FSB has its own back with new rules
Death by regulation
IT is difficult not to feel some sympathy for the Financial Services Board (FSB) because for them it really is a case of damned if you do and damned if you don’t. Participants in over-the-counter (OTC) markets acknowledge there are few investor-protection initiatives, but point out that for a long time there have also been no significant scandals.
That evidently does not provide sufficient comfort for the FSB, whose executives realise that if a scandal hits they will be in the frontline when it comes to taking blame.
And it is not inconceivable that the same journalists who criticised the FSB for wanting to regulate the OTC market out of existence will be wondering, if a scandal hits, why they had not been more intrusive.
That said, there must be a better way of dealing with the issue than what appears to be on the cards, which is tantamount to death by regulation.
For the entrepreneurial minded, the OTC clampdown will provide attractive opportunities at the expense of the less robust shareholders.
Transparency bid sours
SAB Miller’s efforts to be more transparent about its tax policy and payments continue to fail to impress ActionAid. This is the London-based NGO that released a damning report on the beer giant’s African tax payments in 2010.
In an effort to appear more open on tax matters SAB Miller has taken to releasing an annual tax report. However, inevitably, its desire to be trans- parent is generally overwhelmed by its strong marketing inclinations. This means a report that seems more designed to impress than inform. Critically, no details are provided on an individual country basis, and there is much talk of how effective the group is at collecting taxes for governments.
ActionAid says it is neither impressed nor informed. It welcomes SAB Miller’s efforts at being transparent, but says it does not indicate a change in policy since 2010 “when we showed how the company was using a Dutch brand hub and management payment fees to a sister company in Switzerland to avoid paying taxes in developing countries”. It urged SABMiller to provide a country-by-country breakdown of its tax payments.
Keeping it in the family
There was some interesting trading in Sekunjalo shares recently. Chief executive Khalid Abdullah, a brotherin-law of executive chairman Iqbal Survé, sold 10.2 million shares off mar- ket. The shares, which have paid no dividends for some time, were sold at 58c each for a transaction value of R5.9million.
A few days later came news that Sekunjalo Investment Holdings (SIH), the Survé-controlled unlisted entity that controls listed Sekunjalo and houses the cash-rich stake in Siemens, had spent R7.3-million buying 14.7 million Sekunjalo shares. The purchase, again off market, was at 50c a share and takes SIH’s stake in Sekunjalo to 57%.
The transactions have prompted speculation about a delisting, although they might be little more than a rearrangement of the family’s investment in the listed entity, whose August year-end is approaching.
Tsogo executives smiling
It is unfortunate for all concerned that a really clever deal was totally overshadowed by the ham-fisted way in which we were told key executives were to be rewarded.
The R200-million interest-free loan to five executives looks excessively generous even to commentators who have become jaded about executive pay.
What Tsogo needs to tell us all is how much cash it will save by excluding the five executives from the company’s phantom share scheme and also to confirm that this is the end of the awards for these executives.
Will the five executives be motivated by the realisation that if the company and share price do not perform, or if they leave the company prematurely, they will have received no benefit from this “generosity”?
It is disturbing that the circular sent out to shareholders two weeks ago does discuss, at some length, the “facility to executives”, but nowhere does it mention that only five executives will benefit from the facility.
That was left to a Sens announcement released during the week.
And how opportunistic of the National Union of Mineworkers to put the boot in. Didn’t they do something similar at Peermont when they took it private a few years ago?