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Scandals prove easier to survive than a sharp tongue

Impatience and insensitivity lead to resignation of audit firm chair. Plus a look at Net1, Truworths, Mr Price and Barloworld.
A summary of KPMG’s last two decades reads rather like a rap sheet, but ultimately it was a lack of manners that proved to be its chair’s undoing. Image: Bloomberg

Bill Michael, chair of KPMG UK until a few days ago when he resigned after creating an ‘untenable’ situation for himself, doesn’t sound like a terribly pleasant individual but pleasantness probably wasn’t what anyone was looking for when he was appointed to the position in 2017.

Certainly, comments made to hundreds of staff during a recent Zoom meeting appear to have been unnecessarily robust and no doubt the KPMG employees, like most who’ve had to attend one too many Zoom meetings over the past 12 months, were feeling a little fragile.

If, however, you were to draw up a list of reasons why the head of one of the four most powerful auditing firms in the world should get the chop, telling the staff to stop moaning would probably not be on that list.

A potted history of the audit firm’s past 20 years reads more like a rap sheet than an account of an upstanding financial organisation.

Things like ‘not doing our job properly and enabling the wipe-out of hundreds of billions of dollars (pounds, euros, rands, take your pick)’ and ‘allowing clients to cultivate poor business practices’ would have dominated the list.

It certainly took more than a few days for KPMG SA to realise that a few personnel changes were needed after its dubious and long-term dealings with the Gupta family were disclosed to the South African public in gruesome detail. There was so much outrage about its ties with the Guptas that few noticed its troubled relationship with Net1 during the dark days of that company’s battle over social security payments.

As for the other three audit giants – things weren’t much better at PwC or Deloitte, while in South Africa EY looked less tarnished but elsewhere across the globe it was implicated in just as much value-destroying behaviour, most recently of course in relation to Wirecard.


Talking of Net1, the revival of that company, which is under new management and new shareholders, looks firmly on track.

With Value Capital Partners seemingly leading the way, the group has shed its non-SA operations and is intent on developing its SA financial services business. And while controversial former CEO Serge Belamant has long gone, it seems his plans to profit from the provision of financial services to low-income consumers remain firmly entrenched in the company.

In line with what seems to be VCP’s modus operandi, Net1 chair Jabu Mabuza has been buying up Net1 shares in the market. This is always an encouraging sign. There have been similar purchases by VCP executives in Sun International and Altron.


Truworths continues to struggle to deal with the consequences of not implementing effective succession planning decades ago. Current CEO Michael Mark has been in the position for 30 long years and for the first 20 of them did remarkably well for shareholders. But even when he was doing remarkably well, the board should have been considering plans for his replacement. There is good reason why an entire board committee is charged with this critical task.

There was a rather bizarre aborted attempt to replace Mark back in 2015 when a French retailer was brought on board as CEO designate. For reasons still not disclosed six years later, the French executive upped and quit. It’s difficult not to suspect that Mark was ultimately unable to let go of a position he had long-cherished and that, being a dominant force on the board, his view held sway.

Mike Pfaff, who joined the group in 2013 and was appointed chief operating officer in 2018, was next in line. But last November Truworths unexpectedly announced Pfaff’s resignation.

Last week came news that executive director Sarah Proudfoot, who joined the group in 2001, has been appointed to the newly created position of deputy managing director, prompting speculation that she is the latest potential replacement for Mark. Hopefully it will be a case of third time lucky.

Mr Price

A clothing retailer that has been far more successful in sustaining solid long-term performance is the Mr Price Group.

Last week Steward Cohen, co-creator and long-term director of the group, became the latest JSE director to disclose margin trading activity in his shares. The R36.3 million worth of shares that were released were part of the security provided for a loan facility taken up by Cohen.

Although JSE regulations now require disclosure of this critical type of share trading, Cohen is among a relative handful of executives who have bothered to make the necessary disclosure.


Barloworld is in a bit of a quandary following last week’s AGM at which insufficient numbers of shareholders voted to approve the chair’s fees.

Neo Dongwana, who has been on the board since 2012, was appointed chair only last February. She managed to secure 74.28% approval for her fees, which was just 0.72% short of the 75% needed for the special resolution. Presumably last year’s approval, which is valid for two years, will be used to cover payment to Dongwana this year.

A close study of the Barloworld AGM voting suggests a significant block of shareholders is also concerned about the payment of non-executive directors’ fees for ‘special projects’.

It’s impossible to know if it’s the non-executive directors or the ‘special projects’ that concern the shareholders.

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Ya you would think that results (and peoples investments and pensions) would be more important that what he resigned over, however us here in good old RSA are not exposed to the culture war (used by a previous blogger) going on in these leading countries and the pressures that personalities such as Bill Michael face in the UK.

This has to do with the sensitive WOKE brigade and their crusade to disrupt everything and quite frankly is based on fantasy land stuff and not reality and anyone who does not agree with them gets cancelled (cancel culture). They believe that their way is the only way and they use slogans such as “be kind” (meaning that if you disagree with them you are not kind), typical is Greta Thunberg and Lewis Hamilton. There is some resistance to this, voters vote for Trump / Brexit to say NO to this and this is not so much of a vote of confidence in Trump but against this type of culture. These voters also believe that wokeness is actually intolerant of free speech.

For the WOKE it is more important to have a “kind” and agreeable box ticker in place than a proper leader.

End of comments.





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