Investors left in dark over Group Five board

In line with the Swahili proverb that when elephants fight it is the grass that suffers, Group Five and Allan Gray are trampling over retail investors. If ever there was a case for calling “monopoly capital”, this is it.

As much as the global financial crisis was not caused by retail investors, pity the small guy who is being trampled to death by monopolies that are part of oligopolies, in other words, capital ruled by corporations, fund managers and pension funds.

In the case of Group Five, the diversified construction company has much to answer for after Allan Gray asked it to replace five nonexecutive directors in mid-May.

Now, an agonising few months have nearly gone by, with an extraordinary general meeting on the matter only scheduled for July 24.

But Allan Gray is not without fault, as it has provided equally inadequate responses about what catastrophe has happened at Group Five board level.

With a steady outflow of executives and board members since mid-February, ordinary retail shareholders have a right to know what is happening to their investments.

Despite an ostensible uptick in shareholder revolts across the world, the JSE seems to be lagging. Observers say that Allan Gray’s public actions are relatively rare.

What probably hurts small investors most, though, is the opaque position taken by parties about what lies at the core of their dispute.

Parties can — and do — cite confidentiality, but in all likelihood this notion is about as abused as the notion of the sub judice rule is by politicians

What hurts even more, though, is the unlikely event that all will be made crystal-clear at the extraordinary general meeting that has been called. More likely, there will be further obfuscation and statements of a deal done supposedly to the satisfaction of all parties.

Nothing is likely to be further from the truth.

There is something to that cynical economists’ joke about the difference between a recession and a depression in news that the JSE plans to retrench up to 60 of its personnel. You know the old joke that defines a recession as your neighbour losing her job and a depression when you are losing yours.

Along the same line, we could call it a recession when a company listed on the JSE has to retrench and a depression when the JSE itself retrenches.

CEO Nicky Newton-King says the R170m cost-cutting exercise could lead to up to 60 people being retrenched. That’s huge, given that the total staff before any cuts is about 200.

As recently as 2015, the exchange had its best year with turnover up 24%. The first half of 2016 also showed strong volume increases. But over the past 12 months, things have gone wrong for the exchange.

It is not just a South African issue. Things have gone wrong for much of the capitalist world over the same period, marked by Brexit and the election of Donald Trump as US president. It was overlapped by sluggish conditions for several years leading to worldwide uncertainty. While uncertainty can raise volatility, this time there seems to be just too much of it.

Adding to the grim global conditions are the stunning political machinations at home that would terrify all but the bravest of risk-taking investors.