Affairs With A Spy
2 Min Read
I never thought that my accounting newsletter would ever have the subject line of “Affairs With A Spy”, but here we are…
On 29 October, The New York Times reported that US intelligence officials suspected Alice Huang, a former executive at Singapore-based Megaspeed, of working for China's Ministry of State Security. Megaspeed isn't a small account. According to the Times, its Malaysian subsidiary bought more than $4.8 billion of Nvidia processors and server hardware between June 2024 and February 2026.
Nvidia's response that week was that Jensen Huang's interactions with her were "not unusual or unexpected", since meeting customers is part of a CEO's job. Huang told Bloomberg it was all "completely normal and not unusual."
Ten days later, on Sunday 8 November, Huang emailed his staff. "I was unfaithful to my wife," he wrote. "There is no excuse for what I did." The same day, Nvidia's board announced an independent investigation, overseen by a committee of independent directors with outside counsel.
Before going any further, the facts that haven't moved: nobody has established that Alice Huang was a spy, Beijing has called the allegation "groundless speculation", and the board says it has "no reason to believe that either national security or NVIDIA secrets were compromised." The espionage question belongs to intelligence agencies and Congress. The governance question belongs to us, and it's an odd one, because if Nvidia were a JSE-listed company the Companies Act would have almost nothing to say about any of this. King V would have plenty.
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Two statements, ten days apart
The October statement came from the company, which in practice means management. It described a commercial relationship with a large customer and stopped there. The November statement came from the independent directors, and its first act was to take the matter out of management's hands and give it to outside counsel.
That handover is the board doing what a board is for. It also raises the question every audit committee asks first in a matter like this: when did the board know?
Either the board wasn't told about the relationship, or it was told and the company still described it publicly as purely professional. We don't know which, and the investigation presumably exists partly to find out.
Add the commercial context and it gets sharper. Megaspeed was reportedly one of Nvidia's biggest customers in Southeast Asia, and had reportedly been on the US Commerce Department's radar over possible diversion of chips to China. Nvidia says those diversion allegations were investigated and debunked, and Singapore says Alice Huang was never investigated for espionage. But a personal relationship between a CEO and a senior executive of a customer under that kind of scrutiny is precisely the situation a board would want to hear about before reading it in the Financial Times.
The law only sees money and marriage
Run the facts through the Companies Act and nothing triggers.
Section 75 is the director's conflict provision, and it bites on a "personal financial interest" held by the director or a related person. Section 1 defines that as a direct material interest "of a financial, monetary or economic nature". Section 2(1)(a) then defines who counts as related: people who are married, who live together in a relationship similar to a marriage, or who sit within two degrees of blood or marriage. An affair is none of those. Unless a director holds a financial stake in the customer, and nothing reported suggests Huang did, s75 has nothing to catch.
Section 76(2) gets closer. Under s76(2)(a) a director can't use their position or information to gain an advantage for someone other than the company, but that only matters if information actually moved, and the board says it has no reason to believe it did. Under s76(2)(b) a director must communicate information to the board "at the earliest practicable opportunity" unless they reasonably believe it's immaterial. That's the only real hook, and it turns on a materiality judgement made by the person with the most reason to call it immaterial.
King V asks a different question. Practice 1(a)(ii) defines integrity as including the "avoidance of conflict of interests by refraining from situations where personal interests may conflict with the interests of the organisation", and, where avoidance isn't possible, "the diligent disclosure of conflicts and management thereof". Note the wording. It says personal interests, not personal financial interests. The Code doesn't care whether the conflict has a rand value.
You can see the same instinct in practice 42(f), which says a non-executive may not be independent if they're "a member of the governing body or the executive management of a significant supplier or customer to the organisation." A CEO is never independent, so 42(f) doesn't apply to Huang directly. What it shows is that King V already treats closeness to a significant customer as a threat to objective decision-making, before anyone gets personal about it.
So the same facts give you two answers depending what we evaluate on.
Who investigates the CEO when there's no chair
Nvidia has no chairperson.
Its most senior independent figure is Stephen Neal, the lead independent director, and the board has eleven members.
By King V standards that structure is half right. Practice 48 says the CEO shouldn't chair the board, and Huang doesn't. But practice 45 says the board should appoint an independent non-executive chair, with a lead independent only as the fallback when the chair isn't independent. Nvidia has the fallback without the thing it's meant to back up. Practice 47 then says a lead independent should lead "in situations where the chairperson has a conflict of interests", which is roughly the role Nvidia's independent committee is now playing, just without a chair to be conflicted.
The bigger gap is practice 80, which gives the chair the job of leading the formal evaluation of the CEO. At a company with no chair, that job lands on whoever the board decides, which tends to mean whoever is least comfortable doing it. And practice 79 requires the board to oversee succession planning that "adequately safeguards leadership continuity". Reports say Nvidia has no designated successor and around 60 executives reporting directly to Huang. That's the key-person risk the market has been pricing for years, and it's why most analysts expect him to stay.
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Companies Act 71 of 2008: director conflicts
A director must disclose a personal financial interest, or one they know a related person holds, before the matter is considered at a board meeting (s75(5)(a)).
If the interest is acquired after the board has approved the matter, the director must promptly disclose its nature, extent and the circumstances of acquiring it (s75(6)).
A director may also lodge a standing written notice of interests in advance (s75(4)).
Companies Act 71 of 2008: definitions
"Personal financial interest" means a direct material interest "of a financial, monetary or economic nature, or to which a monetary value may be attributed" (s1).
Individuals are related if married, living together in a relationship similar to a marriage, or within two degrees of consanguinity or affinity (s2(1)(a)).
Companies Act 71 of 2008: standards of conduct
A director must not use their position or information obtained as a director to gain an advantage for another person, or to knowingly harm the company (s76(2)(a)).
A director must communicate material information to the board at the earliest practicable opportunity (s76(2)(b)).
Breach of s75 or s76(2) exposes a director to liability under common-law principles of fiduciary duty (s77(2)(a)).
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The Bottom Line
Nvidia isn't a South African company and King V doesn't apply to it, but the story is a clean demonstration of something the syllabus tends to skate past. The Companies Act defines conflicts by what can be measured, and King V defines them by what can bend judgement. Most of the time those overlap. When they don't, the statute stays quiet and the Code is all you've got.
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The Journal Entry Team
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