The Boardroom Talk Podcast: When to engage with the media, and when not to
A look at the Boustred affair, Alwyn Smit ex-Decllion, Verimark's non-communication and the Old Mutual/Hyprop deal that never was.
MONEYWEB [Hilton Tarrant]: Good afternoon and welcome to this week's edition of the Boardroom Talk podcast. Today is Thursday, July the 16th, and I'm Hilton Tarrant, joined in the studio with Moneyweb's Alec Hogg. Alec, a lot being made in the media this week about actually engaging with the media. You had a fascinating discussion with communication strategist, Clive Simpkins, on the SAfm market update earlier on in the week. When do you speak to the media and when not?
ALEC HOGG: That's very interesting. Graham Boustred, well we'll go into him in a little while, but he had a discussion with three journalists from Business Day last week, that is still causing a lot of ructions in the boardrooms of South Africa and it comes down to, it's not always sensible to talk to the media, certainly not - Clive Simpkins reckons anyway - when you're 84 years old and having a look in the past. And Boustred is an interesting story. He is a gentleman who grew up in Johannesburg, he went to St Johns, so he certainly doesn't come from an underprivileged background, St Johns private school, was at Oxford as well, so well qualified there, and went on to become a mogul of South African industry.
He was the man who started Highveld Steel for Anglo American, he was the chairman and the builder of the Richards Bay Coal Terminal and many people regarded him as Mr Coal in South Africa. At the time that he got involved in the coal sector, we were producing about 60m tons of coal a year. By the time he left, 16 years later, it had trebled to 178m tons and from a small export earner, it had become the second biggest export earner to gold. So not surprisingly, Boustred had a fairly high opinion of himself and there were others around him who did too, not least the South African Institute of Mining and Metallurgy who made him Man of the Year in 1990. At that point in time he was riding the crest of a wave, but there was always an undercurrent around Graham Boustred, people didn't really like him, he was regarded as one of those from an old school who just made sure things happened, it didn't matter what people got in the way. He was very blunt, he would use language like that that came out in the Business Day article, the "F" word.
It was at a time as well when the Rand Club where many deals were made, didn't allow women in through the front door. If you had a female guest and I remember my very first boss, Penelope Gracie, refused to go to the Rand Club because she was made to come through the back entrance to appear at meetings there. So it was a different time and a different era and if one looks back on it, Boustred belongs to that era and certainly not to the era today.
The unfortunate thing about all of this is that he had some good to say. The Anglo American company has not been well managed in the last few years, it has passed its dividend for the first time in history, it has made some enormous mistakes, bought other companies for too much, raised debt at a time when it shouldn't have been doing so, but the misfortune is that Boustred by bringing in some quite ludicrous statements, has shattered his own argument and possibly the argument of those who feel that Anglo needs to be shaken up and something needs to be done there, because they are now going to be tainted with the Boustred brush. Far better for everyone concerned that Boustred had not spoken.
Our columnists have had a wonderful time lampooning the old gentleman, there have been two terrific stories on Moneyweb by Jeremy Gordon and then by David Bullard, making light of the whole episode. But it does tell you that there is a time to keep your mouth shut and in Mr Boustred's case, he didn't know that.
MONEYWEB: And it's not just the Boustred example. We've had a number of cases this week where questions would be raised around people engaging with the media or not engaging with the media. One of those, Alwyn Smit, the ex-Decillion man, choosing not to engage with the media and then suddenly this week deciding to engage.
ALEC HOGG: Well I'm pretty sure this is to do with the fact that he's trying to do big deals internationally at the moment with a Finnish company called Ruukki, which he is now the chief executive of. During his time at Decillion, initially when Decillion was listed on the JSE, Alwyn Smith was pretty open and in fact was widely quoted on Moneyweb and elsewhere, it was the listing of the year, going back to the boom in the 90s. But he then started removing himself as Decillion got into more and more trouble and today he wrote a long letter me, which we have published on the website, claiming that he is being unfairly treated and that unfortunately by not engaging over the past four years, with Barry Sergeant in particular who has been doing investigative stuff around the whole Decillion collapse, Alwyn has put himself onto the back foot.
What is interesting is that Barry has now also got the bit between his teeth and he is challenging a lot of the statements that Alwyn has made in his letter to Moneyweb, that we always do and we do that, we'll publish anything, anybody's point of view, any opinion and especially so those people who have been criticised by our journalists because we feel that it's always best to try and allow the reader to have an opportunity to make up their own minds.
In Alwyn Smit's case, he preferred not to engage with the media and this is a dangerous tactic and happens not just with Moneyweb, but has happened on many other publications, where you will see sometimes outrageous stuff written about business people and in the boardrooms, people are surprised that these outrageous claims have been made to the extent that often the board would say, "Ag, let's just ignore it". That's about the craziest thing to do, because that statement then gets repeated elsewhere as fact and business South Africa needs to realise that if there are outrageous statements made about them, they have a duty to respond to them and to explain to the reader generally and certainly to that reporter and that publication, that the facts are not correct.
If that publication then chooses not to acknowledge that other point of view, well then there's more that one can do about it, but to simply refuse to engage is not a good strategy, as Mr Smith is now discovering.
MONEYWEB: We've had almost the complete opposite of that with Mike van Straaten, the MD of Verimark, who engaged with the media when times were good, but now where he's involved in a deal where he's trying to take his own company private, at a much lower price than they brought the company to market at, he has decided not to engage with the media and actually using his PR agency to engage on his behalf.
ALEC HOGG: The whole Verimark story leaves a very bitter taste in one's mouth. Big promises were made at the time of the listing, he sold half his company. If you're going to do that, you better deliver, and he didn't, he never delivered.
The share price dropped from R2.50 at which the shares were issued by him on the basis of promises and I guess the market conditions at the time were pretty full of hype, to 20c and he's now buying back the shares at effectively 20c in the rand of what he received. So he's taking R100m that he got for listing the company at a point in time and he is buying back the company for, well the shares he doesn't own, for R25m and this is appallingly bad behaviour. There is a loophole in the law, it seems, that he is trying to drive a bulldozer through.
The SRP is looking into it, Richard Connellan told us earlier in the week, he cannot speak to us on the record yet, but he is investigating and one hopes that the Securities Regulation Panel will take this very seriously and if the horse has bolted this time round, please God, to ensure that they don't allow another one to bolt in future. And the real problem here is that van Straaten has voted his own shares. So it really opens the door for any entrepreneur in a time of a bull market, to make the most ridiculous claims about profits by his company, sell off the shares to the public and then when those claims are not fulfilled, come back because he's got the greatest voting power still, and buy back those shares from investors and clearly put them at a prejudicial situation.
MONEYWEB: We had another bizarre situation this week where Old Mutual refused to sell one of its properties to Hyprop which it had deemed a competitor, a property not too far from our current Moneyweb offices. They then sold it to somebody else, a middleman who they deem not a competitor, and that person in turn sold it to Hyprop, but Old Mutual basically lost out on R30m, the higher amount that Hyprop had offered them.
ALEC HOGG: Well we're still waiting for an official statement from the CEO of Old Mutual South Africa on precisely which heads are going to roll here, but if they don't, I would be very surprised. This is part of a system that is long gone in the western societies, you still have some vestiges of it in South Africa, where financial institutions who are custodians of retirement funding, treat those retirement funds as though they are their own. It amazes me that the Competitions Commission is now trying to go after the construction sector where there is clearly enormous competition where most of the construction companies, both here and internationally, were keen to get involved in these big stadium projects, they're going along there where under their noses you have an open and shut case of one property company refusing to sell a business which in fact is owned by retirement funds, to another property company because that property company, in its opinion, is a competitor. That's absolutely ludicrous! The fact that Hyprop got the property anyway for the price that it was prepared to pay, just shows us how silly the whole approach has been from Old Mutual - heads must roll!
MONEYWEB: Fascinating stuff. Alec Hogg is the editor-in-chief of Moneyweb and he'll be back with us again next week Thursday for another edition of the Boardroom Talk podcast. |