Solomon regains Wesizwe control

David McKay | Thu, 17 Dec 2009 15:12
[miningmx.com] -- IN A TEMPESTUOUS meeting, Wesizwe Platinum shareholders today overhauled its board for the second time in four months with beleaguered mining engineer, Mike Solomon, set to resume his duties as the company's CEO.

He will be joined on Wesizwe’s board by Rob Rainey, formerly acting chairman, as well as four other directors who were voted off the board in August at the firm’s sparsely attended annual general meeting.

Solomon told Miningmx that his priority was to install appropriate corporate governance structures in the company for which he was heavily criticised by outgoing chairman, Iraj Abedian.

Interestingly, Solomon also said he would take steps to root out an attempted hostile takeover of the company which he said had been led by Musa Capital, a firm founded by Antoine Johnson, a North American with a background in private equity.

“If there is a hostile bid for the company, we need to see who is behind it,” Solomon said in the immediate aftermath of a dramatic and ill-tempered extraordinary general meeting (EGM).

And in a prepared press release to the media, Solomon said: “This raid has been led by Musa Capital and is not in the interests of the majority of shareholders”.

Solomon’s reappointment was by the thinnest of margins, however. Some 51.6% of votes cast were in favour of his reappointment with some 48% going against him.

Disele 'DJ' Phologane, a Wesizwe Platinum board member whose claim to represent the Bakubung-Ba-Ratheo community, the largest single shareholder of Wesizwe Platinum, was audibly disputed, was removed from the board by a wider margin. Only 38.78% voted against a resolution he stay on the board while 51.72% voted he go, with the balance made of abstentions.

All in all, Abedian, Phologane and acting CEO, Nyasha Tengawarime, were voted off the board and will be replaced by Solomon, Rainey as well as Dawn Mokhobo, Mike Eksteen, Peter Gaylard and Kgomotso Moroka, all of whom had been serving on the board prior to the August AGM.

A total of 81.4% of shareholders were represented at the EGM.

Corporate governance

Commenting on his future in Wesizwe, Solomon said that he would serve out the remaining year of his contract, but was still likely to retire thereafter. He also said corporate governance, a properly functioning board and ways to finance Wesizwe’s platinum mine development were key.

Said Solomon: “We have to clear up the corporate governance and make sure that doesn’t happen again”.

He was referring to allegations levelled at him that he had expensed the private use of a helicopter to the company’s account, and more importantly, that he had converted incentive-related shares to cash which was then misrepresented as a bonus in the company’s annual report.

Details of these alleged abuses were provided by Abedian who, in a preamble to voting, described what he termed “an agonising” period as the chairman of the company.

After being invited to the board by Solomon, Abedian found that it was divided by two gangs: those for Solomon and Rainey, and those against the two men. He described how he had commissioned Deloitte, an auditing firm, to examine claims by Nyasha Tengawarima, then CFO of Wesizwe, that Solomon had racked up nearly R2.8m on the company credit card over three years.

Auditors had never reported on these costs because, on an annual basis, they were below R1m and therefore fell below the materiality test, said Abedian. Tengawarima said he could only blow the whistle on Solomon once he had been made financial director, even though he knew of them many years before.

In Abedian’s view, Solomon had flouted the fundamentals of corporate governance while CEO. “I have sat on many boards, private and parastatal, but I have never seen disregard for corporate governance at this fundamental level,” he said.

Solomon, in addressing the EGM, declared himself shocked that these allegations had been made in public without having the opportunity to prepare his own response. “Letters to request copies of this documentation had been refused,” he said. “I have been tried in the media and in this meeting without the ability to respond”.

Solomon later claimed Abedian had been biased and unfair: “It saddens me deeply that the current acting-chairman, who I was responsible for introducing to the board, had not lived up to the high standards of transparency which I expected of him.

“The bias and downright unfairness he has shown is disappointing and frankly not worthy of somebody with integrity,” he said.

Bakubung-Ba-Ratheo

But if Abedian and Solomon were acrimoniously pitched against one another, it was nothing to compare to Disele Phologane’s reception when, during one part of the EGM, he described himself as the representative of the Kgosi of the Bakubung-Ba-Ratheo.

“Where do you live?,” said certain community members suggesting Phologane was not an active member of their settlement.

The Bakubung-Ba-Ratheo, on whose land in South Africa’s North West province Wesizwe is developing the R5.6bn Frischgewaagd venture, have a direct 12.58% stake in Wesizwe.

The bias and downright unfairness he [Abedian] has shown is disappointing and frankly not worthy of somebody with integrity

A further parcel of shares in Wesizwe was swapped for R500m in cash in a deal brokered by Musa Capital Advisers. These shares were then placed in a firm called Newshelf 925 in which the Bakubung have a 60% stake.

The royal family of the Bakubung, led at the EGM by Mokgwari Monnakgotla, told Miningmx that Phologane did not represent the community on the Wesizwe board. “Phologane was the adviser of the Bakubung-Ba-Ratheo because he was close to the late King David Monnakgotla. However, he did not have the support of the new king, Ezekiel Monnakgotla,” said Mokgwari Monnakgotla who added that the community would meet to appoint its own appropriate representation for Wesizwe’s board.

Factionalism would appear to run deep in the Bakubung, however, as Phologane was also well supported at the EGM by other community members.

The two sides heckled each other extensively and, at one point, moved to abandon the EGM until their internal community disagreements could be settled.

Solomon said having the Bakubung-Ba-Ratheo’s affairs resolved was a key challenge going forward. “I don’t want to meddle in shareholder affairs, but having fair representation for the community is essential,” he said.