Talks non­sense

Finweek English Edition - - INSIGHT -

Don’t get me wrong – as an en­tre­pre­neur who has cut more than his fair share of cor­ners in try­ing to get a busi­ness off the ground, I un­der­stand that there is a very fine line be­tween “risk tak­ing” and “rule break i ng”. How­ever, what Wendy Machanik did was break the rules and it is fun­da­men­tal that South African en­trepreneurs un­der­stand why.

Writ­ing an opin­ion piece for Busi­ness Day, Machanik apol­o­gised and took some re­spon­si­bil­ity for her ac­tions. Ba­si­cally she said that she dipped into the com­pany trust ac­count to the tune of R17m, but it was okay be­cause the pri­mary rea­son was to se­cure jobs for her em­ploy­ees as the busi­ness faced a down­turn.

No­ble, I’m sure, but she is ei­ther delu­sional, a liar or sim­ply mis­guided.

If you read her opin­ion piece, she says she ac­cessed the Trust ac­count 90 times over a three-year pe­riod and she also put her own money into the busi­ness over this pe­riod of time. In mit­i­ga­tion she ar­gues that she ac­tu­ally re­turned all the money by 2010 and there was a sur­plus of R1.2m in the Trust ac­count. Notably she said that at the peak of her busi­ness, Wendy Machanik Prop­er­ties (WMP) was turn­ing over R130m a month and em­ployed over 300 peo­ple. TH­ESE ARE THE ONLY NUM­BERS YOU NEED TO UN­DER­STAND: R130m in turnover di­vided by 300 em­ploy­ees im­plies the “cost” per em­ployee is R433 000. As­sum­ing that those em­ploy­ees are ac­tu­ally agents, she ar­gues the whole rea­son she had to take money is be­cause the prop­erty in­dus­try was col­laps­ing. That cost would have been a vari­able one in line with ac­tual prop­erty deals done. Ad­mit­tedly, this cal­cu­la­tion is very sim­plis­tic and doesn’t re­flect the real po­si­tion of the busi­ness – what it should re­flect though is a com­pany that didn’t plan dur­ing the good years. I can guar­an­tee that 300 em­ploy­ees were not av­er­ag­ing R430 000 a month. A bil­lion rand a year busi­ness should have no is­sue ap­proach­ing its fi­nanciers for R17m in short-term fund­ing. The fact that Machanik dipped into the trust ac­count 90 times in a three-year win­dow im­plies that WMP couldn’t plan its cash f low by more than 13 days at a time. Surely they jest? It is ab­so­lutely im­pos­si­ble that a board of direc­tors and the au­di­tors (re­port­edly Dar­ryl Sk­lar & As­so­ci­ates) could have missed 90 trans­ac­tions in three years. If the com­pany needed money ev­ery 13 days,

Wendy Machanik

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