Ethics in the grey zone: governing conflicts of interest with courage

By Nqobani Mzizi

In governance, few terms provoke as much unease as "conflict of interest". It conjures images of overt corruption, self-dealing and backroom deals. Yet in many boardrooms, the more dangerous form is covert and subtle. It emerges not through criminality but convenience, not through law-breaking but ethical lapses that thrive in silence and passivity. These are the conflicts that live in the grey zone.

We often associate conflicts of interest with clear-cut wrongdoing: a director awarding a tender to their own company, a regulator sitting on a board they’re meant to oversee. But many conflicts are more nuanced. They live in assumptions we don’t question, relationships we don’t declare, and benefits we don’t probe. Often, they hide in plain sight: in annual declaration forms submitted as routine or meeting registers listing interests without discussion or follow-up. These processes, meant to enable transparency, become hollow rituals without meaningful engagement and ethical reflection.

Grey-zone conflicts are not always compliance failures; they are ethical blind spots where governance falters under silence, ambiguity, or convenience. They are technically compliant but ethically compromised. They flourish where disclosure is absent, recusal is performative, and boards look the other way, not because they condone wrongdoing, but because they’ve normalised ambiguity. It is here, in the comfort of procedure without principle, that governance erodes.

King IV recognises this risk. South African law requires declaration of personal financial interests and sets fiduciary duties, but King IV Principles 1 and 5 go further, calling for ethical and effective leadership beyond legal minimalism. A director may comply with the law but betray governance’s spirit by failing to disclose a relationship or by participating in decisions blurred by personal gain.

When Sizekhaya Holdings was awarded the fourth National Lottery licence in 2025, public concern quickly surfaced over the perceived political connections of its leadership, including ties to relatives of senior government officials. Though the award process may have complied with legal requirements, the absence of visible and transparent disclosures around these relationships undermined trust. In governance, perception matters. Poor or absent disclosure damages legitimacy, even without legal fault.

At the Airports Company South Africa (Acsa), CEO Mpumi Mpofu came under fire for alleged misrepresentation of academic qualifications and awarding bonuses to executives during financial strain. With service providers unpaid and operational performance under scrutiny, the optics of bonuses raised ethical questions. Although no formal charges were brought, the board’s failure to address these concerns reflected a worrying tolerance for ethical ambiguity: a grey zone where silence replaced scrutiny.

The Steinhoff International scandal, known for accounting fraud, also revealed subtle but corrosive conflicts of interest. Executives linked to related-party transactions personally benefited from inflated financial results. Despite this, the board did not act urgently. It failed to question transactions, investigate relationships, or push for disclosure. The board’s deference to executive authority, whether out of loyalty, deference, or inertia, allowed personal interest to override fiduciary duty, shifting oversight to complicity.

These cases show governance failures need not involve overt misconduct. Sometimes, it is the cumulative effect of quiet compromises: undisclosed affiliations, soft recusal, where directors nominally step aside without meaningful disengagement, and silence under pressure that unravels institutional integrity.

The Steinhoff scandal, like the cases of Sizekhaya and Acsa, reveals a pattern: grey-zone conflicts thrive where boards privilege process over principle. They are not isolated failures but systemic symptoms of a governance culture that rewards silence over scrutiny.

To break this cycle, boards must reframe conflicts of interest as strategic governance moments, not bureaucratic disclosures to file away. They must take an uncompromising stance on ethical ambiguity, recognising that every potential conflict is an opportunity to demonstrate ethical clarity and transparent leadership. This mindset demands more than compliance; it requires courage.

Disclosure practices must be strengthened. Too often, boards limit declarations to statutory interests or ownership stakes, ignoring broader context. Personal, familial, or political affiliations that may create perceived bias must be declared and discussed openly. Some argue excessive scrutiny risks paralysing decision-making. Yet the greater danger lies in inaction disguised as pragmatism. Boards that tolerate grey-zone conflicts to avoid ‘overcomplication’ ultimately erode the very currency of governance: trust. Boards must create environments where over-disclosure is encouraged, not penalised.

Oversight mechanisms must be more robust and independent. Conflict reviews should not be managed by internal structures reporting to those under scrutiny. Independent ethics committees with external expertise can depoliticise assessments. But structures alone are insufficient without cultural change. Boards must adopt zero tolerance toward grey-zone conflicts, where even perceived compromised judgment triggers recusal, not just legal violations.

Ethical behaviour must be incentivised, not incidental. Executive performance metrics often focus on profitability, growth, or shareholder value. But ethical governance should be tied to performance evaluations and bonus structures. Stakeholder trust, reputational stewardship and ethical conduct must carry weight in boardroom remuneration decisions.

Finally, governance culture must prioritise values over vagueness. It is not enough to have conflict of interest policies on paper. Boards must actively pose ethical questions, encourage critical reflection and normalise discomfort. A culture that rewards candour, curiosity and dissent is one that builds long-term resilience and trust.

Ethical governance lives in the gap between law and leadership. Conflict of interest is not merely a legal risk; it is a test of character. It demands more than checklists and compliance registers. It demands boards and executives who are willing to declare their interests fully, recuse themselves meaningfully and interrogate decisions with integrity.

As directors, we must ask ourselves:

• Are we fostering a boardroom culture that prioritises disclosure over defensiveness?
• Are we willing to challenge colleagues when grey-zone decisions arise?
• Do we understand the reputational cost of passive complicity?
• Are we prepared to act with courage when conflict surfaces, or will we hide behind process?

In an era of rising public scrutiny and stakeholder activism, governance legitimacy will not be earned by technical compliance. It will be earned by ethical clarity. And that clarity is forged in the grey zones, where the law is silent, but leadership must speak.

* Nqobani Mzizi is a Professional Accountant (SA), Cert.Dir (IoDSA) and an Academic.

** The views expressed do not necessarily reflect the views of IOL or Independent Media.

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