Mungo Soggot
The state tea company has quietly axed its managing director after a disciplinary inquiry headed by a retired high court judge found him guilty of financial impropriety.
Sapekoe suspended Mike Cherry three months ago and fired him last week. The low-profile company has clung to its apartheid-era penchant for secrecy and sought to keep the matter under wraps.
Sapekoe, based in Tzaneen, produces nearly all South Africa’s tea. Set up in 1963, Sapekoe rapidly turned into a job scheme for white management and is protected by regulations which force local tea manufacturers to buy its tea.
The company is controlled by the state’s industrial holding group, the Industrial Development Corporation (IDC), which probed the charges against Cherry after he was suspended and then dispatched a forensic audit team to investigate further.
Judge David Melamet, who has retired from the Johannesburg High Court, found Cherry guilty of breaking his fiduciary duty as MD and of conduct “not becoming his position”.
The IDC and Sapekoe this week refused to discuss the allegations against Cherry. Sapekoe’s acting MD, David Parken, said he did not know the details of the allegations against Cherry. “I was not party to the inquiry and I was not party to the detail of the alleged offences.”
Sources said that in an open letter last week Parken congratulated officials on their efforts to keep the matter secret. He said he was pleased the matter was never made public and that any rumours that leaked out were ill-informed. He also urged that it should remain a private Sapekoe matter.
Cherry’s departure takes place ahead of an imminent shake-up of the company. The IDC plans to partially privatise it sometime this year.
IDC MD Khaya Ngqula said the new partner would probably secure at least a 30% stake. Ngqula said that although Sapekoe had been unprofitable at times in the past, it was on track for a better performance this year.
Last year the company was almost shut down by a strike for the entire summer harvest period. Ngqula said that after losing about R23-million last year, the company should post a profit this year.
It is understood that one possible equity partner is a very wealthy establishment farmer.
The quota system which is supposed to protect Sapekoe forces local tea manufacturers – such as Lipton and National Brands’s Five Roses – to buy about 50% of their tea from the parastatal before they can import often cheaper and better tea. Sapekoe, which accounts for about 70% of South Africa’s tea production, harvests about 7 000 tons of tea a year. Local tea manufacturers use about 21 000 tons a year.
Industry sources said that it is a reflection of Sapekoe’s ineffeciency that it has not managed to capitalise on its guaranteed market and turn the company into a lean, profitable operation. Sapekoe owed the IDC R155- million in the latest financial year.
Parken told the Mail & Guardian that as far as affirmative action was concerned, the company’s policy was “in line with government objectives”. He said that of the 46 staff at Sapekoe’s head office in Tzaneen, five were black. One is an executive.