Nyasulu's action threatens to chill investor activism
April 9, 2009
Much hangs on the outcome of the battle between Public Investment Corporation chief executive Brian Molefe and Sasol chairwoman Hixonia Nyasulu.
Anyone who has interacted with Nyasulu will have little doubt about her integrity. And Molefe is adamant he has not defamed her.
It appears, however, that he has concerns about her position as chairwoman of Sasol, given that a company she controls holds 1.3 percent of Sasol Oil. These concerns seem to have reached heightened levels in January, when Sasol announced its double application to the competition commission for leniency: one for Sasol Gas and the other for Sasol Oil.
Given that Sasol has "form" in this area - not least the approximate R3 billion fine it is facing from the EU competition regulators, and its frequent attendance before the local competition authorities - Molefe's concern seems reasonable. So his worries that Sasol provided more information about the gas application than about the oil application may be understandable.
Nyasulu believes Molefe went too far in his media comments on the matter in January, so she has called in the lawyers - at her expense.
Which side one takes is likely to be influenced by whether one is a director.
Given the importance of directors and independence in corporate governance, this is a crucial issue for shareholder activism.
If it goes the legal route, it could have a chilling effect on the already cold level of shareholder activism in this country. When again will a shareholder raise questions about the independence of a director who has been on a board for more than 10 years?
While there is no doubting Nyasulu's motives, the ability of a director to threaten legal action - which could be funded by the company - would put an end to shareholder activism, and with it any hope for advancement in corporate governance.
Cleaning up Zimbabwe
Zimbabwe's hyperinflation disappeared instantly at the start of this year, when the price mechanism was restored and the cash base reduced to a fraction of its former state. Not only was inflation reversed, but prices fell in the first two months of the year.
Zimbabwe scrapped price controls in February, allowing suppliers to make profits. The reintroduction of the profit incentive did what it is supposed to do: provide producers with an incentive to produce.
At the same time, the government was forced to replace its own worthless currency with multiple foreign currencies, because it had become uneconomical to move around Zimbabwe dollar notes in the required volumes to make transactions feasible.
Before the reforms, inflation was officially running at 231 million percent - although other sources put it much higher.
Now prices are falling, but not all Zimbabweans will benefit. Although people with jobs get some sort of hard currency wage, the unemployed have to depend on remittances from family members abroad.
John Robertson, an economist in Zimbabwe, reports that others are hawking, bartering or scrounging a living from their extended families, or looking for charity, or support from aid organisations. "A great many are suffering malnutrition and many other hardships. Crime is growing worse, because so many more are living by their wits. It is a grim scene."
The impact, of course, is felt in South Africa, where economic refugees are attempting to supplement their family incomes. While many are employed and contributing to South Africa's gross domestic product, others are here illegally and therefore are not in a position to look for work. Some are employed illegally, while others do as they would in Zimbabwe: live on charity or their wits.
How much happier the region would have been if its leaders had not supported President Robert Mugabe.
In the pipeline
The strike by the SA Transport and Allied Workers' Union (Satawu) in the road freight and logistics industry, and the fuel shortages that could result from the disruption, again highlight the need for South Africa to sort out the precarious position in the local fuel industry.
In 2006 the Moerane commission looked into fuel shortages experienced in December 2005. The commission warned that unless weaknesses in the country's fuel supply were addressed urgently, another supply crisis could emerge.
Supply to South Africa's inland areas, either via new pipelines or from the proposed Mafutha project that Sasol and the Industrial Development Corporation are looking at, is needed to ensure that enough fuel gets through in spite of circumstances such as strikes and emergency refinery shutdowns.
Fuel shortages could arise soon, especially in inland areas, if the national strike by Satawu in the road freight and logistics industry goes on for an extended period.
The members of the SA Petroleum Industry Association (Sapia) have yet to experience a fuel shortage despite the Satawu strike, which started on Tuesday.
Sapia's members include BP, Caltex, Engen, PetroSA, Sasol, Shell and Total.
Avhapfani Tshifularo, the Sapia director, said yesterday that companies with their own vehicles should be less affected than those that relied on third-party logistics firms. If the strike were sustained, there were likely to be petrol stations running out of fuel for a couple of hours.
Industries that might be affected by the strike include construction, medical equipment, medical waste and perishable cargo, such as fruit and vegetables for retailers and animals to markets.
The strike again increases the pressure for increased fuel supply in the local market, especially inland. It also puts pressure on fuel companies to increase the amount of fuel they hold in reserve stocks in case of emergencies.
Edited by Paul Smith. With contributions by Ann Crotty, Ethel Hazelhurst and Justin Brown
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