The abrupt extension of the tenure of Imtiaz Patel, chair of takeover target MultiChoice, was always going to cause controversy among corporate governance advocates and gurus. It should have been expected and managed from the start of the talks about the SA-French transaction.
For this, the board has to shoulder the blame for the fallout occasioned by its decision to keep him on after reappointing him as chair and then creating a deputy chair position.
In a country like SA with a troubled past, it was unseemly beyond optics, especially amid a big transaction involving the acquisition of one of SA’s major multinationals by Canal+, the French multinational.
MultiChoice appointed business person and board member Elias Masilela as Patel’s successor. Controversially, it then announced Patel, formerly the CEO of MultiChoice, would stay on as chair until the transaction is complete, and then appointed Masilela as his deputy. Unsurprisingly, there was an outcry about this about-turn.
As questions grew around this move, on Tuesday the group, which owns DStv, walked back the decision. It announced that Patel, a respected SA executive, especially the sports industry, would step down immediately but stay on as a consultant.
The climbdown is to be welcomed. Better late than never.
There have been plenty of corporate gaffes, such as those by Sasol and Barloworld, for MultiChoice to learn from. Clearly, these lessons were ignored. In a country with such a divisive past, decisions such as this one have to show sensitivity to all role players. That this apparently did not feature in MultiChoice’s calculus is rather disappointing, particularly in the middle of this transaction.
Unnecessarily, it has created an unhelpful narrative about Masilela’s readiness to shepherd a deal of such scale and complexity. This is unfortunate.
Before his appointment to the MultiChoice and Sanlam boards, Masilela had a sterling career as an executive. He ran Africa’s largest asset manager, the Public Investment Corporation (PIC), until the forces of state capture flexed their muscles and swept him away. His tenure at Sanlam, where he served as chair, has been free of controversy, which must have qualified him for the MultiChoice job.
In the circumstances, the rethink of his elevation was unfortunate.
It would be a mistake to read this piece as a commentary on Patel. It is rather a call on MultiChoice and its new owner, Canal+, to constantly keep a check on corporate governance hygiene issues.
Patel is not the only nonexecutive director to enjoy lucrative consultancy perks. At least one has had the consultancy arrangement terminated. After the chair debacle, this director-consultancy issue should be addressed urgently. Otherwise, controversy will continue swirling around both MultiChoice and the mooted transaction, which is now at a critical stage.
These director-consultancy arrangements may not be illegal but they raise genuine questions about the independence of nonexecutive directors. Besides, SA’s nonexecutive directors are not unfortunate from a pay point of view.
Also, listed companies routinely pay millions in professional fees to independent contractors. However, conflating roles of directors with consultants is undesirable. Every effort should be made to avoid this situation.
MultiChoice has an opportunity now to address this once and for all. A further delay would only shroud the transaction in avoidable controversy.
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