Mail & Guardian

Tiger execs make a killing

How Tiger Brand bosses bailed out while selling R44-million in shares

- Lloyd Gedye

Senior executives of Tiger Brands cashed in R44-million-worth of options early last year — just as the Competitio­n Commission was beginning a price-fixing investigat­ion that roasted the company.

The sell-off began on January 22 — the very day Premier Foods approached the Competitio­n Commission for leniency in exchange for their cooperatio­n with the collusion investigat­ion.

By selling off at that moment the executives avoided sustaining significan­t losses as the inquiry pushed the share price down.

Before the probe became public knowledge the company’s share price was hovering around R175 but it has since dipped to a low of R130.

An investigat­ion by the Mail & Guardian has shown that four executive directors and the company secretary sold R44-million-worth of Tiger shares in just over a month between January 22 and February 26 last year.

T i g e r B r a n d s wa s fined R98-million by the Competitio­n Tribunal in November for its role in bread collusion, but was soon back before the tribunal — this time for collusion in the pharmaceut­ical sec- tor by its subsidiary Adcock Ingram Critical Care (AICC). That case led to a fine of R53,5-million.

The first sale of 78 300 share options at a profit of R13,5-million was made on January 22 by executive director Clive Vaux, who made another major sale the next day.

These were followed by a further four transactio­ns in which executive directors Haydn Franklin and Mike Norris and company secretary Ian Isdale offloaded R10,2-million in share options between them.

Franklin was at the time the managing executive of Tiger’s grain business, where the bread collusion occurred. Norris was the former chief executive of Tiger subsidiary Adcock Ingram and had been seconded to Sea Harvest, another subsidiary. (For details of all transactio­ns, see table, below.)

If the executives knew about the Competitio­n Commission’s investigat­ion before the sale of their share options, the transactio­ns could amount to insider trading.

In response to questions from the M&G Tiger Brands said the first official communicat­ion it received from the commission about the bread matter was on the afternoon of February 14 last year.

Gerhard van Deventer, execu- tive director of market abuse at the Financial Services Board (FSB), says the FSB is not investigat­ing the sales of the shares.

Corporate governance expert and ex-FSB executive officer Richard Cottrell says that to ask whether the sales amount to insider trading is mere conjecture at the moment. However, he agreed to the suggestion that the number of directors who sold options and the significan­t amount of shares sold in such a short period make it look as if there may have been prior knowledge of the commission’s investigat­ion.

F r a n k l i n a n d No r r i s h a d announced their plans to leave Tiger Brands in September 2006 and duly did so the following March. Isdale is still the company secretary.

However, the Competitio­n Commission was told by a source that all three of the senior Tiger executives had known about the collusion at AICC since 2002 and had not acted on the informatio­n.

Tiger has often said that it is investigat­ing these claims and that appropriat­e action will be taken when its investigat­ion is concluded.

After these sales of share options, the commission referred the case against the bread manufactur­er to the Competitio­n Tribunal.

When the tribunal contacted Tiger about the matter on February 14 last year there was another flurry of selling. Both Norris and Vaux again offloaded share options and Tiger’s chief financial officer Noel Doyle and AICC managing director Jonathan Louw did the same.

In total another R17-million in share options were sold by these four senior executives in the 11 days from February 15 to 26.

Doyle, who left Tiger last month to head vehicle body repair group Bluespec, was alleged to have known about the bread collusion, as pointed out in an anonymous letter that was sent to Tiger chairperso­n Lex van Vught.

The same letter claimed that Tiger’s chief executive Nick Dennis and Franklin also knew about the bread collusion. Dennis left Tiger on early retirement after the case was concluded before the tribunal.

Following the release of a confidenti­al report into the collusion case by law firm Edward Nathan Sonnenberg­s, Tiger confirmed that Doyle was one of 26 staffers who were discipline­d.

Doyle is said to have received a final written warning.

Shareholde­r activist Theo Botha said companies must be very careful to protect their reputation and have a responsibi­lity to protect the interests of their minority shareholde­rs.

Botha criticises the fact that Tiger told its shareholde­rs about the investigat­ion only on March 14 2007 — a whole month after the case had been referred to the tribunal. It made the announceme­nt in an item carried by the stock exchange’s Sens informatio­n service.

Franklin refused to comment this week, referring the M&G to Tiger Brands. He added that Isdale had all the informatio­n about the share option sales.

Attempts to contact Doyle and Norris were unsuccessf­ul. Tiger Brands refused to tell the M&G how to contact them, even though Norris is still a director of Sea Harvest, a subsidiary of Tiger Brands.

Dennis told the M&G that he would try to find Doyle and Norris so that they could get in touch with the newspaper. At the time of going to print they had not made contact.

Isdale, Louw and Vaux are still employed by the Tiger group.

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 ??  ?? Clockwise from top left: Noel Doyle, Mike Norris, Nick Dennis, Haydn Franklin, Clive Vaux, Ian Isdale and Jonathan Louw
Clockwise from top left: Noel Doyle, Mike Norris, Nick Dennis, Haydn Franklin, Clive Vaux, Ian Isdale and Jonathan Louw
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