This article was first published in the latest issue of the Moneyweb Investor. Click here to read the magazine in full, at no cost to your pocket.
When Koos Bekker says so, that’s when. The chairman of Naspers was outraged at suggestions made last week that payments made by MultiChoice to the SABC and to ANN7, once owned by the Gupta family, were anything less than above board.
What seemed to outrage him further was firstly that the media did not accept Naspers CEO Bob van Dijk’s assertion, made on radio to Moneyweb editor Ryk van Niekerk, that the problem was not Naspers’ but MultiChoice’s to resolve. And secondly that when the Naspers subsidiary did issue a statement, the questions and disbelief refused to die down.
Listen to the podcast: State capture allegations MultiChoice’s problem, not Naspers’ – Bob van Dijk
There is no doubt that Bekker is feeling persecuted by the media following a bruising run-in with shareholders over the company’s executive remuneration policy at the AGM two months ago.
But to respond with what appears to be arrogance, rather than concern, to accusations that cut to the very heart of the state capture story is to suggest that this is a chairman who is out of touch with the sentiments of a very large group of shareholders – South African pension funds, who invest on behalf of South Africa’s working population.
Never has corruption – the misuse of entrusted power for private gain – dominated the public discourse as much as it is currently. Increasingly, citizens are pointing fingers at those who are aiding and abetting government and SOE corruption – and that is unquestionably the private sector.
Think about the treatment meted out to KPMG mostly, but also to SAP and McKinsey over their recent transgressions. Where once there was a certain tolerance of corruption – dare I suggest that even the bread and construction cartels did not receive this level of vitriol – I suspect that this is changing fast.
Under intense pressure, MultiChoice announced it would conduct an internal investigation into its relationship with the former Gupta-owned 24-hour news channel ANN7 and the fairness of its commercial agreement. That is a good step.
It must be said that it is very easy to throw stones and point fingers while sitting in a comfortable board or living room. We love the moral high ground, us South Africans. But what about when taking a stand costs you?
Investment management firm Element does not hold Naspers in any of its funds – as it believes both Naspers and its associate, Tencent, are overvalued. This, says chief investment officer Terence Craig, has cost the fund recently in terms of relative performance as a result of Naspers’ current dominance within SA Equity benchmarks.
In addition to valuation, Element also deems the ESG (environmental, social, governance) concerns with respect to Naspers as material, warranting a significant discount in its valuation.
“No one cares about ESG issues until the share price falls,” he says. In other words, it is easy to ignore lapses in governance when they suit you to do so. His concerns are not only about the executive remuneration policy and the dual class share structure that sees directors and others aligned to them controlling 68% of the shares.
“ESG issues in general are not a priority in this company. You have a situation where Koos Bekker takes a sabbatical (twice) and both times sells a material portion of his shares, but the market only learns of this via the annual reports several months later and not via a SENS release at the time of sale. That is following the letter, but not the spirit of the law and it is concerning.”
He adds that Naspers’ holding structure of Tencent, which is held via a Special Purpose Vehicle based in the Cayman Islands, is much more complex than it appears at first glance and any associated risks warrant further clarification. These and other issues will be well ventilated at Naspers’ first ever off-shore investor day in New York on December 12.
Meanwhile, South Africans of all walks of life and political persuasions need to ensure that they hold the private sector and public to account – without fear or favour.