MIYELANI SHIKWAMBANA: PIC cracks the whip at MultiChoice board
The resignation of Absa CEO Arrie Rautenbach has been widely welcomed to close a chapter of botched executive appointments since 2019. Chair Sello Moloko is fixing the mess inherited from his predecessor, Wendy Lucas-Bull. The early retirement for Rautenbach was due to a failure in succession planning after the departure of former CEO Daniel Mminele. Absa’s governance issues put a spotlight on corporate SA, punctuated by concerns at MultiChoice, which are now being tackled by Public Investment Corporation (PIC) chair and deputy finance minister David Masondo over the paying of questionable consultancy fees.
The PIC’s firm stance that it will block the re-election of long-serving board member Jim Volkwyn over the payment of millions in advisory fees is a positive development to fix MultiChoice’s board shenanigans. The DStv operator continues to make news for the wrong reasons and has confirmed it has an agreement with Volkwyn that will expire only in 2028, by which time he will have netted a total of more than R10m in consultancy fees. These payments were flagged by the Institute of Directors SA as Volkwyn is an independent director and chair of MultiChoice’s remuneration committee.
Miyelani Shikwambana. Picture: SUPPLIED
Former chair Imtiaz Patel received a bonus of $1.25m (about R22m) for overseeing a deal between Showmax and Comcast earlier this year. Patel resigned under a cloud in April. The former MultiChoice CEO had initially stepped down after nearly three years as chair in September 2023. The move was meant to improve governance standards after the company came under fire for having cosy deals with board members that exposed it to potential conflicts of interest. Shareholders also moved to stop a payment of consultancy fees of R1.5m to Kgomotso Moroka, one of the company’s longest-serving board members, allowing her to remain an independent nonexecutive director.
Volkwyn stepped down as lead independent director to become an independent director after an outcry that forced the board to appoint Elias Masilela as chair in April. Masilela confirmed to the media that consultancy fees paid to select board members would be reviewed and likely scrapped. This undertaking still sounds hollow in the face of huge payouts to two key directors who are MultiChoice lifers, who can waive payments of director fees to earn consultancy fees. According to group’s annual report, Volkwyn provided the group CEO with professional services on a regular and ongoing basis to earn over R7m. This raises the question of why a sought-after director such as himself should not resign from the board to become a consultant to avoid a conflict of interest.
This governance test will be a crucial issue at the AGM. It will be interesting to see if Volkwyn is re-elected as a board member after the PIC’s intervention. Other directors, such as Andrea Zappia and Deborah Klein, also received what appears to be additional fees in the hundreds of thousands of rand more than other directors. This shows that such arrangements are pervasive in the company, over and above getting paid board fees. The key question here is: why is MultiChoice using broadcast deals as a cover to compensate board members with dubious consultancy fees? Worryingly, the Comcast deal clearly confirmed the conflict of interest between the chair of the remuneration committee and the former group chair over the payment of consultancy fees and bonuses.
Canal+, which owns 45% of MultiChoice, raised concerns over the Comcast deal and may likely scrap the consultancy fee arrangement and Showmax deal if it assumes full control of the group. Masondo’s confirmation that the PIC will move to block Volkwyn’s reappointment at Wednesday’s AGM is a huge milestone in stopping consultancy payments in the upper echelons of MultiChoice. When a board fails to do its duty, shareholder democracy should kick in, with large investors having the final say on such payments. Shareholders are set to vote on the company’s remuneration policy at the AGM, with the result likely to be closely watched.
