New Eskom CEO in share scandal
GET OUT: SOLD MOST OF PERSONAL SASOL SHARES IN 2013
He and fellow executive say they obtained the necessary authorisation.
Andre de Ruyter engaged in questionable stock sales at Sasol in 2013, according to a forensic audit report. De Ruyter, who was Sasol’s senior group executive officer for global chemicals and North American operations, together with then chief financial officer Christine Ramon knew about cost overruns at a chemical project and sold the company’s stock before that information was disclosed to other executives, says the report, a copy of which was seen by Bloomberg News.
The report formed part of a risk and corporate governance assessment Sasol commissioned from Werksmans Attorneys.
Both executives deny wrongdoing, saying they obtained the necessary authorisation to sell stock and weren’t aware of the Werksmans report. Sasol confirmed the sales were authorised.
The report said, however, that had the information been more widely known, approval would not have been given.
The chair and acting chief executive of Eskom, Jabu Mabuza, said the company wasn’t aware of any investigation of De Ruyter.
“We can confirm that rigorous integrity and reference checks were performed independently, in line with normal recruitment processes and as required by the shareholder in supporting the board’s recommendations for any appointment to the position – these came back with satisfactory results,” he said.
“In 2013, a review into the share trading of certain executives was undertaken,” Sasol said in response to questions.
Ramon and de Ruyter left before the report was completed and their departures were not related to it, nor were they told about it, the company said.
Sasol added it didn’t believe it needed to report the trades to regulatory authorities.
Stock exchange filings show De Ruyter sold three tranches of the company’s shares for a total of R8.9 million on May 14, 2013, while Ramon sold a single tranche for R33.7 million the same day.
In both cases, the sales represented the majority of the Sasol stock they held, according to the Werksmans document. Both executives reported to Sasol’s thenCEO David Constable.
On the day the two executives sold their shares, the company held a meeting at which other executives were told about the escalating costs of expanding a synthetic wax production project, according to the audit report.
Internal Sasol correspondence showed De Ruyter and Ramon knew about the issue as early as February 2013, the report said.
The manner in which the report was produced “smacks of an intent to get the imprimatur of a law firm to cast unsubstantiated and uncorroborated allegations”, De Ruyter said. “I do not consider the matter adequately dealt with.”
He said the fact that the report had come to light six years after he left Sasol seemed to be an attempt to undermine his credibility as incoming CEO at Eskom.
Sasol’s per-share earnings rose 11% in the year through June 2013, as output from its synthetic fuels business increased. That meant the trades didn’t work out optimally for the two executives: the stock surged 25% between the date they sold and the end of 2013.
Ramon said: “I strongly deny I have made any material misrepresentations and that I was conflicted in any manner as alleged. Sasol’s wax production project had no bearing on my decision to sell my securities in Sasol.” – Bloomberg