The former head of Sasol who signed off on the group’s disastrous Lake Charles plant, David Constable, has been named the next CEO of Fluor Corporation — the lead contractor for the troubled US project.
Constable, a member of the Fluor board since 2019, will now assume the corporation’s top job come January 1 2021, the global engineering and construction company announced in a statement.
Constable has a total of 30 years of experience at Fluor, listed on the NYSE, where he held various leadership roles from 1982 to 2011 before moving to Sasol where he served as CEO from July 2011 until mid-2016.
During this time, Constable signed off on the group’s Lake Charles Chemicals Plant (LCCP) which was originally estimated to cost $8.9bn but ballooned by 45% to $12.9bn, also facing numerous delays. The true extent of the problems only became known a while after Constable’s exit when the last cost estimate was revealed in May last year, causing the company’s share price to plummet.
An independent probe into what went wrong was launched and, although Sasol will not make the report public, the group said the findings revealed a toxic culture of fear at Lake Charles. Constable’s successors, Bongani Nqwababa and Stephen Cornell, stepped down as a result, although the investigation apparently found no evidence of wrongdoing on their part.
The debt incurred for the US project has stretched Sasol’s balance sheet, which is in danger of breaching its debt covenants with lenders. The group has now moved to cut costs and sell assets — including a portion of Lake Charles — in a bid to avoid a $2bn right issue.
Constable is not entirely off the hook, however. A class action has been brought by disgruntled investors against Sasol, Constable and four other executives over Lake Charles.
The plaintiffs hope to prove that the group intentionally mislead investors, with six confidential witnesses expected to testify. They will be named as the case progresses.
One confidential witness allegedly claims that Sasol had received a contractually binding "change order" from Fluor in February 2016 that confirmed that Fluor’s costs would be at least $11.7bn and much higher than the $8.9bn that Sasol publicised at the time.
While Sasol revised its cost estimate to $11bn in June, the investors argue this was still untrue. They accuse Constable of misrepresenting the facts when, on call with investors
that month, he said that $11bn was the "worst case scenario and we don’t expect it."
Constable succeeds Fluor CEO Carlos Hernandez, who will retire at the end of the year.
"We are pleased to appoint David, a proven executive with a deep understanding of our operations and opportunities, as Fluor’s next CEO," said Alan Boeckmann, executive chair of the
Fluor board.
"David brings a unique combination of deep insight to Fluor and an outside perspective from his prior experience as CEO of Sasol. His successful history of leading integrated global operations with a focus on effective risk management makes him ideally positioned to lead Fluor," Boeckmann said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.