By Rob Rose
Sasol's largest minority shareholder, the Public Investment Commissioners (PIC), has hit out at the petrochemical giant for telling its US shareholders that it views black economic empowerment as a potential investment risk.
The complaint by the PIC, which controls R300bn in government pension money, highlights the gulf between government's position on empowerment and how some companies view it.
Brian Molefe, the CE of the PIC, was objecting to Sasol's recent compulsory filing to the New York Stock Exchange, in which it listed black empowerment as one of several "risk factors" it faced.
The company warned shareholders it could not guarantee that empowerment deals would happen at fair market terms, nor could it reassure investors that forced participation in empowerment would not harm its business.
Molefe said at an investment conference in Sandton yesterday that he was "displeased" with the position taken by Sasol, in which the PIC holds a 13% stake.
"As a shareholder, we will contact Sasol and demand they explain We see empowerment as a strategy that will bring commercial benefits to South African companies, not something that will be a reason not to invest," Molefe said.
Sasol's view contradicts government's own stance on empowerment. In the past, the national treasury has made similar submissions to the US Securities and Exchange Commission for South African government bonds, listing SA's empowerment drive as a strength and a source of potential growth.
Molefe said Sasol's stance highlighted a larger problem in which some companies saw empowerment as a limitation, while government saw it as a business opportunity.
"We need to ensure that companies that use our money do not stick out like a sore thumb in not following the (empowerment) route that the majority of country has embarked upon," he said.
Molefe said the decision to question Sasol signalled a new era of shareholder activism for the PIC, which holds a total of 8% of the top 200 companies listed on the JSE Securities Exchange SA.
Molefe's comments are likely to add to the debate on empowerment risk, in which some argue that without empowerment initiatives, a highly inequitable corporate environment would raise investment risk.
Others believe that empowerment charters, which require companies to sell some of their shares to black investors, increase investment risk.
BusinessMap director Reg Rumney said the contrasting viewpoints showed a lack of understanding of empowerment.
"You could argue either way, but empowerment deals are essentially a short-term cost for a long-term gain. You could either see it as a tax or a chance to add value to your business," he said.
Business Day
Tuesday
04 November 2003
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