What e.tv boss claims in court papers

2014-10-24 12:38 - Alec Hogg
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Johannesburg - Two days after the shock disclosure on Sens that executive chair Marcel Golding was being ousted from the HCI group [JSE:HCI], his side of the story is starting to surface.

In an affidavit lodged with the Cape Town Labour Court ahead of the proposed hearing on Friday, Golding outlines how his almost two decade long partnership with Johnny Copelyn hit the rocks over their vastly differing approach to political interference in their key media asset.

Here, in Golding’s own words, but with my editing and very necessary shortening from the original 57 pages, are the reasons why he is being forced out of the group by trade union Sactwu.

The way Golding tells it, the union’s provocateur within the group, one Yunis Shaik (surname ring a bell? Yep, he’s Zuma’s confidante Shabir’s brother) first got Golding’s wife Bronwyn Keene-Young sidelined after she resisted a direct instruction of coverage from the Zuma cabinet.

Then Shaik targeted Golding himself. And because Golding didn’t buckle, Shaik and the now estranged Copelyn are using the red herring of an investment in Ellies to forcefully eject him.

Click here to see the infographic.

HCI controls Sabido, the holding company in which Johann Rupert’s Remgro is a one third shareholder. Thus far Rupert has been silent on the matter.

Sabido, in turn, owns e.tv. Golding personally owns 8% of HCI and apart from chairing the company is also the CEO of Sabido and e.tv, which with 15 million viewers, is a massive prize for political interests.

This story has massive implications. Not least, that the lip service which the ANC pays to media freedom is, quite clearly, just that.

By Marcel Golding, executive chair of HCI

I have recently been summoned to a disciplinary hearing to answer charges relating to the purchase by Sabido, of which I am the CEO, of shares in Ellies, a JSE-listed company. It is alleged that I did so without the necessary board’s authority. I acted in good faith and at the time believed to be in Sabido’s best interests in purchasing the shares.

The disciplinary hearing has been launched after months of attempts to get me to relinquish the chair of the board of HCI and resign as CEO of e.tv and Sabido as a result of my refusal to permit e.tv to be used for political purposes by a trade union that is invested in the group.

I believe two directors of HCI, John Copelyn and Yunis Shaik are the driving forces behind the attempts to push me out.

HCI was originally founded by Copelyn and myself. Copelyn is currently HCI’s CEO and Sabido’s non executive chair. Over the last year our relationship has deteriorated.

The cause of this deterioration included amongst others our differing views with respect to how to manage the concerted pressure Sactwu has been exerting on HCI and Sabido. Sactwu has persistently attempted to influence the editorial direction of e.tv news in order to further its agenda.

In August 2013, Sabido contracted with Yunis Shaik Attorneys to perform consultancy services, including advice on its business strategy in relation to government. Since then Shaik has been endeavouring to increase his power and influence in the company.

He purports to speak on behalf of those close to the central levers of State power – as well as on behalf of Sactwu (for whom he previously worked) and in that capacity has been motivating for my ousting.

I am vehemently opposed to any interference with the independence and integrity of editorial content and this tension is what led to the fracture of alliances within the connected companies. When those attempts failed, the disciplinary action was initiated.

He was appointed to the board of HCI in 2005 as lead independent non-executive director of HCI in 2010 and as executive chair in April 2014.

Control of media assets

The control of media assets in any country is a sought after goal. Initially, though HCI had control of Sabido and Sabido of e.tv, HCI did not attempt to influence e.tv. Approximately a year ago this situation changed, particularly during the lead-up to the general elections in May 2014.

The pressure on Sabido and, through it, e.tv brought into focus philosophical differences between myself and Copelyn and we were unable to agree how the situation ought to be managed. I was unwilling to compromise on the issue of independence and integrity of editorial content and Copelyn saw my view as detrimental to HCI’s business interests, particularly because of the attitude of its major shareholder Sactwu.

On 24 March 2014 Shaik addressed an email to Bronwyn Keene-Young (COO of Sabido) stating that the Minister of Economic Development Ebrahim Patel had called him and asked that a supplied newsfeed of President Zuma opening a dam be aired on the e.tv evening news. The suggestion in the email was that it “might be a good lead story”.

It should be noted that this request was made four days after the Public Protector report into Nkandla was made public.

Keene-Young and I were at a conference and unavailable to respond. Shaik therefore, after receiving another call from Minister Patel, “assumed the responsibility to liaise with” Patrick Conroy, managing director of the news channel, “alerting him of the news and suggested it gets some coverage.”

On 24 March Keene-Young replied to Shaik’s email and explained the inappropriateness of Shaik’s conduct to him in the context of news integrity and appealed to him “never to make this kind of request directly to our managers.”

Shaik replied and contended that he was “not acting as a shareholder representative” when he contacted Conroy and dismissed her stated concern about integrity and independence of the media on the basis that she was having a “temper tantrum” and “protecting turf not values.”

Spouse and the business

On 28 March 2014 I received an email from Copelyn to alert me to a conversation he was planning to have with me about Keene-Young who had raised the ire of “several important corners of HCI.”

Keene-Young is my spouse so this situation was understandably awkward for all of us. Copelyn and I met and an altercation ensued in which an ultimatum was posed that either I or my spouse should leave the business. A solution was found in that Keene-Young was designated as Sabido’s chief corporate officer and removed from any interface with external stakeholders.

Nonetheless, Shaik contacted Keene-Young again in respect of furthering the wishes of Minister Patel, this time on 29 April 2014. A debate was due to be held between Minister Patel and the opposition party representatives at the University of the Witwatersrand.

Patel asked that a clip of an earlier Reserve Bank meeting be aired during the debate, which was to be broadcast live. The clip would be supplied and Patel evidently believed it showed the opposition party was incorrect in certain statements it had made regarding the Reserve Bank.

On 19 May 2014 I received another text message from Shaik. This time it was about the possible mention of another HCI affiliate, Tsogo Sun: “Maggs on Media. He will feature a story on gambling addiction. See the story before he airs it. Watch the visuals. It would be terrible if he features Tsogo. Check to see if it is balanced and includes activities we take for responsible gaming.”

Perturbed, I inquired is this request a suggestion or an instruction? Shaik’s immediate reply was: “For you, it is an alert. Remember last year we were under pressure from Government because it was said we ripping off pensioners. We had to meet Pravin Gordhan as they wanted to raise (gambling) taxes. I am alive to how negative media plays put in government. It rapidly degenerates into self righteous crusade with government escalating controls or taxes.”

On 14 August 2014 I was sent the following SMS “instruction” by Andre Kriel of SACTWU: “Will call you tomorrow. Violet Seboni Memorial lecture will be on 25 August in Johannesburg, Minister Patel will deliver the lecture. We require eTV to cover it live. Please arrange.”

After the Keene-Young debacle I was in an untenable situation and did not enjoy the support of my HCI co-founder Copelyn to deal with Shaik’s attempts at interfering in news content.

Threats

Before this event there had been serious problems and we had already considered our options to go our separate ways, but for me these incidents of interference in news content were the last straw.

I was also threatened that should I not resign I would be suspended and disciplined on account of my purchase of Ellies shares – the subject matter of the impending disciplinary hearing. This started shortly after I first disclosed the Ellies purchase in early August. The FD Kevin Govender told me that people he referred to as “the bloodhounds” (I believe he meant Shaik, Copelyn and some other Sactwu directors) would try to “get me” if I did not agree a deal. It was constantly raised: if I did not agree to a deal, I was told, disciplinary steps would be taken against me.

I believed Ellies was strategically sound to invest in. I saw such an investment (and still do) as a strategic investment for one of our key Sabido subsidiaries which is struggling to meet its targets. The subsidiary is a free to air satellite platform which is dependent on the distribution – by Ellies – of set top boxes to retail outlets where they are bought by end users who are then able to access the platform. Ellies’ relationship with retail outlets across SA is a critical element of the success of this subsidiary. I first presented the Ellies opportunity to Copelyn and Govender in August 2013.

The issue continued to be discussed informally over the six months that followed. On several occasions I informed Copelyn that I had asked Investec to buy some shares and check on the company’s liquidity, an important factor in determining its share price.

Ellies investment

When Sabido met with Ellies and their advisers Java Capital in August 2013, my view was that Ellies represented a useful investment opportunity even though their shares were overpriced at R7.40. I accordingly waited for the share to drop to the R4 level in March 2014 and at that point instructed Investec through a nominee account to build our holding incrementally.

From March 2014 the relationship between Copelyn and me had become so strained there were fewer and fewer discussions between us on any matter and, accordingly, with respect to Ellies.

Between March 2014 and July 2014 Investec on behalf of Sabido spent R24m to purchase Ellies shares. The day before the Sabido Board meeting of August 7, I told Govender and Copelyn that I had acquired approximately R24m worth of Ellies shares and it was now time to raise it at a Sabido level given that with the drop in the share price there were more shares available on the market.

My acquisitions had also reached the threshold where the JSE would require disclosure of the identity of the ultimate purchaser of the shares. I prepared a draft Mergers and Acquisitions report for the Investment Committee. In the end result, it was decided by Copelyn, Govender and myself to hold the issue over to a more appropriate time and the portion of the draft report pertaining to the Ellies transaction was omitted from the version presented to the board.

In the report I mentioned that Ellies have over 5 000 accredited installers and a sales force that is difficult to replicate. I noted that we had not succeeded in making headway at an earlier phase because too high a price per share had been sought.

I stated that I remained of the view that Ellies is a key feature in our expansion and I set out the reasons for proposing that we should aim for a 25% stake. This was not a particularly large transaction by the standards of the organisation.

The R24m involved is less than 1% of the group’s turnover. The manner in which we have conducted business in the past, the CEO had discretion to make investment decisions on behalf of the company with the expectation that they would subsequently be ratified. The next time the Ellies issue was raised with me was at a meeting between Shaik, Govender, Copelyn and myself on Friday August 15 2014.

The meeting was very acrimonious. Both Copelyn and I threatened to walk out at certain points. The informal meeting was to discuss the possibility of my stepping down from HCI and Sabido. I said I did not want to do this as there had been an agreement that I would run the media (Sabido) side of the company and I wanted an opportunity to engage with SACTWU to see why it had changed its mind.

Copelyn then raised the Ellies transaction and accused me of acting “fraudulently”. It was after this that I realised I would not get any support for the Ellies transaction and would need to come up with some remedy to deal with it. Subsequently, after discussion and agreement with Govender, I decided to tender that I would pay for the shares myself and take ownership of them.

Indemnify Sabido

I made this tender in order to indemnify Sabido against any possible loss. I made the same tender to Remgro in two separate meetings well before the disciplinary process was initiated. It was not an admission of wrongdoing as I still believe the transaction was strategically important. When I met with Sactwu general secretary Andre Kriel and president Themba Khumalo on 12 September 2014, neither of them mentioned anything regarding the Ellies transaction nor anything relating to breaches of corporate governance.

Their stated position was that they didn’t want to have to choose between Copelyn and me because we had built HCI into a very valuable company. On August 28 2014 Copelyn wrote to Andre Kriek of Sactwu advising him that HCI and I had agreed to part ways on mutually agreeable terms.

The essence of the separation proposals involved creating a consortium which, through an appropriate vehicle – possibly Seardel – would assume control of media assets (which I would run) while HCI would assume control over all non-media assets. In this way potentially destructive difference of opinion over future strategy and personality issues could be avoided.

Discussions remained constructive and amicable until Sactwu indicted that it was not interested in any outcome where I would remain on as the CEO of Sabido. My understanding of the situation is that Sactwu’s stance is directly related to a desire by Sactwu to exert greater control over news content at e.tv (and eNCA) by ensuing that a CEO less independent than me assumes control over Sabido.

Their desire to have me removed is unrelated to the best financial interests of both Sabido and HCI shareholders and is directly related to the pursuance of an agenda to exert greater control over news content aired by e.tv and its related broadcasters. Editorial independence is part and parcel of the constitutional right of the media to freedom of expression as protected by section 16 of the Constitution of South Africa.

In opposing the attempts to manipulate news content I have been acting to protect the right of editorial staff to run an independent news service.

- Fin24

* Alec Hogg is the editor of BizNews and this article is published with his permission.

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