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WITH A friend, Leon Kirkinis started African Bank Investments Limited [JSE:ABL] (Abil) almost 23 years ago and for nearly two decades, Kirkinis had the market for unsecured loans in South Africa all to himself.
It was not until Kirkinis acquired the struggling furniture retailer, Ellerine, a couple of years ago that the company began to struggle to achieve the top line earnings growth it was used to and lost market share to emerging competitors.
This writer was part of a media corps that was addressed by a fuming Kirkinis in Midrand a couple of years ago (early 2009), who intimated at the time that they were taken for a ride when they acquired the furniture retailer in a multi-billion rand deal.
It was then that I had a gut feeling that this whole Ellerine saga was going to break this courageous and visionary leader. And indeed this week’s events bear witness to this.
On Wednesday, the JSE-listed Abil and biggest provider of unsecured loans, announced the resignation with immediate effect of its CEO Kirkinis after 23 years at the helm.
Reacting to the news, the share price of Abil immediately gave up 57%. At Thursday's close, the share price traded at a mere 53c, down another 80.37% on the day.
“The board owes a huge debt of gratitude to Leon for his vision and leadership during the growth of African Bank and wishes him every success for the future,” the board said.
Nithia Nalliah, the current group CFO, was appointed to succeed Kirkinis as acting CEO of Abil and MD of African Bank, a unit of Abil, with immediate effect.
This comes at a time when the company is struggling to produce top line earnings growth as it continues to face tough trading conditions in a negative economic environment in South Africa, which shows that Ellerine cannot alone be blamed for the problems at Abil, although the furniture retailer did come with its own baggage of non-performing loans.
This week Abil said the banking unit is likely to post a basic loss and headline loss for the second half of the 2014 financial year. But the fact that Kirkinis resigned with immediate effect signals that he has been pushed rather than leaving from his own free will.
I have covered Abil for many years and have spoken to Kirkinis on many occasions and I found him to be a very responsible leader. He would not leave without serving notice, which is what happens when the CEO and the board part ways amicably.
There must have been a blow up at the higher echelons of the firm. We might not know the details any time soon because these are often kept under wraps.
It is a fact that the buck often stops with the CEO, but I am sure that Kirkinis did not take the decision to acquire Ellerine all by himself.
He must have consulted with the board and the executive committee. And the company did conduct due diligence when it acquired Ellerine. What about the auditing firm that was paid exorbitant fees for conducting due diligence?
- Fin24
*Mzwandile Jacks is an independent journalist. Opinions expressed are his own.
