Stefanutti investors battle to get facts
Grilling at AGM fails to reveal full picture of bid rigging, collusion
THE shareholders’ meeting of construction group Stefanutti Stocks, held on Friday, was always going to be a tough one for management.
In May, the Competition Commission fined the construction company — one of South Africa’s biggest — R307-million for bid rigging and collusion.
The company admitted to the fraud after rival Group 5 snitched to the commission to get off the worst of the fine.
The fine came after a tough year in which Stefanutti made an after-tax loss of R162-million for the year to February against a R264-million profit last year.
But despite the fact that directors must have mentally gritted their teeth expecting the worst, shareholders, including tireless shareholder activist Theo Botha, were irritated, and the hour-long meeting adjourned with a nearly audible sigh of relief.
The major gripe was that Stefanutti still had a lot to admit to about its competition breaches.
It emerged at the AGM that Stefanutti had still not disclosed to shareholders details of 27 cases in which it broke the competition rules — even though it made the Competition Commission aware of these cases.
Instead, Stefanutti has revealed to shareholders details of only 12 cases in which it broke the rules — only 30% of the cases it identified.
As a result, said Botha, Stefanutti had not been completely transparent with all stakeholders about what exactly had happened in each case of fraud and how much money was involved.
“Clients want to know what the practices were,” Botha said. To be less than completely transparent was to threaten the company’s reputation, he said.
Though the company made submissions about its wrongdoing to the Competition Tribunal, and CEO Willie Myburgh signed a “mea culpa” consent agreement on June 21, this was never placed on Stefanutti’s website.
Another major point of contention was remuneration. How could Myburgh be paid a bonus of R1.2-million — equal to 58% of his total salary — while
To be less than transparent was to threaten the company’s reputation
shareholders were losing money Botha asked.
In all, during a year when Stefanutti suffered a loss and was probed for breaking the competition rules, Stefanutti’s directors were paid R3.2-million in bonuses.
A large portion of the shareholders appeared equally clear that the directors should not be paid hefty bonuses. Only 68% of shareholders voted to approve the remuneration report — a slap in the face for the board, given that the approval percentage is usually much higher at company AGMs.
Another shareholder, Mario Compagnoni, suggested “as a good Catholic” that by merely confessing to having done wrong, the directors might feel the fine was the equivalent to a few Hail Maries, which would allow life to continue as before.
Naturally, Myburgh’s management assured Compagnoni otherwise.
Compagnoni got the directors to squirm as he forced chairman Gino Stefanutti to once again spell out how he, and most of the men facing the shareholders, had been aware of the tender-rigging and corruption.
“It was industry standard,” he said to no applause at all.
Stefanutti repeatedly reassured the sceptical shareholders that there would be no repeat performance of the collusion. More vocal investors appeared unconvinced.