Futuregrowth seeks to change law
• Asset manager wants protection from potential meddling as it considers trading bonds again
Futuregrowth Asset Management is concerned the South African National Roads Agency is vulnerable to ministerial interference and, following months of discussions with the agency, has requested that the Sanral act be changed.
Futuregrowth Asset Management is concerned the South African National Roads Agency (Sanral) is vulnerable to ministerial interference and, following months of discussions with the agency, has requested that the Sanral Act be changed.
The asset manager announced on Wednesday that it would reconsider trading Sanral’s debt instruments after an almost year-long freeze. But much still hinges on how the transport ministry responds to its requests to buttress governance at board level.
“The Sanral act says the minister will appoint the CEO,” said Futuregrowth chief investment officer Andrew Canter.
“That’s very unusual. Universally, boards of companies appoint CEs, even if the minister must approve it.
“But how are we going to make a 30-year loan to build roads when we could see an entirely new minister of transport who wants to control procurement and replaces the chairman, the board and the CEO in one shot? Think about that,” he said.
While most state-owned enterprises allow for the minister to appoint board members, Canter said it depended on what processes were used to arrive at the appointments.
“We want to see a proper nomination committee of the board, active consultation on the proposed members and strong independent board members,” he said.
Canter said other stateowned enterprises had implemented these procedures.
The transport ministry has a history of making sweeping board changes. Earlier in 2017, then transport minister Dipuo Peters abruptly fired four nonexecutive board members from the Airports Company SA to “strengthen” its board.
Critics claimed the sacking was to shield CEO Bongani Maseko from being suspended.
Peters was swept away in President Jacob Zuma’s Cabinet reshuffle a month later and was replaced by Joe Maswanganyi.
Canter said Futuregrowth had “no axe to grind” with the new minister but was concerned there was too much discretion in the ministry.
The act makes space for only eight board members.
Futuregrowth analyst Tarryn Sankar said: “It is quite prescriptive in specifying the number of board members and that sets it apart a bit compared to the founding acts” of the Development Bank of Southern Africa, the IDC and the Land Bank, where the board had a little bit more latitude.
“In those acts they will refer to between five and 12 board members,” Sankar said.
Futuregrowth has not yet lifted its lending suspension on Transnet or Eskom.