the provision of false information or misrepresention of information relevant to assessing the broad-based black economic empowerment status of an enterprise to any organ of state or public entity. In terms of section 13O (2) criminal liability is also extended to a B-BBEE veriﬁcation professional or any procurement officer or other official of an organ of state or public entity who becomes aware of the commission of, or any attempt to commit, any offence referred to in subsection (1) and fails to report it to an appropriate law enforcement agency. The provisions of section 13O (1) prohibiting fronting have to be read in conjunction with section 1 (e) of the Act which gives a non-exhaustive list of transactions that amount to fronting. The legislation empowers the Broad Based Black Economic Empowerment Commission to investigate cases of fronting on its own accord or following a complaint. The Commission is permitted by the legislation to institute legal proceedings in court to restrain any breach of the Act, including any fronting practice, or to obtain appropriate remedial relief. 

Section 13O (3) provides heavy sanctions for persons or business entities found guilty of contravening subsection (1) or (2) of the legislation.  In the case of a contravention of subsection (1), the offender shall be liable for a ﬁne or be susceptible to imprisonment for a period not exceeding 10 years or to both a ﬁne and such imprisonment or, if the convicted person is not a natural person, to a ﬁne not exceeding 10 per cent of its annual turnover. Where a contravention of subsection (2) exists, the offender shall be liable for a ﬁne or susceptible to imprisonment for a period not exceeding 12 months or to both a ﬁne and such imprisonment. In terms of section (5), a court in which any person is convicted of an offence in terms of subsection (3) is compulsorily mandated to report the conviction to the B-BBEE Veriﬁcation Professional Regulator, if that person is a B-BBEE veriﬁcation professional to the Employer Council and to that person’s employer. In terms of section 13P, any person convicted of an offence, which includes fronting, may not contract or transact any business with any organ of state or public entity. Such a person will be entered into the register of tender defaulters, which the National Treasury may maintain for that purpose. Where the convicted person is not a natural person, the court may in its discretion restrict the restrictive order permitted by the legislation only to members, directors or shareholders who contravened the Act. 

There are commendable features of the legislation which are indicative of a decisive stance to confront fronting as a practice that goes against the underlying purpose of the broad-based black economic empowerment programme. Firstly the criminalisation of fronting backed by punitive sanctions restrains individuals or business entities from participation in the practice. The liability of B-BBEE verification agents, procurement officers or other officials of an organ of state or public entity for failure to report to the Commission or attempt to commit offences that include fronting is also an effective deterrent as such persons are strategically positioned to detect any contravention of the legislation earlier than other parties. Secondly, the provision of a non-exhaustive list of fronting transactions or arrangements in section 1 (e) affords an opportunity for the investigative process to assess each case on its merits therefore casting the net wide in order to harness various and complex fronting activities.

It has been argued in the article that fronting breaches the unfettered exercise of the directors’ duty of good faith and for a proper purpose, stakeholder governance and ethical corporate leadership which are all aspects interwoven in the function of company boards. Against this background, it is important for the board of directors of companies to consider fronting as a real corporate risk and therefore in conjunction with their management teams develop a risk management system to abate it. Apart from the risk management team, the ethical concerns of fronting also invoke the active role of the Ethical Committee of the company if it has such an establishment as provided by section 72 of the Companies Act, 2008. Considering that the Ethical Committee gives the company ethical direction, it is critical that it ensures that the board of directors does not engage in fronting. Moreover, the committee has to pioneer far-reaching initiatives like the embedding of anti-fronting clauses in the company’s Code of Ethics and also the conduct of educational campaigns within the company. The latter will ensure that employees who are also stakeholders of the company are equipped to report any suspected fronting activities if detected.  

Lastly, shareholders also have a critical role to play as they can invoke remedies provided in terms of company law to discourage director misconduct which includes the sanctioning of fronting transactions. Section 69 (8) (b) (iv) (aa) of the Companies Act, 2008 for example provides for the disqualification of a director  who is convicted of an offence that includes fraud, misrepresentation or dishonesty upon the application of shareholders to court. Similarly, section 77 (3) (c) makes provision for the personal liability of a director if he or she is a party to any transaction to achieve a fraudulent purpose. Both provisions provide effective means by which shareholders can ensure that directors do not breach the law. 

6.	Conclusive Remarks
This paper has established that the broad-based black economic empowerment programme is a key legal instrument in promoting corporate social responsibility in South Africa. The promulgation of the B-BBEE Act in 2003 marked an important dimension for the concept of corporate social responsibility in South Africa as it was given legislative backing. The legislation remains a critical legal instrument to address the economic inequality in South Africa emanating from the country’s political history. Whilst the importance of the legislation in enforcing corporate social responsibility is an uncontestable fact, its implementation remains challenged by the practice of fronting which has become a doorway by which some business entities in South Africa have wriggled away from the social responsibility conferred upon them by it. 

The effects of fronting have to be considered in view of its gravity on the practice of best standards of corporate governance in South Africa. South Africa’s reputable standards of corporate governance are susceptible to damage owing to the negative effects of fronting particularly on the country’s fundamental pillars of corporate governance, namely the exercise of the fiduciary duties of directors, stakeholder governance and ethical corporate leadership. The amendment of the B-BBEE Act to criminalise fronting is welcomed as a decisive legislative step to respond to fronting as a challenge that confronts corporate governance. Finally, whilst embracing the legal framework to combat fronting, its success in achieving the underlying objective can be expedited by an all-inclusive approach whereby important actors in corporate governance namely directors, stakeholders and shareholders assume different responsibilities and act collectively to discourage to the practice.