CSA ‘not in breach’ over Lorgat

Lawyers find in favour of board’s decision to reject BCCI’s threats

THE looming R200m mistake of appointing Haroon Lorgat as their CE did not put Cricket SA’s board in breach of their fiduciary duties as directors, lawyers said yesterday.

THE potential R200m mistake of appointing Haroon Lorgat as CEO did not put Cricket SA’s (CSA) board in breach of their fiduciary duties as directors, lawyers said yesterday.

In fact, Cricket SA would have been in trouble had it not given Lorgat the job once it decided that he was the most suitable candidate.

Despite a threat against doing so issued to Cricket SA by the Board of Control for Cricket in India (BCCI) in December last year, Lorgat was named CEO in July.

Told that it was not India’s place to interfere with Cricket SA ’s hiring procedures, BCCI president Narayanaswami Srinivasan apparently said, “We’re telling you who not to appoint.”

The exchange was relayed to Cricket SA’s board, which discussed the issue and is believed to have been told by one of the directors that the effect of Lorgat’s appointment would be “minimal”.

But the BCCI’s warning that Cricket SA would “lose money” now looks set to be made good, with the Indians wanting to shorten their tour itinerary next year and in the process take up to R200m out of Cricket SA’s coffers.

The Companies Act says “a director of a company is liable for any loss, damages or costs sustained by the company...”.

But in this case it seems Cricket SA’s board members — who have become notorious for inept, shortsighted and wrongheaded decisionmaking — got it right.

“The board is always obliged to act in the best interests of the company,” Jason Dorning, a director at Van der Merwe Attorneys, said yesterday.

Did this remain the case even if doing so would leave Cricket SA out of pocket to the tune of many millions of rand?

“If (after the BCCI attempts to dissuade it from hiring Lorgat) Cricket SA still believed that he was the best candidate and that his appointment would be beneficial to the long-term interests of the company, they could still take that decision lawfully as long as they applied their mind to the situation.”

Cricket SA’s recruitment agency apparently declined to put Lorgat’s name on the original short list, partly because of the BCCI’s stance.

It also asked Jacques Faul, who took over as CEO of Cricket SA in a caretaker capacity when Gerald Majola was suspended, to apply for the job months after Lorgat said he had sent in his CV.

But Cricket SA would have dug a legal and governance hole for itself had it taken the BCCI’s unsolicited

If somebody from outside tries to influence the decision, you would cast your credibility in doubt by heeding them

advice. “If the board believed he was the best person for the job and they did not appoint him because of pressure from an outside entity, that could be cast in a negative light,” Dorning said.

Foaad Moola of LS Attorneys said, “Whatever personal grudges existed (between the BCCI’s Srinivasan and Lorgat) should not have mattered.

“If Lorgat fulfilled the criteria and was the best person for the job the board did the right thing by appointing him.

“If somebody from outside tries to influence the decision, you would cast your credibility in doubt by heeding them.”

Faul was subsequently appointed CEO of the Titans franchise in Centurion following the death of Elise Lombard.