Technology, COVID-19 and How the World Will Change
“There are decades where nothing happens; and there are weeks where decades happen” (Vladimir Lenin, who would have known!)
In a recent seminar, the President of Microsoft, Brad Smith, gave his thoughts on what is unfolding in business due to COVID-19, plus how he saw the post-pandemic world.
Fasten your seatbelts!
Ransomware and hacking rose to high levels in 2019 and there is no sign this is abating. For example, private patient data is being hacked in U.S. hospitals with demands that unless a ransom is paid, the data will be put in the public domain.
As many people now work from home, so vulnerability to being hacked is rising. People should “strap on their seatbelts” and take precautions – a two-pronged approach is often used now and is effective in containing the vast majority of hackers. For example, using a password and then getting an SMS to use a PIN to activate a PC.
Up your digital skills
Working from home will almost certainly continue to be widely used after the pandemic is over, so it will pay long term dividends for staff to hone their digital skills now.
These two points may seem obvious, yet in the rush to swiftly react to COVID-19, they are often being overlooked.
Keep your company culture alive
Spending most of your day looking at a screen is not conducive to fostering the business’s culture. Frequent news on how people in the company are doing plus the company’s performance and human interest stories such as how the company is helping its staff and communities in alleviating the plight of those adversely affected by the Coronavirus will help to lift the spirits of your staff.
The future of offices
The trend of working from home has been successful and Smith expects some form of hybrid between employees at the office and working from home to emerge in the post-pandemic years. The saving in travel time resulting in increased productivity plus a greener environment from less travel ensure that working from home will be a feature in future business. But there will still always be a need in many businesses for an office. Let’s not forget that man is a social animal and requires human contact.
Upheavals, history and massive changes
Great events have long lasting impacts on future generations. The Second World War transformed air travel from a small elite industry into a mass transport business which led to massive growth in airlines and the tourism sector. It also gave impetus to globalisation.
Another trend from the Second World War that has had a lasting effect was the harnessing of research at universities by governments which led to technological breakthroughs.
With the aftermath of COVID-19, Smith expects that online business will be fully embedded in businesses due to the innovation surge which has followed the emergence of Coronavirus.
Another important feature has been the rapid assimilation of data to help governments quickly understand and fight COVID-19. As the stakes in this pandemic are extremely high, the emphasis has been on providing fact-based information which is transparent and can be interrogated. The search for a vaccine illustrates this – usually it takes up to ten years to find a vaccine but there is hope that this can be reduced to ten months and be ready before the end of the year.
6 principles to fight fake news
A bugbear for all countries that just seems to keep growing is “fake news” and the growing amount of false information on the internet. Smith says that disinformation spreaders have found it difficult to fight the massive amount of scientific data that has been put out in fighting COVID-19. Microsoft now uses six principles when developing software to support open government, which are:
- Fairness – all people will be treated fairly.
- Transparency – the system will be fully documented, and capabilities and limitations will be set out.
- Accountability – technology can have a significant impact on people and an appropriate level of human control will be exercised to prevent adverse consequences from occurring.
- Non-discriminatory – no unlawful discrimination will be allowed.
- Notice and Consent – people subject to the technology must consent to its use.
- Lawful Surveillance – Microsoft will campaign for people’s rights to not be infringed by use of software.
Smith said if these principles can be accepted as an industry standard, it will promote openness which will reduce the impact of “fake news”.
There has been limited application for Artificial Intelligence (AI) in combating the virus, but it has been useful for example in diagnosing whether a caller needs to come into a clinic or hospital and take a coronavirus test. This allows medical staff to focus on helping the confirmed sick. AI is also being used to predict how severely affected each patient who tests positive will be and it helps tailor the treatment the person should undergo.
Lastly, and very importantly, it has shown how important co-operation is in finding answers to COVID-19. Without multilateral and bilateral approaches, it will take longer to find solutions.
Smith said technology can be used either as a weapon or a helpful tool. It is up to governments and civil societies to ensure that it is used as the latter.
Tax Freedom Day: How Many Days Did You Work for The Taxman in 2020?
“I Have Bad News and – No, Actually I Just Have Bad News” (Rick Riordan)
In the current year it has taken the average South African 126 days to pay off their taxes and only from the next day did the taxpayer then work for him or herself. This date fell on 6 May this year and is globally known as Tax Freedom Day (TFD).
So, what does this tell us?
This should be good news as last year TFD took 11 days longer to achieve than in 2020. However, this 11 day drop reflects the calamitous fall-off in the economy due to the COVID-19 crisis. Peoples’ incomes are dropping in 2020 which means less tax will be paid – this is the main reason for the 11 day improvement over last year.
This is not good news as the impact of lower taxes on government finances will push South Africa into a worse debt crisis. Some economists are predicting that our budget deficit to GDP will be 17% versus the 6.8% in the Budget presented by the Finance Minister in February – this shows just how fast our economy is tumbling. At least we are in good company – the USA shed 36 million jobs in the first seven weeks of their lockdown. Across the world, virtually every economy has slipped into recession.
The problem is it will take, depending on how long the pandemic lasts, some years for South Africa and the global economy to recover. This will not be good news for TFD, as taxpayers will probably be required to shoulder a higher burden of taxes to pay off the debt incurred due to the pandemic.
COVID-19 and Directors: Your Duties and Liabilities in the Coronavirus Crisis
There are significant obligations placed on directors by the Companies Act and personal and criminal liabilities if they fail to meet these obligations.
As a director you will no doubt be focusing on critical issues like keeping your business afloat and solvent (the CIPC has waived its right to intervene when a company becomes temporarily insolvent due to the lockdown and other restrictions imposed. This concession will be withdrawn 60 days after the lifting of the National Disaster regulations), don’t forget that the Companies Act is still in force.
The coronavirus has created an unprecedented situation which demands swift, decisive action by directors – for example, the President only gave the country 72 hours’ notice before the lockdown came into effect, which gave little time for directors to react to the new reality.
No change in your duties or liabilities
Despite the coronavirus there is no change to the duties or liabilities of directors. They must perform their role:
- “in good faith…,
- in the best interests of the company
- with the degree of care, skill and diligence that may reasonably be expected of a person –
- carrying out the same functions in relation to the company as those carried out by that director; and
- having the general knowledge, skill and experience of that director.”
“Good faith”, “best interests” and “care, skill and diligence” are onerous terms. For a director to be protected against falling foul of these provisions that director needs to show that he/she took diligent steps to be informed of the issue and made a rational decision in the best interests of the company. This is known as the Business Judgment Rule and courts look to this when considering a director’s personal liability.
The impact of the King IV Report
When considering the Business Judgment Rule, the courts have relied on whether a director followed the King IV Code of Good Governance when reaching their decision.
One issue that will arise with the coronavirus is that King IV mandates that a company be a good corporate citizen and part of this is to look after the health and safety of employees (following the requirements of the Occupational Health and Safety Act and now government’s Disaster Management Act Regulations) – for example, were adequate steps taken in terms of the National State of Disaster declared by the President such as social distancing (working from home where feasible) and ensuring employees had access to masks, hand sanitisers and so on at work?
Failure to comply with King IV in this scenario means directors will not be able to rely on the Business Judgment Rule and can be held personally liable for losses incurred.
Will your indemnity insurance cover you?
Directors can take out indemnity insurance, covering claims awarded, in their personal capacity, when they commit “wrongful acts”. However, the insurance will not apply if there is “wilful misconduct or wilful breach of trust” by the director (check your policy’s exact wording). An example might be the director being convicted under the Occupational Health and Safety Act.
As a director you could find yourself being held personally liable for your decisions and being denied access to your indemnity insurance cover.
Dealing with the pandemic increases the pressure on directors but doesn’t absolve them of their liabilities.
