Johannesburg - Shareholders took Sasol top brass to task on Friday, claiming at the petrochemical group's annual general meeting in Johannesburg that it should have anticipated the scope of a fine levelled at the firm by the European Commission (EC) earlier this year.
Sasol's Hamburg-based wax division Sasol Wax GmbH was among nine companies fined a total of R8.6bn (€318m) in October by the EC, Europe's antitrust watchdog, for participating in a paraffin wax cartel and violating antitrust laws.
Sasol said at the AGM it would appeal the fine.
"Sasol conducted due diligence in 1995 [when it first bought a stake in the German wax business] and again in 2002," said shareholder activist, Theo Botha. "How is it that neither due diligence highlighted the scope of this fine?"
Said another shareholder: "I think the board is trying to fudge it and I am not happy about it."
Sasol management was also criticised for not making enough provision for the fine in its previous year's financial results, even though it had been transparent about the prospect of regulatory action.
"We were expecting the fine, but not the magnitude," said Pat Davies, CEO of Sasol. "When the fine was announced, we were shocked by the quantum of it. The first idea I had of it was when I was woken up at 4am in Boston."
Davies added that if Sasol had had any idea of the fine amount, it would have accounted for it differently and "communicated this differently to shareholders".
Sasol's fine was the largest of those imposed by the EC. It was based on the EC finding that the company was a leader of the cartel, said I-Net Bridge in an earlier report.
"ExxonMobil, MOL, Repsol, Sasol, Shell and Total also engaged in market allocation for this product and ExxonMobil, Sasol, Shell, RWE and Total also fixed prices for slack wax sold to end-customers on the German market," said I-Net Bridge citing an EC official.
Calling the cartel the "paraffin mafia", the EC found that from 1992 to 2005 the producers of paraffin waxes and slack wax "operated a cartel in which they fixed prices for paraffin waxes".
Shareholders also questioned Sasol about the environment, its social responsibility programme, and that old chestnut: executive remuneration.
Botha asked some tough questions about Sasol management's approach to social responsibility and the environment.
He pointed out that in the previous year, Sasol reported a R34bn operating profit, but asked whether management was placing profits ahead of the environment.
Davies said the company had spent R800m on social development projects and had committed 10% of its annual research and development budget to developing more environmentally-friendly products.
- Fin24.com