Wednesday, May 22, 2024

Uproar as gov’t engages former stock exchange boss as consultant after resignation

The business community has reacted with outrage to a decision by the Main Committee of the Botswana Stock Exchange (BSE) to retain its Chief Executive Officer (CEO), Hiran Mendis as a consultant after he resigns from his post in December 2015.

Those who are against the decision say it was made without due consideration of the cost implications of engaging Mendis as a consultant, and is against the spirit of localisation as the Deputy CEO, Thapelo Tsheole is capable of leading the stock exchange going forward. It has also emerged that all has not been well at Exchange House, as brokers and employees are not happy with Mendis’ ‘unilateral’ management style, while the BSE board seems to be content with rolling over and giving him whatever he wants without question.

Sunday Standard is in possession of correspondence between the Chairlady of the BSE Main Committee, Regina Sikalesele-Vaka and Minister of Finance Ken Matambo, which details how government readily accepted a proposal by Mendis for him to be retained as a consultant after he resigns from the bourse. In a letter dated 16 June 2015, Sikalesele-Vaka informed Matambo that Mendis has tendered his resignation from the exchange with effect from 31 December 2015, citing personal circumstances which compel him to be stationed in Sri Lanka for most of his time.

She further said Mendis had recommended for Tsheole to be appointed acting CEO for a period of 12 months, in line with the BSE succession plan that was put in place in 2014. “Mr. Mendis has also stated that he is available to continue with the BSE in a consultancy capacity for a further 12 months, during which period he would mentor Mr. Tsheole and make inputs to the demutualisation of the exchange and other strategic initiatives that the BSE wishes to undertake,” said Sikalesele-Vaka. She further told the Minister that the Main Committee of the BSE had discussed Mendis’ proposal and resolved that it is the best option available as it would enable smooth transition of the leadership of the BSE. “Accordingly, the Main Committee resolved to appoint Mr. Tsheole as Acting CEO after the departure of Mr. Mendis and enter into a consultancy agreement with Mr. Mendis.

The Governance and Remuneration sub-Committee has been entrusted with the task of negotiating a consultancy contract with Mr Mendis and the process is underway,” said Sikalesele-Vaka. Matambo responded on June 24th, endorsing the recommendation of the BSE Main Committee for Tsheole to be appointed in an acting capacity for 12 months after which he may be confirmed subject to him passing a performance assessment. “I further agreed that the BSE may enter into a consultancy contract with Mr. Mendis for a period of 12 months during which he will mentor the acting CEO and assist in the demutualisation of the exchange and other strategic initiatives,” he said.

When reports emerged that the BSE will engage Mendis as a consultant after his resignation, the stock broking community reacted with outrage and questioned the rationale behind the decision.

“Tsheole has been understudying Mendis for a long time and everyone knows that he is competent and ready to run the BSE. We all know that Tsheole was the brains behind most of the ground breaking initiatives at the bourse and there is absolutely no reason for Mendis to be retained as a consultant,” they said. They also opined that Mendis, who already earns as hefty package as CEO, will cost the exchange a lot of money if he is paid a consultancy retainer. “Its use the brokers, government and ordinary Batswana who will bear the costs of retaining him as a consultant. The Main Committee was ill-advised and there is absolutely no reason to retain Mendis as a consultant. Tsheole doesn’t need a mentor now. He has the requisite skills…just let the man do his job,” said the brokers.

While Sikalesele-Vaka told Matambo that the Governance and Remuneration sub-Committee is still negotiating a consultancy contract with Mendis, Sunday Standard is informed that the deal is as good as sealed. BSE Main Committee insiders have revealed that Mendis resigned because he had personal circumstances that compelled him to spend a lot of time in Sri Lanka. To that end, they said, he proposed to spend two weeks in Sri Lanka and the other two weeks in Botswana during the term of his consultancy.

“It seems his proposal was readily accepted by the Main Committee, with no regard to the cost implications of such a set up. In any case, why would you engage a consultant who is absent from the job for half of his term?” they said. Sunday Standard is informed that Mendis always travels first class, and his return ticket to and from Sri Lanka will cost around P45, 000 per trip. This will translate to P90, 000 every two months and P540, 000 per year in travel costs alone. Further costs will be incurred in his retainer fee, accommodation and benefits.

Questions also abound as to exactly what role Mendis will be playing at the BSE as Tsheole will be acting CEO. They cautioned that there is a danger of the two men clashing as their roles will overlap, which may result in Tsheole not being recommended for the top post at the end of his twelve month acting tenure. “What will Mendis be doing that other Batswana cannot do? We have capable men and women at the BSE who have been excelling over the years. Batswana are ready….we should be serious about localization,” they said. Sikalesele-Vaka could not be reached for comment at the time of going to print as her phone rang unanswered.


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