HCI: A VERY UNUSUAL AGM

A little more governance, fewer tears perhaps?

If anyone was expecting public sparks to fly at the HCI AGM, they would have been disappointed. Sense came to the party as the two protagonists in the boardroom drama, which has damaged both corporate and personal reputations, attempted to put a dignified face on their battle and an end to the media spotlight.

Both John Copelyn, CEO of HCI, and Marcel Golding, who resigned as executive chairman on Monday, were present at the group’s AGM on Thursday.

Golding oversaw the formalities and did his best to deflect questions relating to the appointment of Yunus Shaik as an executive director, allegations of political interference in e.tv, whether the charges against himself were farfetched, and the company’s bonus and remuneration strategy.

“Please, I’m not ducking the issue,” he said in answer to questions posed by shareholder activist Theo Botha and shareholders Chris Logan from Opportunaté and David Couldridge from Element Investment Managers. “I’ve said what needs to be said. I want it to be as dignified as possible, notwithstanding the differences of opinion.”

It was clear he wanted to deal with the formalities of voting through the various resolutions as quickly as possible, in order to read his prepared statement and depart the assembled eyes of shareholders, fellow directors and intrusive media.

“My colleagues at HCI have won and I have lost and I will be leaving. My hope is that the legacy I have tried to build continues under the new leadership of the company.

“Trust, integrity and truth is what our media business is about.”

“I have tried to uphold that.”

With that he departed the packed boardroom, with damp eyes.

John Copelyn is not a man usually moved to tears – certainly not in the boardroom. His emotion was also brought to the surface – not by the grim handshake proffered by Golding as he departed – but by the mention of the late Violet Seboni, a former deputy president of Sactwu who was killed in a motor accident in 2009.

The minister of Economic Development, Ebrahim Patel delivered the Violet Seboni memorial lecture two months ago and Copelyn had mentioned her name as he attempted to illustrate the benign nature of the requests from government and Sactwu for news coverage on e.tv. For reasons that remain his, he was unable to continue with the story and paused to collect himself for several moments.

“The issue of political interference is without question the most serious issue for all of us,” he continued. “But we need some balance here. I‘ve owned e.tv for 17 years and I’ve not had one conversation with Patrick Conroy [head of news].

“I don’t regard the incidents [as described in the past week] as interference.”

Rather they are requests from the government and trade union Sactwu that they would make of any other media organisation.

He did address several issues that he said HCI needed to answer to, and where the public deserves an answer.

There is zero chance of HCI splitting of its media assets, which are largely held in subsidiary Seardel. “We spent a long time working on this. We reversed these assets into Seardel, and took other things out of Seardel. But given where we are today I would say that this is now most unlikely. Close to zero in fact.”

He also addressed Golding’s assertion that financial director Kevin Govender had traded in Ellies shares for personal gain. According to Copelyn the managers of Govender’s family trust had purchased shares, but had sold out long before Golding began to buy shares in the company.

He also discussed at length the role that Yunis Shaik plays as an executive in the company. Initially, as a non-executive director he provided a lobbying service to e.tv and Sabido. “The digital world is our future. What regulation the state imposes is vital and we have every reason to advocate for, and push a view that is in our businesses favour. The gorilla in the market, DSTV, happens to have a different view.

“In March Yunis became an executive director of HCI. He has closed his legal practice and stopped consulting to Sabido.”

For the public at large the last ten days in HCI’s life will fast become a memory as the media, with its short attention span, moves on to the next show in town.

For the executives, the staff and shareholders however, the fact that a boardroom battle became so very acrimonious and so very public, will have lasting ramifications.

It raises very serious questions of governance.

“Governance means different things to different people,” says David Couldridge, a senior investment analyst at Element Investment Management. “And often people ignore it until it matters.”

In the case of HCI shareholders have been getting pretty good returns. “The executives have done well and have made good calls and while this is happening people tend to look away, and so a culture starts to develop; its one where no-one questions you,” he says.

“In this case you have a board, with independent directors, yet it appears they did not ask questions; in fact they did not even have the information from which to base questions. In some cases it would appear that some decisions were taken without the board’s involvement (as suggested here).

“Governance matters,” he says. “A proper board, with the right skills can ask the early questions. You should be able to stub out problems before they start smoldering and the fire breaks out. In this case it would appear that the board is not used to asking questions and getting information.”

At the AGM it would appear that HCI’s CEO and financial director took many of the suggestions to heart. Whether they do anything with them remains to be seen.

Source: Moneyweb – Sasha Planting