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Sasol CEOs forced to quit after US fiasco

Oct 28 2019 08:08

Sasol's [JSE:SOL] joint CEOs, Bongani Nqwababa and Stephen Cornell, have agreed to resign after an independent review into the company's disastrous US project.

The Lake Charles Chemicals Project (LCCP), which will have seven production units that deliver various chemicals including a plastics variant called polyethylene, will cost between $12.6bn and  $12.9bn (R190bn at current exchange rates) – almost double the original budgeted amount. It has been plagued by delays and technical problems, and has wreaked havoc on Sasol's share price. The company lost 44% of its value over the past year.

"To be clear, the Board has neither identified misconduct nor incompetence on the part of the joint CEOs," the company said in a statement on Monday.

But an independent investigation into the LCCP found inappropriate conduct and incompetence in the LCCP project management team.

It also found "an improper tone at the top of the LCCP", and that managers didn't provide accurate cost and schedule estimations to Nqwababa and Cornell.

The company will take disciplinary action against the executive vice president previously in charge of the LCCP. He will be removed "from all work responsibilities" and three senior vice presidents will also leave the company.

"However, on balance, the Board finds that there is not sufficient evidence to conclude that these individuals acted with an intent to defraud," Sasol said.

"I would like to thank Bongani and Stephen for their long and loyal service to Sasol, and for showing exemplary leadership by putting the interests of the company first in agreeing to step down to allow for a leadership reset," Sasol chairman Dr Mandla Gantsho said. 

They – along with Sasol's executive committee members - will also not receive any short-term bonuses for the past financial year.

Fleetwood Grobler, executive vice-president of chemicals in the company, will take over as president and CEO of Sasol from next month.

Sasol said in a statement that the changes will "help to embed a new culture at all levels in the company".

"At the leadership level, there needs to be more robust challenge of key decision making. A spirit of 'constructive dialogue' which includes empowering challenge and avoiding conformity, needs to extend though the Company so that people always feel able and free to speak up without fear for their prospects."

It bemoaned the fact that the LCCP has tarnished the reputation of the entire company, but said that no further financial restatements are needed, and that it is comfortable that the LCCP cost will remain between between $12.6bn and  $12.9bn.

On Monday morning, in the first few minutes of trading, Sasol's share price jumped by 9% following this confirmation.

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