You can’t keep a good dy­nasty down

But then there’s the pro­fes­sional di­rec­torate…

Finweek English Edition - - Openers - BY STEPHEN MUL­HOL­LAND stephenm@fin­

THERE HAS BEEN a dy­nas­tic tinge to the de­vel­op­ment of the South African private sec­tor and it has gen­er­ally been highly pro­duc­tive. Take, for ex­am­ple, the great Op­pen­heimer dy­nasty founded by Sir Ernest. He was fol­lowed with dis­tinc­tion by his son, Harry, who built with enor­mous suc­cess – and with con­sid­er­able courage and fore­sight – on the foun­da­tions left by Sir Ernest.

His son Ni­cholas, who has re­turned the fam­ily to its orig­i­nal core in­ter­est in di­a­monds, in turn has suc­ceeded Harry. He’s chair­man of De Beers, which he runs with his own son, Jonathan, fourth in the line.

Jonathan, in turn, has three chil­dren, two boys and a girl, so that a fifth-gen­er­a­tion De Beers dy­nasty is quite pos­si­ble.

There’s also the fam­ily hold­ing com­pany – E Op­pen­heimer & Son – which de­ploys its re­turns from its core stake in De Beers into a wide range of other in­vest­ments world­wide.

An­ton Ru­pert’s orig­i­nal Rem­brandt group, based pri­mar­ily on to­bacco and al­co­hol (and later, health pro­vi­sion; per­haps to treat the ills in­flicted by cig­a­rettes and brandy) was the foun­da­tion of an­other dy­nas­tic South African en­ter­prise that’s been trans­formed by his son, the ebul­lient Jo­hann, into the world’s lead­ing lux­ury goods provider via the Swiss-based Richemont along with a range of other in­ter­ests, from min­ing to bank­ing. Jo­hann also has three chil­dren and thus the Ru­pert dy­nasty ap­pears likely to en­dure.

At the Al­tron group, founder Bill Ven­ter – who was once thick with the Nats and is now thick with the ANC – has in­stalled his sons Robert and Craig as his suc­ces­sors in what is an­other bur­geon­ing dy­nasty. At Pick ’n Pay, founder Ray­mond Ack­er­man’s son, Gareth, and his sib­lings are also well set on the dy­nasty path.

Such fam­ily suc­cess re­flects Adam Smith’s ex­am­ple of the in­di­vid­ual in pur­suit “only of his own gain” who “is led by an in­vis­i­ble hand to pro­mote an end, which was no part of his in­ten­tion”.

Here we talk, of course, of those who place their own funds at risk, en­trepreneurs who cre­ate wealth, jobs and op­por­tu­ni­ties and gen­er­ally en­rich so­ci­ety. Then you get that other class, the pro­fes­sional di­rec­torate, those who spend their lives at, or pre­par­ing for, board meet­ings or meet­ings of board com­mit­tees or meet­ings of share­hold­ers – just so long as there are meet­ings. Meet­ings are their lifeblood and the source of their fees.

One such is the lugubri­ous War­ren Clewlow, now near­ing his sell-by date but still chair­ing Bar­loworld, where he has hung around for, it seems, a cen­tury or so. His di­rec­to­rial ten­ta­cles ex­tend far and wide: to Ned­cor, Sa­sol, Old Mu­tual, and so on.

At Ned­cor he dis­tin­guished him­self by, along with his fel­low fee-earn­ers, per­mit­ting the oleagi­nous Michael Katz (and col­leagues) to buy back the law firm of Nathan Fried­land from the bank for a pit­tance of R50m – payable, one sus­pects, on the never-never af­ter Katz and his col­leagues had been paid R400m for their desks and chairs.

Katz him­self pock­eted R100m of that, de­posit­ing his nice lit­tle wind­fall shortly be­fore his tax com­mis­sion rec­om­mended that cap­i­tal gains be taxed. Whew!

One would think that any self-re­spect­ing chair­man would lean upon some­one like Katz to depart in peace with his tax-free gains. But no, Katz re­mained on board – no­gal as deputy to Clewlow.

Be all that as it may, what we now have is a sit­u­a­tion in which Clewlow, as chair­man of Bar­loworld, is sit­ting in judge­ment on his son-in-law, Clive Thom­son, who is about to suc­ceed the ad­mirable Tony Philips as CEO of the group. Oh yes, Clewlow protests that he re­cuses him­self from all meet­ings at which the suc­ces­sion is­sue is dis­cussed. Hope­fully, he re­funds a por­tion of his fees to Bar­loworld for opt­ing out of such a crit­i­cal – prob­a­bly the most crit­i­cal – de­ci­sion fac­ing a board.

This col­umn was writ­ten be­fore the Bar­loworld an­nual meet­ing took place on Fri­day, 26 Jan­uary. How­ever, ear­lier last week Brian Molefe, CEO of Bar­loworld’s largest share­holder, the Pub­lic In­vest­ment Cor­po­ra­tion (PIC), lashed out at Clewlow’s po­si­tion.

Ac­cord­ing to Busi­ness Day, Molefe de­clared: “This is ab­so­lutely pre­pos­ter­ous. What kind of con­tempt for share­hold­ers does this com­pany have that it re­places direc­tors dur­ing the year and then brings their choices to share­hold­ers sim­ply to rub­ber-stamp their de­ci­sion?”

Pre­sum­ably, Clive Thom­son is an able chap who would make a de­cent fist of it as CEO of Bar­loworld. But does Clewlow have no feel at all for ap­pear­ances, for per­cep­tions? Surely he could have swal­lowed his ego and quit as soon as it be­came clear that Thom­son was a con­tender for the top job? It seems that Clewlow views Bar­loworld as some sort of private fief­dom. He for­gets that he isn’t an Op­pen­heimer, a Ru­pert or an Ack­er­man. He isn’t even a Ven­ter, though he was also thick with the Nats.

Clewlow’s just a hired hand earn­ing fees from share­hold­ers’ funds who has got a lit­tle above him­self.

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