WE NOW have two full-blown boardroom war zones: HCI and PPC. Both have CEOs at loggerheads with boards. Both have damaged share prices. Both show how egos can trump rationality, even when many millions are at stake.

The HCI case is set for dramatic court action. The court papers reveal a serious breakdown in the relationship between HCI’s executive chairman Marcel Golding and his long-time business partner Johnny Copelyn.

Reading through the court papers and correspondence, Copelyn seemed quite reasonable, but realised the relationship between Golding and HCI had to end. That realisation seems to be driven by a fallout between Golding and HCI’s biggest shareholder, the SA Clothing and Textile Workers’ Union and HCI director Yunus Shaik (brother of Schabir).

The root of the fallout is apparently over efforts by Shaik to have e.tv news cover events favourable to president Zuma. In other words, Golding resisted political interference in the news process and got shafted for it.

The other side have pinned it on trade in Ellies shares. It seemed that Golding instructed Investec to buy just shy of 5% of Ellies for R24-million for strategic reasons to do with getting Ellies to market set-top boxes. That was before the share tanked more than 50%.

HCI then alleged that Golding had done the buying without permission and that this was gross misconduct. Golding had earlier offered to cover the full costs of the transaction himself and donate the shares to charity. Golding alleges the Ellies transaction is just a device being used to force him out for other reasons.

Over at PPC the dispute has, so far, kept clear of the courts. Former CEO Ketso Gordhan apparently stormed out of the boardroom after he was criticised for trying to fire his finance director, Tryphosa Ramano. He then tried to rescind the resignation but the board would have none of it. So Gordhan decided to take on the board by approaching shareholders directly.

He has so far won over Foord Asset Management and Visio Capital Management.

Foord has apparently been increasing its stake so the two firms cross the 10% threshold needed to call a general meeting at which it could propose to replace the whole board.

It is a dangerous strategy for Foord. While it initially wanted four of the current directors to stay, they’ve all said they’ll have none of it. So the only option is a wholesale replacement of the board, losing all of its institutional memory. The costs of that have to be balanced with the benefit of backing Gordhan.

In both cases, no good can come of the battles. Shareholders, staff, customers and other stakeholders are bound to lose.

Both cases are examples of how egos and shareholder-value don’t mix. When personalities clash, the board should ensure that the clash is managed without damaging the company.

At both PPC and HCI the respective boards have failed to meet that basic expectation.

HCI then alleged that Golding had done the buying without permission and that this was gross misconduct. Golding had earlier offered to cover the full costs of the transaction himself and donate the shares to charity. Golding alleges the Ellies transaction is just a device being used to force him out for other reasons.

LAST WEEK I wrote rather negatively about the Postbank — pointing out that it is an aberration in the banking market as it is not overseen by the Reserve Bank, and forms part of the shambolically run Post Office.

I received a rather irate e-mail from the Post Office’s communications GM, Khulani Qoma, accusing me of a litany of factual inaccuracies. In particular, Qoma took issue with my claim that the Postbank’s balance sheet is intermingled with the Post Office’s — an organisation which this week enters its third month of a strike, having told Parliament it was unlikely to be able to pay staff salaries.

In fact, he says, it is strictly segregated. This is apparently by agreement between the Department of Communications and the Treasury. Operationally, there are separate asset and liability management committees. Moreover, on the segregation, Postbank has R1.8-biilion of liquid assets over and above its deposit base.

He also took offence at my claim that Postbank is being badly run. He pointed out that its auditors have raised no concerns about its financial statements.

Qoma offered an interview with the acting MD of the Post Bank, Shaheen Adam, an offer I accepted.

As of the end of the week, however, that offer hasn’t been fulfilled. More’s the pity as I could have interrogated just how well managed the Postbank really is.

It is good to hear of the segregation of the Postbank’s balance sheet from the rest of the Post Office. It is odd that this was not mentioned in the 2013 Post Office annual report, considering how material that fact may be to creditors. There is also no financial disclosure whatsoever on the Postbank’s website, or anywhere else I can find, of this segregated balance sheet. Registered banks all have detailed financial information on their balance sheets published on the Reserve Bank’s website very month.

This is the very minimum level of transparency one can expect from banks whose financial management is critical for depositors. I imagine that the Post Office’s auditors do not think to mention that the Postbank’s assets are segregated because the segregation has no legal standing.

It appears to be a decision of the shareholder and speaks to the management of the operations of the Post Office, rather than a formal legal segregation. If the Post Office were to be sued, there is no way the balance sheet of the Postbank could be legally protected.

If the Post Office were bankrupted, the assets of the Postbank would still be part of the estate.

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