Toxic leaders threaten the economy

Toxic leadership has brought Eskom and other public sector organisations to the brink of collapse. Should Eskom fail, it would be bigger than the failure of US energy company Enron nearly 20 years ago, said forensic investigator Paul O’Sullivan, speaking at a CFO Talks debate on toxic leadership in Midrand this week.

The surge in corporate scandals is symptomatic of the rise of toxic leaders, said Nicolaas van Wyk, CEO of the SA Institute of Business Accountants (Saiba). “I’m a Christian, but whenever I see someone whip out a Bible in the boardroom, I become suspicious. We need to be far more vigilant in our dealings in business and insist on a return to goodness and the rule of law.”

Forensic investigator Paul O’Sullivan at the Toxic Leadership debate in Midrand this week.

A study of 261 senior professionals in the United States found that 21% had clinically significant levels of psychopathic traits. That’s equivalent to the rate of psychopathy in the prison population, versus about 1% in the general population.

Toxic leaders surround themselves with weak followers, said work psychologist Theo Veldsman. “The staff churn will always be high around toxic leaders. Good people leave, only the weak stay. Toxic leaders hift blame when things go wrong and take all the credit for good deeds. And they will manipulate the benefits and rewards of the company to suit themselves.”

Psychopaths often rise to great heights in the corporate world. The identifying traits include ruthlessness, few feelings of guilt, a powerful ability to persuade, and the inability to see things from another person’s perspective. But they are also resilient to chaos, which can be useful in a crisis.

In one investigation after another, so-called toxic leaders were creating an environment conducive to fraud and corruption among their juniors. “The figures show that most fraudsters are middle-aged men, and most are junior managers. But senior executives, CFOs and CEOs are responsible for the biggest frauds by rand amount.”

Toxic leaders are nothing without toxic followers, added O’Sullivan. The problem was most visibly demonstrated in state-owned enterprises such as Prasa (Passenger Rail Agency of SA), Eskom and SAA.  Former Prasa CEO Lucky Montana has refuted claims the rail agency was captured by corrupt forces during his tenure, or that he was involved in corrupt dealings. He was nudged out of Prasa in 2015 amid accusations of mismanagement and will be remembered for signing off on the R3.5 billion purchase of trains that were too tall for SA’s rail infrastructure. Now several of these locomotives are being auctioned off to recoup some of the money. O’Sullivan says he’d be surprised if auction netted more than 3-4% of their worth.

“Lucky Montana ruled with an iron fist,” said O’Sullivan. “He got others to get rid of people in Prasa who stood in his way. Toxic leaders will protest their innocence to the end. He has recently been tweeting out red herrings he wants the Zondo Commission to Investigate. I wrote and told him to turn up at the Commission with his personal banks statements so we can see where he got his money, and he tweeted back that I was the real criminal. We’ll see how that goes.”

Former SAA chairperson Dudu Myeni had interfered in the R15 billion refinancing of SAA’s fleet and had likewise got rid of competent people at the airline who stood in her way. SAA’s former procurement manager Masimba Dahwa recently told the state capture inquiry how he was pressured by Myeni to flout the airline’s procurement procedures and pass business to a preferred BEE company.

In 2017 Angelo Agrizzi, former chief operating officer at Bosasa, approached O’Sullivan’s non-profit organisation, Forensics for Justice, with information on how the prison services company had bribed dozens of senior public figures and politicians to win billions of rands worth of contracts.

“CFOs have to keep their eyes open, especially when it comes to procurement,” said O’Sullivan. “That’s where the money is.”

Panelists at the Toxic Leaders debate (L-R): Jodi Joseph, Erik Vermeulen, Theo Veldsman, Prof Sasha Monya (Unisa), Nicolaas van Wyk, Jo-Anne Pohl and Rosemary Hunter.

Rosemary Hunter, who fought a years-long battle against her bosses at the Financial Services Board over the deregistration of pension funds which still had unclaimed money belonging to pensioners, said whistleblower protections in SA are good on paper, but woefully inadequate in practice. “People are often afraid to lose their jobs and will often stay silent when they are aware of corruption. I would advise that whistleblowers get legal advice and start recording conversations where corrupt dealings are documented. It is not unlawful to record conversations if you are a part of it. What we need in SA is an industry whistleblower support programme.”

Jo-Anne Pohl, CFO at law firm Bowmans, said whistleblowing words until the culprits find out who the whistleblower is. “Then there are consequences. My advice is to look at your actions and decide that you want to live long enough to tell your grandkids you did mostly right. Don’t seek to be liked.”

Sometimes you have to take extreme measures to fix things that are broken, added. Pohl.

Behavioural psychologist Erik Vermeulen says toxic leaders often have a “halo effect” where they put themselves beyond scrutiny, and this can also put them beyond the scrutiny of external auditors.

Theo Veldsman said current international research indicates that between 20% and 60% leaders are toxic. This can be attributed to:

  • the general weakening power of commonly accepted ethical values and norms, the greying of clear cut  values;
  • the fanatical worshipping of unfettered individualism and egocentricity to the detriment of the common good;
  • unrealistic stakeholder expectations (e.g. shareholders), forcing leadership to take unethical, opportunistic short cuts;
  • rampant growth in personal self-interest and self-love: narcissism; and
  • toxic followers who allow toxic leadership to be in place to serve their personal needs and interests, however unethical and immoral.

Jodi Joseph, a former CFO and AdaptIT executive, says CFOs need to challenge and question practices and behaviour in companies, even when there may be nothing untoward. This has the effect of keeping corruption at bay and creates a more ethical business climate.

About the author




Are you

Tell your story on our

Follow CFO Talks

CFO Talks

Quick links

The Workspace at The Club
Cnr Pinaster Avenue and 18th Street
The Club Shopping Centre, Second Floor
South Africa

The Workspace
Melrose Arch
44 Melrose Boulevard
South Africa

Tel. 012-643-1800 |

Scroll to Top