Donna Block
The co-founder of New Africa Investments Limited (Nail), Jonty Sandler, tried to claw his way back from the business wilderness this week, appealing to shareholders in full-page advertisements to block Nail’s long-awaited restructuring.
The disgraced former executive resigned his post last year after it emerged that Sandler and three other directors had hatched a scheme to transfer R130-million in share options to each of themselves. Irate shareholders were appeased by his resignation and by the further commitment of Nail executives to put in place a major restructuring plan. Nail is preparing to dispose of a string of assets so as to focus on running Metropolitan Life, the life assurance giant. The plan allows Nail to transform itself from a sprawling conglomerate with a finger in every pie to a leaner and more defined financial services group.
The restructuring of Nail goes to the heart of a debate over whether black empowerment should focus on equity ownership or management control. Nail started out as an unwieldy conglomerate which gave powers to directors that were disproportionate to their equity – a system that got black empowerment on the road, but then left other institutional shareholders with little say in the company’s management. This was why investors welcomed Nail’s plan to become a focused financial services company.
Sandler took out full-page advertisements in several newspapers this week – just a few days before shareholders are due to vote on the unbundling – arguing that Nail’s restructuring would advance neither black empowerment nor the financial interests of the shareholders. Sources at Nail were dismissive of Sandler’s claims this week, saying the figures he had used to argue his case against the restructuring were faulty. “Jonty’s numbers are all wrong,” said one Nail insider. “He claims that ‘headline earnings per share’ last year were R585-million; in fact this was the total net figure. Moreover, when he claims that post-restructuring Nail will occupy only 1% of the Johannesburg Stock Exchange (JSE), he entirely leaves out our Metlife holding and our future plans there.”
In the advertisement, Sandler claims black-empowerment companies own 9% of the JSE – a figure that will collapse to 1% if Nail goes ahead with its plans. But BusinessMap, the leading business consultancy, has just completed a survey that shows black-owned companies account for 3,8% of the JSE, from 3,1% in November.
In a further development, there have been rumblings of Sandler’s attempt to team up with Phillip Dexter, current chair of Union Alliance Holdings and chair of the National Economic Development and Labour Council, to stop the Nail restructuring. Early in the week some press reports suggested that Union Alliance was “unhappy with Nail’s restructuring plan”. But by Wednesday Dexter had issued denials of any involvement in Sandler’s campaign.
Nail sources were particularly scathing about Sandler’s attempt to play the black empowerment card. “This is Jonty playing silly buggers – yet again. If he is such a champion of black economic interests, why is it that he had more equity in Nail than any black person, including [co-founder] Nthato Motlana?”
“Jonty’s mindset is 10 to 15 years out of date,” said another Nail executive, adding: “Conglomerates will die swiftly in a globalising economy. Even Anglo American is focusing. Jonty is still stuck in a pre- 1994 mindset.” Sandler was last month charged with raping a hotel employee in Himeville. He could not be reached for comment at the time of going to press.