Bitter power struggle rocks BBS
Board chairperson fires MD Management bars board members from entering BBS headquarters BSE suspends trading of BBS shares
The management wants and has already published the agenda which includes elections of five board positions that will become vacant on April 26 just four days before the meeting. The board argues to the contrary and wants to extend its term for another 90 days and conduct the set elections at a later date.
IMPASSE
The impasse happened when the board directed management not to publish the names of the candidates aspiring for the five vacant board posts. Instead the board wanted the names brought to them for vetting, something that management refused to do, insisting that the board is already conflicted because five of its members are also interested in being re- elected.
The management argued that the board has no legal standing to extend its term, and that only the general meeting can do so. Having held several board meetings without reaching an agreement, on Tuesday the board opted to dismiss the Managing Director, Pius Molefe and Head of Communications and Company Secretary, Sipho Showa for alleged failure to follow lawful instructions.
The duo had gone ahead and published the agenda including the names of candidates who will contest for the elections. Both Molefe and Showa are employed on a two- year contract which was renewed this year and is still left with 21 months. The duo has taken the fight back to the board by hiring the attorney Mboki Chilisa of Collins Chilisa Consultants who has since written to the board indicating that his clients are still bona fide employees of BBS and remain committed to continuing to discharge their employment duties in the best interests of the company, as they have always done.
Part of his letter reads “If you hold firmly to the view that you have terminated their employment contracts, we invite you to institute legal proceedings in order to establish that there is a resolution of the board terminating their employment contracts. “Until then, our clients will regard your letter as communicating your personal wishes rather than a resolution of a duly convened meeting of the board of the company”.
Chilisa also wrote another letter to Board Chairperson Pelani Siwawa- Ndai stating that as a trite principle of corporate law, the board of directors can only take decisions through resolutions. Those resolutions, unless adopted unanimously through round robin, must be taken at duly convened meetings of the board. Molefe as a member of the BBS Limited board of directors is entitled to receive notice of board meetings, Chilisa wrote to Siwawa- Ndai. Chilisa pointed out that Molefe never received in his capacity as a director any notice of a meeting where the termination of Showa’s contract or his was to be discussed. “It follows, in our view, that there is no decision of the Board to terminate their contracts of employment”.
The letters spurred the Board into action as they called a special meeting lasting for the better part of Tuesday night ending around midnight. Regular board meetings come at serious costs to the Society. The current Board came in when the current fees were already set. Records show that BBS Board meeting fees are as follows: Board chairperson gets P12 000 per seating and other directors P7 500, while Board committee attracts P7 000 for the Chairperson and P6 000 for others. The annual Board retainer fee is P60 000 for
Chairperson and P30 000 for others.
It is believed that in their Tuesday night meeting, the board mapped a way forward, resolving to appoint some members to accompany their chairperson to the headquarters to address staff as well as appoint the Acting MD. But they had a rude awakening upon arrival.
On Wednesday morning which was the first day after the dismissal of the top two officials, business was operating as usual with both Molefe and Showa occupying their respective offices and leading staff to keep the business afloat. In fact, it was the board that appeared to be losing grip as their representatives led by the Chairperson, SiwawaNdai were barred from entering the premises.
However, stakeholders remain worried that BSE’s decision to suspend trade might have a negative impact on BBS’ efforts to raise the muchrequired capital for the growth of their business.
The other risk which management wants to avoid is a bank run ( a situation where clients withdraw their money from the bank because they fear the bank could cease to operate).
ELECTIONS
At the time of going to press management was busy preparing for the general meeting as scheduled with the proposed agenda showing that a total of 10 candidates will contest for the five available positions. Of the 10, five are the current board members whose term ends in three weeks’ time.
On Wednesday afternoon, Molefe released an
update to BBS Limited shareholders, assuring them that he and the rest of the management are working very hard to ensure that the “recent unlawful decisions of the BBS board” are being dealt with in a mature manner. “I am determined to ensure that your interests as shareholders, depositors and other stakeholders are protected,” Molefe wrote.
He reiterated that indeed there is a dispute between himself as the sole executive director and his non- executive director colleagues on the Board regarding the nomination of candidates for the Board, which include five of them as they are retiring on Monday 26 April 2021.
“A notice has been issued to you indicating that the annual general meeting at which the election of directors is to be considered, amongst other matters, will be held on Friday 30 April 2021.
“My view remains that it is your decision as shareholders as to which individuals, based on qualifications and criteria for eligibility, should be appointed to your Board, not that of current Directors. “Given differences with my colleagues on this matter, they purported to dismiss me and the Company Secretary Sipho Showa from work yesterday, Tuesday 6 April 2021, for not following their unlawful instructions”. Molefe assured shareholders that BBS securities have been suspended from trading by BSE until the current matter has been resolved and assured them that they are engaging with stakeholders to mitigate any negative impact on BBS.
I am determined to ensure that your interests as shareholders, depositors and other stakeholders are protected