Time for Tiger to come clean
When news first broke last year of the bread price-fixing scandal, Tiger Brands at first tried to present its involvement as minimal, no more than the doings of a few rogue elements.
But as a fuller picture emerges following the pharmaceutical cartel case, it has become increasingly clear that corruption was deeply embedded in the culture of the company.
Competition Tribunal head David Lewis, for instance, remarked that it looked like the company was home to a “substantial culture of anti-competitive conduct”.
The ensuing events have seen Tiger’s chief executive Nick Dennis and chief financial officer Noel Doyle stand down, while two further board members, Haydn Franklin and Mike Norris, have also resigned. But questions remain on the role of the Tiger board: what did it know and when?
To what extent was it aware that it was facilitating, overseeing or turning a blind eye to illegal practices; and if it was unaware of what was going on, did it not fail shareholders in a duty of diligence?
The board needs to come clean about any involvement by senior executives, and if the internal investigations exonerate all the accused, then it should release the reports publicly so their innocence can be established once and for all.
Tiger has gone to great lengths to claim that its senior executives did not have any knowledge of the collusive behaviour happening under their watch.
Chairperson Lex van Vught has used the findings of numerous “independent” internal investigations conducted by law firm Edward Nathan Sonnenberg to proclaim the innocence of senior managers, but these reports have not been made public.
When it emerged that Doyle was one of 26 staffers disciplined for collusive practices in the bread industry, Van Vught defended these claims by stating that when Doyle committed anti-competitive acts he was a junior in the company and not a director.
Doyle received a final written warning for his role in making agreements with competitors to each shut down certain bakeries that would benefit the others.
Van Vught stated that Doyle was an “outstanding financial executive” and his decision to leave Tiger Brands shortly after receiving a final written warning was “regrettable”.
“The collusive activities that he voluntarily provided information on had taken place several years before when he was in the more junior position of the bakery division,” said Van Vught.
“The independent investigation did exonerate the then executive directors from any involvement in or knowledge of such activities.”
In June 2008 Adcock Ingram concluded a consent order agreement with the Competition Tribunal, agreeing to pay a fine of R53-million for its part in a pharmaceutical cartel that had been in operation for eight years and had rigged numerous government tenders.
The Competition Commission’s referring affidavit for the case had also stated that a witness had implicated Tiger Brands company secretary Ian Isdale and two other board members who have since left the company.
The witness alleges that Isdale and board members Franklin and Norris were informed about the collusion as far back as 2002 but failed to act.
New Tiger chief executive Peter Matlare informed the Competition Tribunal at the hearing in June that Isdale had been removed from any duties related to the collusion case until an internal investigation into the conduct of Isdale and two board members had been concluded.
However, according to Adcock Ingram’s head of corporate affairs, Mike Mabasa, the internal ENS investigation into the collusion at Adcock Ingram was “entirely concluded” during May 2008, before Adcock even appeared before the tribunal.
If this is the case, why has the report not been made public or handed over to the Competition Commission, and are the allegations against Isdale, Franklin and Norris baseless?
Tiger Brands’ Jimmy Manyi says the investigation into the conduct of Isdale, Norris and Franklin is complete and is being considered by the board.
Manyi says when the board pronounces on the report, the findings will be made public but the report will remain confidential.
Adcock Ingram lists on JSE
Adcock Ingram may be making a big song and dance about its return to the Johannesburg Stock Exchange, but the market has been cautious.
While the market’s initial reaction to its listing this week has been described by analysts as disappointing, Adcock insist that the move to list separately from Tiger Brands will unlock shareholder value.
Adcock shares began trading at R35 on Monday and, by Wednesday morning, they were sitting at R34,70, which gives the company a market capitilisation of almost R6-billion.
Tiger Brands’ share price opened at R127,75 on Monday after closing last Friday at R158,50. It later dropped to R126,35 on Wednesday.
Adcock Ingram’s head of corporate affairs, Mike Mabasa, says the company is happy with the successful listing and will be watching the share price over the coming weeks. He says the unbundling from Tiger Brands allows Adcock to be a separately listed, focused, independent and leading healthcare company.
“We are embarking on a significant capital expenditure programme of around R850-million for the next three years,” said Mabasa. “We now have the capacity and strategy flexibility to grow through acquisitions and by internationalising our business.”