Oh, how the mighty are fallen. The sudden reversal of the BIFM share sale to company executive managers and directors after cutting a multi million pula deal in secrecy is a reminder that none of us is untouchable. Even powerful business executives can slip up on a PR banana skin.
On the face of it, four of the company’s most senior members huddled together to draw a strategy that would propel the BIHL forward. Instead, they came up with a scheme that lined their pockets with millions of Pula. This was enough to raise eyebrows. The air was poisoned, and the situation was not helped by the company’s fancy footwork to keep the details of the deal a secret.
The PR campaign to set the record straight found itself running behind newspaper headlines. It failed to dispel the mood of suspicion which gained more ground with every conflicting version of events tendered by the company directors and executive managers.
Ironically, this should have been BIHL’s best year ever. The company announced its best results ever. In fact, their results were the best among companies listed on the stock market. Their shares, however, are on free fall. It is safe to conclude that the controversial deal was hurting the company and that some shareholders who were unhappy with the deal were dumping their shares, forcing down the company share value on the stock market.
Then on the eve of the BIHL Annual General Meeting, Bank of Botswana cancelled its asset management contract with BIFM. The central bank smelled a rat. The explanation provided by BIFM on the controversial deal did not add up. BoB may be small in terms of the business it gave BIFM, but it sure has a lot of clout. It is government’s advisor on economic issues. With the deal that was conceived to propel the company forward threatening to run it to the ground, the BIHL board of directors reversed the whole deal. We applaud them for doing the honourable thing to save other shareholders.
As it turned out, most shareholders who attended the Annual General Meeting had no problem with the principle behind the deal. Their gripe was the veil of secrecy surrounding the sale. Once all the facts were put on the table the AGM’s response was that “you should have explained all that in the first place.” Even the company chairman acknowledged that “with the benefit of hindsight, it is important to acknowledge that the communication of the transaction to stakeholders could have been more robust and this is regretted.”
The Chairman further reiterated that “With the benefit of hindsight, I must respectfully state that this transaction could have served the desired purpose if public perceptions and expectations had been handled differently through communication of the transaction to stakeholders at a more appropriate time instead of relying on the announcement in the Annual Report.”
The problem with trying to give such a huge deal a low profile by being economical with the truth is that you can not turn down the heat once the truth starts coming out. By choosing to suppress the real facts of the deal, BIFM unwittingly relinquished any control over what conclusions may be drawn. The BIFM saga should be a lesson to Botswana, that in the world of corporate governance, the truth and transparency are precious commodities.
