Success+wont+go+to+head+of+Brian+Molefe,+Chris+Barron,+S+Times

Sunday Times, Business, Johannesburg, 04 March 2007
=This activist won’t let success go to his head=




 * Brian Molefe**//, chief executive of the Public Investment Corporation, has been on the warpath recently over transformation — the placing of the ownership and management of South African companies in black hands.// **Chris Barron** //asked him some questions://


 * With all this transformation stuff occupying you is there any time left to worry about your investments?**

Of course, yes. We’ve had very good returns.


 * Have you been losing any sleep over the recent sell-off in the market?**

A little bit, but not too much. The South African economy is doing well, the fundamentals are in place. This is just a temporary movement, a correction, perhaps even an over-correction.


 * Why has your shareholder activism been so long in coming?**

It hasn’t. It’s just that most of it hasn’t been in the public eye.


 * A lot has been going on behind the scenes?**

A lot has been going on. We do have a lot of interaction with the companies in which we are invested.


 * Because there seems to have been a sudden flurry of activity lately, starting with Barloworld.**

Well, Barloworld was a case where we decided to act the way we did. But we’re talking to corporates all the time.


 * So it’s not that you have lost your patience and decided to get tough?**

No, not at all. We might have lost it with Barloworld, but the others we continue to talk to all the time.


 * What is their attitude?**

Generally people say, yes, we’ll do it, we’ll transform faster, we’ll address this, we’ll address that. A lot of them do what they say they will do. Some of them miss the time lines by which they say they will do it. But we’re generally patient with the corporate world about the things that we discuss and agree need to be done.


 * Why did you lose your cool with Barloworld?**

The resolutions that they drafted for the AGM (annual general meeting) were not in line with our discussions.


 * Have you come under any political pressure to push harder for transformation?**

No, not at all.


 * Do you think the paucity of black executive directors is an accurate reflection of how much a company has transformed?**

No, it isn’t. But the total absence of black executive directors in the top 10 and top 20 companies in South Africa I think shows us the extent to which we have not transformed. I mean, the top 10 companies on the JSE have 33 executive directors.

Only three are black, and all of them are from MTN. I’m not saying there should be a majority of black directors, but of the nine companies zero out of 30 are black.

I mean I’m not saying that every single company must have a black executive director.

But I think that the executive directors of the Top 40 companies must reflect our democracy.


 * What are you saying? That in our top companies there must be complete racial representivity at main board level?**

I’m not sure what the solution is. But what I know is that when you have the top 10 companies on the JSE with 30 executive directors and none of them black, or three black directors coming from one company, I suspect that there is a problem. Or when the top 20 has about nine [black] directors and seven of them are from two companies, Telkom and MTN, I think that is a problem.


 * Why are there so few, do you think?**

I think that people have all sorts of excuses for not appointing black executive directors. When we went to Sasol and said we think they should appoint Imogen Mkhize onto their board there was resistance — despite the fact that she has an MBA from Harvard.

When I went to Barloworld and said why isn’t Isaac Shongwe, who is a Rhodes Scholar and who has been in Barlows for some time and who was in a very senior position in their logistics business – in fact he was their empowerment partner in logistics – why couldn’t he become an executive director? And there was resistance.

They were saying it couldn’t be done. When the initial resolutions went out his name was not there.

I don’t understand what it is.

I know there is a skills shortage, but I don’t think that we are deploying the few skills that we have, optimally. There are a lot of Shongwes out there.


 * What makes you so sure? He’s an exceptionally bright person.**

You look at the treasury, for example. It has performed exceptionally well, and the treasury staff is very representative of South African society.

Where does the treasury get all those young people? Where do we get Lesetjo Kganyago. They are everywhere.


 * So what is it? Racism?**

I wouldn’t go that far. You know, in any change situation where you must change the way you do things, there is sometimes resistance, sometimes conscious, sometimes unconscious.

I think it is something that is still in our psyche that makes us overlook certain things naturally. If you’re not used to looking at certain things or a particular detail, you miss it when it is in front of you sometimes.

If you don’t know what an elephant is you’ll miss it when you see it.


 * What about the argument, used by Barloworld, that although there may be no black executive directors on the board there has been substantial transformation at subsidiary levels?**

That’s fine; that must be welcomed. But the fact is that until January this year their executive board members, 10 I think, were all white males.

And if you think about it the heart of any organisation is actually those 10 white men. I don’t think it is good enough to say that we are transforming everywhere except where it matters most.


 * The other argument is that executive directors have to be developed and brought up through the company.**

That argument has been around for some time and it’s not coming to any conclusion. I mean at Barlows, for example, Warren Clewlow himself said in his chairman’s report that he became aware of the imperative to develop black skills and empowerment in the 1980s. Now we are in 2007. That’s 20 years that he’s been thinking about it. So I think that at some point something must give.


 * Is there a danger that if you push too aggressively it will encourage window dressing, appointments that have little operational or technical responsibility?**

Perhaps there could be instances where that happens. The industry charters that have been developed are very good, but I am getting worried that companies are developing a mentality of ticking the box.

If we are going to do this thing because we need to tick boxes it means that we are not entirely convinced that it needs to happen, which is when people come up with a sub-optimal product.

If people want to do it just so they can tick a box they are doing a disservice to themselves and the country. If people make an effort to look for the people who are suitable for these positions, I am sure that they are there.


 * You recently criticised exorbitant executive remuneration. As a major shareholder why haven’t you tackled this more aggressively?**

We do engage in discussions with companies about this, although perhaps not in public.


 * They remain exorbitant, so how effective are your quiet chats?**

There are policy initiatives that we support and it is something that we have raised; for example, at the Barloworld AGM.


 * Again, one wonders why not more aggressively and loudly?**

If you become aggressive and loud people tend to ignore you.


 * They can’t ignore you, Brian.**

Oh, you’ll be surprised. We mustn’t fall into the trap of overrating ourselves.


 * How do you ignore somebody who owns 15 percent of the company?**

It has happened. At the Sasol AGM they called our bluff and said “okay, we’re not appointing her”.

We voted for her appointment and we lost. Because although we had about 15 or 16 percent they had lobbied the other shareholders.

But then on reflection they decided they’d humour us and appoint Imogen. But in reality we went in there and lost at the AGM, and that was very humiliating.

We have so many shares in the company, so much invested, but we can’t have our way because the board is able to talk to the old boys’ network.


 * Is that because of our long tradition of shareholder passivity?**

Perhaps. But the point I’m making is that we mustn’t assume that we will win every battle.


 * So you’re not going to allow the power that we assume you have to go to your head?**

It would be a tragedy if it does. I think if it does go to my head I must resign.


 * From: http://www.sundaytimes.co.za/PrintEdition/BusinessTimes/Article.aspx?id=401689**

1478 words