Oceana’s closedshop AGM
Instead of allowing investors to question executives on the controversial Daybrook deal, they were shut down
Shareholders in fishing company Oceana might have braced for a stormy AGM last week. For starters, the company was only recently cleared by forensic auditors of a raft of allegations pertaining mainly to its US subsidiary Daybrook.
While the underlying tension was palpable at the start especially in the upfront apology for any anxiety caused by the longdelayed financial results to end-September shareholder tensions didn’t really bubble to the surface, largely because there was no real shareholder interaction at the meeting at all.
Instead, Oceana directors dashed off prepared answers to probing questions around Daybrook and its associate Westbank, controlled by former group CEO Francois Kuttel.
Longtime shareholder Des Mayers, a senior analyst at Afrifocus Securities, says Oceana “cherry-picked” only some of his questions at the meeting. Ahead of the session, Mayers had issued scathing observations on executive and nonexecutive pay (in relation to a lower dividend in the last financial year).
Wrote Mayers: “The figures leave little doubt that the shareholders have not been on the same page as the directors with the dividend in 2021 at 358c a share compared with 469c a share way back in 2016.
“Thus it is abundantly clear that while shareholders were on the ‘back burner’, the directors were very well rewarded. This is unacceptable.”
An AGM is the one time shareholders can engage executives and directors on a public platform, and the FM is aware that an Oceana executive had asked Mayers not to air his questions, but rather interact with management in a separate meeting. But Oceana maintains that all shareholders were given the opportunity to ask questions. It says: “The shareholder in question was given time ahead of the meeting and was offered a session with our nonexecutives on the remuneration observations he made, which he declined.”
For the record: Mayers calculated that Oceana’s two former top executives had been paid about R212m between 2014 and 2021, while shareholders suffered years without any payouts at all over the same period. Oceana’s response is that the group’s remuneration policies received 81% approval by shareholders.
Then there’s the concern over Oceana’s purchase of fisheries business Daybrook for $383m in 2015. It also snapped up Westbank, which operates the vessels that catch the fish sold to Daybrook. The problem was that the
American Fisheries
Act says only companies with 75% US ownership qualify for fishing rights, so
Oceana ran a “bidding process” to find someone to take 75% of Westbank. And this was none other than Oceana’s then CEO, Kuttel, who happened to be a US citizen.
The US operation was recently the centre of a corporate storm that delayed the release of Oceana’s results for the year to end-September until late March. But, said chair Mustaq Brey at the AGM: “There is no evidence of fraud, misappropriation or loss of funds or management override of controls at the group.”
Oceana has been almost totally controversy-free since listing on the JSE in 1947, but uncertainty over Daybrook has caused its share price, which was bobbing around R74 in June last year, to plunge as low as R48. Though cleared of any wrongdoing after a lengthy internal and external investigation, the share price still reflects jittery sentiment.
Some of the more serious allegations included the recoverability of $3.5m in receivables, and the accounting treatment of Westbank as an associate company. There were also allegations of a “gentleman’s agreement” between Oceana and Kuttel. Though no fraudulent activities were picked up by ENSafrica, there was some serious fallout in the sudden resignation of Oceana CEO Imraan Soomra in mid-February and the suspension of CFO Hajra Karrim a week earlier.
Mayers remains concerned about developments at Oceana, especially the inconsistent performance of Daybrook, which he describes as “a poor performer and a noose around the group’s neck”. Central to his worries is Daybrook’s profit performance, which starkly contrasts the