Irate R&E investors quiz CEO on pay
ALMOST a decade after the death of notorious crook Brett Kebble, the companies he almost ran into the ground are still plagued by corporate governance headaches.
In 2005, Kebble ran out of money and, in one of the most ambitious corporate frauds in South Africa, effectively stole shares from the company of which he was CEO, Randgold & Exploration, to line his own pockets.
Some of the proceeds of the stolen shares ended up in the other company Kebble headed, JCI, and were further used to repay Kebble’s debts to banking group Investec.
After Kebble died in an “assisted suicide”, new executives were appointed to sift through the debris and see what could be saved for shareholders.
This week, R&E CEO Marais Steyn, who has been mandated to recover what Kebble stole, came under fire himself at the company’s AGM at the Michelangelo Hotel in Sandton.
Before the meeting, Steyn and chairman David Kovarsky looked jovial when they got into the lift at the hotel on their way to the meeting. But the mood soon changed.
The AGM turned into a heated affair, and was almost immediately adjourned as investors argued with the company over whether they were allowed to record the event.
What followed was a tension-filled, hour-long meeting, during which smaller shareholders challenged the company on its governance.
In particular, investors wanted to know why Steyn was paid R8-million last year — by a company that has virtually no assets except for three undeveloped mining rights and R174-million in cash.
But Kovarsky defended the fact that Steyn and financial director Van Zyl Botha were paid R11.5-million between them last year.
“Being the CEO or [finance director] of a company like Randgold is not fulfilling as it is not a company producing anything.
“The only thing that Randgold does is collect money. To attract people to do this job, we have to pay them,” he said.
Altogether, R&E is seeking to recover about R80-billion from various sources for the assets stolen by Kebble. This includes claims against auditing group PwC and Investec.
So far, R&E has recovered about R1-billion.
The disgruntled shareholder group, including former director Johann Blersch, also challenged the company because it did not have a remuneration report, a requirement of the King 3 corporate governance code.
Randgold claimed it complied with the code.
But Kovarsky told the shareholders that R&E’s remuneration policy was an “internal document” and there was no bonus policy.
He admitted, however, that the company had talked to a few big shareholders before bonuses were paid out, rather than the wider group of shareholders.
Blersch’s group was not placated, saying this infringed on the governance norm that all shareholders should be treated equally —
Being the CEO or [finance director] of a company like Randgold is not fulfilling
and that the board should ensure that minority shareholders were protected.
Kovarsky was unmoved, saying in response to some questions “Send the question via e-mail, we will respond in two weeks”, and on other occasions, just “No”.
Investec, which bailed out R&E and JCI just before Kebble died in 2005, is being sued by several of the investors.