Gets an enema
Better out in the open than in
SASOL HAS NO IDEA just how deeprooted the problem of collusion is within the company. To date it’s paid two substantial fines amounting to more than R4bn to competition authorities in Europe and South Africa. The nature of collusive behaviour means it can’t tell whether that bill is going to rise.
Despite that, CEO Pat Davies has committed Sasol to exposing even the most sordid truth about possible underhand business practices in the company he’s run since 2005. Davies, an executive director at Sasol since 1997 and a senior manager of numerous business units throughout the group for more than two decades, also faces personal scrutiny to establish whether he or any other senior managers were aware of illegal activity.
It wasn’t a decision taken lightly – but Davies has no choice. Competition authorities in territories where Sasol operates have made it clear that unless there’s full co-operation, the consequences of insufficient or non-disclosure could be considerably worse than they have been to date.
Davies made the public commitment to greater transparency after a finding last year by competition authorities in Europe that Sasol Wax had been engaged in price fixing. Two directors of the unit were fired. Sasol paid a fine of around R4bn – against which it’s currently appealing – and embarked on a clean-up campaign that’s steadily gathered momentum.
Central to the internal process – which is being carried out by a number of the country’s top law firms under the watch of the group’s non-executive directors – is to uncover not only why collusion occurred, but to find out whether it was ever encouraged, tolerated or simply went undetected. Crucially, Sasol also wants to identify individual culprits to illustrate its claim that the problem isn’t endemic but rather as a result of the actions of a handful of individuals.
Davies hopes the process will give the company – listed on the JSE and on the New York Stock Exchange – a clean bill of health. It’s aimed at restoring the reputation of a firm that has a shadowy past, in that it was formed as a sanctions-busting mechanism under the apartheid government to defy the then oil ban.
Coming clean carries the risk that even more dirty laundry could be washed in public. Executives simply don’t know if the investigators hired by Sasol will find that collusive behaviour spread beyond more than just its Sasol Wax and Sasol Nitro business units.
While the Sasol Nitro case has been settled, there’s still an abuse of dominance issue that must also be addressed, which carries the potential of further sanction.
SA’s Competition Commission is already investigating other divisions, either directly or as part of broader industry probes outside the
Clearing house. Pat Davies