/ 17 June 1994

Board bafflements

South African directors are arrogant, have little knowledge of or respect for, shareholders’ rights and often do not understand how the Johannesburg Stock Exchange functions. These factors were recently highlighted by a number of company presentations.

Top of the list was undoubtedly the Anglo American Corporation’s media briefing at the beginning of this month. At the end of the hour-long meeting, a shareholder commented: “Well, that was a complete waste of time.” Indeed, it was.

Chairman Julian Ogilvie Thompson did little to expand on the financial results, simply ignored certain questioners in the audience and diverted crucial questions to his four deputy chairmain — Leslie Boyd, Nicky Oppenheimer, Graham Boustred and Mike King. “They are all well versed in the art of saying a lot without answering a single question,” says an analyst, who — like all analysts — refuses to be named on such “delicate topics”.

Judge for yourself. Among the questions asked were some on two extremely important issues which will affect the corporation’s direction and, therefore, its financial profile and results.

The first pertained to unbundling and the second to the controversial minerals rights issue. After a lengthy diatribe, neither were answered to any degree of satisfaction. Asked how unbundling will affect the corporation and whether this will entail a lengthy process, Ogilvie Thompson diverted the question to financial director King.

King said: “This is not the appropriate platform to discuss the issue.” Why not? The question was quickly fielded by Ogilvie Thompson, who suggested that the answer depended on how quickly funds could be mobilised by black organisations.”We will look at proposals which are economically viable and to the interest of shareholders,” said Ogilvie Thompson.

Ironically, he pointed at this year’s sale of African Life as an example of the importance of unbundling and promoting black entrepreneurship. The question was repeated: “How will Anglo undertake its proposed unbundling of JCI nand how long will this take?”

All Ogilvie Thompson would say was that legislation would have to be changed before that project could be carried out. So why did Anglo announce its intentions to do so? Was it politically correct to make the announcement before the elections or did it actually have a plan in mind? No comment was forthcoming from the directors. The minerals rights issue got even less attention.

Said Ogilvie Thompson: “This is a difficult question. Prospecting costs hundreds of millions of rands and changes to legislation should be a product of careful discussion.” He was sure that “when the time comes, government will make the right decision”.

Effectively, Anglo told shareholders it did not have a plan or it refused to admit it did have one. Either way, it is not treating shareholders as part owners in the company, but as “a necessary evil to obtain cheap funds”, says an industrial holding analyst.

“The problem of attitude is not limited to Anglo directors, but is much wider spread,” he says. “It seems these directors have forgotten that their companies are no longer theirs.” Under the Companies Act a shareholder is defined as a part owner in the company to the extent of the number of shares held.

Consequently, a shareholder has the right to information and to question this information. In fact, the doctrine of disclosure is the foundation on which the Companies Act is built and is used — or should be used to safeguard the interests of shareholders, investors and creditors. Based on this principle, shareholders should be given reasonable and adult answers to questions, and this need not be limited to designated meetings.