I was most bemused to discover that casino operator Tsogo Sun and its Montecasino establishment were above the law and could in fact refuse an instruction from the Reserve Bank and the South African finance minister.
Over the weekend, I decided to go and spend a bit of money at the Fourways casino establishment only to be initially refused entry because the company does not accept 10c and 20c coins as part of their R10 parking charge. I was told that if I wanted entry into the complex, I needed to pay with my debit or credit card because – as per the sign at the parking attendant office – no denomination smaller than 50c would be accepted.
I was a little taken aback that I had a R5, one R2 coin, and two R1 coins which… if coupled with my 50c coin, two 20c coins and a 10c should in theory buy me access to their parking lot. Unfortunately not. The coins above 50c are acceptable but anything smaller just won’t do.
I get it. 10c and 20c coins are a real pain in the rear end to have to administer and if a business has a choice they would rather not take them but if I am coming into your complex to spend R560 on my lunch and a couple of movie tickets, surely the cost of handling 20c and 10c coins is not really that high?
This got me thinking – if your business is licensed into existence by the South African government (which issues casino licences) – can you refuse legal tender that is issued by the South African Reserve Bank? Can you put signs up at your front door telling people what money you accept and what you don’t accept?
Last I checked, section 17 of the Reserve Bank Act of 1989 said I am allowed to pay up to R5 “where coins of denominations of ten cents up to and including fifty cents are so tendered”. Of course Tsogo may have a different set of guidelines when it comes to corporate governance.
My starting point was to visit the Tsogo Sun investor relations section of the company website and fortunately it had posted the King III gap analysis on the site where the company outlines whether it complies with various corporate governance standards. Ironically its first ‘gap’ is:
“The board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards” – which it described as “in progress”.
The next gap is: “The board should elect a chairman of the board who is an independent non-executive director. The Chief Executive Officer (CEO) of the company should not also fulfil the role of Chairman of the board” to which the company explains “The majority shareholders exercised their prerogative to appoint Mr JA Copelyn as the non-executive Chairman, representing their interests.”
In this instance, the rules were “applied differently” according to the gap analysis.
Of course JA Copelyn, is none other than Johnny Copelyn who, as CEO, is involved in the fallout at Hosken Consolidated Investments (HCI), one of the major shareholders in Tsogo Sun and sits on the remuneration committee at Tsogo Sun. HCI is controlling shareholder of Tsogo.
The next gap happens to be in board appointment processes. “Directors should be appointed through a formal process” – considering that Copelyn’s co-director Marcel Golding at HCI was earning R250 000 per month without an employment contract, it would be interesting to know if Tsogo Sun followed a similar approach to corporate governance.
I did a quick sum: Copelyn takes home R71 250 per month (averaged) as the non-executive chairperson of Tsogo Sun. On top of that he receives a R14.6 million per year package from HCI which means that in effect, he is taking home more than R1 million per month-plus in benefits from a business which is licensed into existence.
Another interesting detail I discovered while doing some research around the remuneration policies at Tsogo Sun is this: “Mr JA Mabuza retired from his position as Chief Executive Officer on 30 September 2011. The group entered into a three-year restraint of trade contract that expires on 30 September 2014. In terms of this contract, Mr Mabuza is paid an amount of R8.5 million per annum, in quarterly instalments. In terms of the restraint, Mr Mabuza is prohibited from acting for, consulting to, or advising any other party in the hotel or gaming industry and makes himself available to the group for consultation and assistance where required. In addition, although no further long-term incentive allocations will be made, his existing allocations will vest over that period.”
(Jabulane Albert) Mabuza is now the chairperson at Telkom, another business which has been licensed into existence, so one could argue his skills were certainly not limited to the gaming sector.
While Tsogo seems happy to splash on its execs, its staff don’t seem to fare as well.
Without nit-picking, I find it interesting that Tsogo Sun is keen to count the pennies at the front door (literally!) but the company reduced its training spend on staff development from 5.8% in 2013 to 4.1% in 2014.
That’s quite a steep drop but Tsogo explains in its annual report: Although training spend for the year at R101 million, which is at 4.1% of payroll, has decreased from the prior year, spend on training disabled employees has increased, as has the number of learnerships undertaken by the group and the provision of executive and management development programmes. The group spent R77 million on training and development initiatives provided to its black staff during the year, which is 3.1% of payroll in accordance with the DTI’s BBBEE targets.”
Unfortunately Tsogo doesn’t provide any further detail about this improvement in spending but they say it is there, so let’s assume it is telling the truth.
I have said before that there is a ‘land grab’ of sorts under way in corporate South Africa and I used the example of Sun International. Competitor Tsogo Sun seem to be sending the message that it doesn’t accept legal tender and by its own admission, following the rule of law is something which is “applied differently”.
The irony of it all is that if it had simply accepted the 10c and 20c coins at the door, maybe somebody wouldn’t be digging into broader remuneration policies at the business?
Could it be fair to say that management here is executing a similar land grab to its rival?