It has been a few weeks since the Botswana Insurance Holdings Limited General Meeting.
The reader will recall that this newspaper reported that the Board announced its retraction of the transaction that would have seen the sale of 27.5% of the subsidiary, BIFM, to local directors and a South African entity in the Sanlam stable.
This decision has been communicated to this newspaper and other stakeholders through a Board Memo that is interesting in more ways than one.
The thrust of the memo is that the Board maintains its position that in effecting the transaction, the Board members did nothing wrong. It maintains that the reversal is purely as a result of a realization that the means of communication to stakeholders of the company, was wanting, and that the purpose thereof was rendered ineffective, thus necessitating a rethink on their part. Thus the reversal, as their logic would have it.
To buttress this line of logic, the Board points us to the fact that those Board members who were involved in the transaction and who were the subject of re-election to the Board at the meeting, were duly re-elected thereto. This they gleefully opine at the instance of minority shareholders.
Subsequent to this memo, meetings have been advertised to and convened with trustees; the stated purpose being to explain the reversal of the transaction.
Interesting…because the thrust of the public outcry centred on the issue of corporate governance. Corporate governance is not only an issue of transparency. It encompasses issues of conflict of interest and fiduciary obligations to other stakeholders.
The question that has to be answered is how the Board considered itself to be objective in this exercise and, therefore, best able to execute its’ fiduciary mandate to its shareholders (the minority shareholders in this particular case). To state, albeit unwittingly, that the next time they attempt the transaction, they will tell us that they are about to enrich themselves is to miss the point completely and calls into question their fitness to hold office .
If reference to arms-length distance from the transaction and the involvement of accountants, lawyers and valuators is rendered as a pointer to the questions above, then the members alluded to above are either naïve in the extreme or think stakeholders to be gullible. Suffice it to state that since the infamous days of the Enron and WorldCorp collapses, liability for the actions of Board members cannot be passed onto hired third-parties.
The logic that suggests that one is willing to take a punishment voluntarily even whilst protesting their innocence vigorously can only mean that they have not learnt their lesson and are liable to be repeat offenders.
Interesting…also given the circumstances of the General Meeting itself.
This auspicious meeting was always going to be the subject of great interest given the prior publicity that had engulfed the company. The fact that many shareholders did not receive notice of the meeting, either through the company secretaries or through press advertisements, is telling.
That the meeting’s agenda was superseded by the announcement not only had the effect of pre-emptively warding-off the threat of some directors not being elected to the board, it also stifled debate and questions surrounding the nature and purpose of the transaction.
In the circumstances, hard questions were put on hold because there appeared to be position of remorse (mea culpa) adopted by the Board, thereby bringing sympathies into sway. Given the subsequent Board Memo and it’s spin on the meeting, it hardly goes without saying that such sympathies were misplaced .
The meeting misplaced the opportunity to seriously question the rationale for the sale of 17.5% of BIFM to Sanjeev Gupta’s operation within the Sanlam stable. If indeed the rationale was to fund an African expansion programme in return for BIHL stakeholders acquiring a 10% therein, then more questions follow.
It must be assumed, therefore, that whoever would acquire the 90% in that company would fund a proportionate amount. But is this so? If not, then why were BIHL stakeholders assets being stripped to fund this ostensibly SIMS/SANLAM project?
Is it possible that someone told Sims/Sanlam that such BIHL assets were there for the taking and that the local directors could ensure the same if the quid pro quo entailed some form of citizen empowerment deal? Why was this African expansion project not a perfectly explainable financial transaction requiring a joint financial injection between shareholders of both BIHL and SANLAM? Why should the former bear the financial risk alone?
It is into this environment that the imminent visit of the hierarchy of SANLAM will take place. An environment where the Board Memo of BIHL has indeed put to rest the concerns that surrounded a transaction that militated against the principles of good corporate governance but has left many questions unanswered with respect to the actors thereto. What it says and does with respect to its future representation in this country will be noted with particular interest.
Batswana are appreciative of the type of investment represented by Sanlam and African Life, particularly where such investments offer them the opportunity to participate as shareholders on the scale that a listed company offers. Where such a company is as visibly engaged in the development of the local infrastructure as BIHL is, they readily embrace it.
Indeed, when it does falter, through the actions of it’s officers, they are prepared to move ahead with it if it owns-up to it’s faults. This was amply demonstrated when some BIHL executives were alleged to have conducted insider-trading activities. Indeed I would even venture to say that if it could be demonstrated that this country’s liberal foreign exchange regime offered the company’s shareholders a competitive edge in the African exchange programme , then they would embrace the idea . But…as they say, you take Batswana for granted at your peril!
