Tongaat pensioners have a bone to pick
The board of Tongaat Hulett may have to contend with more than frustrated shareholders at its annual general meeting next week. The latest issue of Noseweek contains a timely reminder of the company’s drawn-out battle with its pensioners, some of whom might be tempted to make the trip to KwaZulu-Natal to attend the meeting.
At the end of May, the Supreme Court of Appeal upheld an earlier ruling by the High Court in Durban that Tongaat had legally taken R363.2m from the Tongaat-Hulett Defined Benefit Pension Fund when it was wound up in 2012 and its 2,500 members transferred to an Old Mutual Benefit Fund.
Not only did they lose the case, the pensioners were ordered to pay Tongaat’s legal costs. It must be a bitter disappointment to the pensioners, who alleged their fund had been looted over a five-year period. Making things even worse is that the Old Mutual fund has provided disappointing returns for them.
The grim reality is that Tongaat is far from being the first company to use pension fund “surpluses” to boost its balance sheet. And, as the SCA ruled, it is entirely legal. That doesn’t make it easier for the pensioners to accept. In Tongaat’s case the hefty payouts awarded to Peter Staude, who was appointed CEO all the way back in 2001, must make it all a little more difficult to swallow. Staude, who has overseen a steep collapse in the Tongaat share price, was paid a R6.6m bonus in financial 2018, lifting his remuneration package to R12.8m for the year. Calls for him to step down are a little too late as he is due to retire next year. And unlike his former colleagues, he won’t have to worry about surviving on a meagre pension. Comments from Anglo American CEO Mark Cutifani that the company remained committed to its investments in South African mining and that it wanted to play a constructive role in addressing perceived shortfalls in the Mining Charter are important.
As the last truly major mining company operating assets in SA since the departure of the others and with South32 extricating itself from coal in the country, it’s a message that it would serve the government well to listen to.
Anglo has come under pressure from a number of analysts and investors pushing for the company to ditch SA.
Cutifani has in the past said the outcome of the charter talks would determine investment decisions made by the Anglo board. There is clearly deep industry unhappiness with aspects of the new draft charter presented by mines minister Gwede Mantashe, particularly around the 10% free carried shares split between employees and communities on new mining rights as well as a 1% trickle dividend off operating profit to be paid to empowerment partners. Mantashe said during a recent public meeting of all stakeholders that the industry, which has stated its fierce opposition to these two particular elements, had yet to present an alternative. Cutifani’s comments that Anglo and its peers would offer an alternative that would satisfy all parties including investors should be seen as a precursor to a concerted effort by mining companies to engage the Department of Mineral Resources before the comment period closes at end-August.