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Can interim chief financial officer Ralph Buddle clear...

Business Maverick

ANALYSIS

Can interim chief financial officer Ralph Buddle clear up the muddle at Oceana?

Bank notes. (Photo: Nadine Hutton / Bloomberg via Getty Images) | Oceana Group Logo. (Image: Supplied)

The company says that none of the matters considered as part of the ENSafrica Forensics investigation is likely to result in a financial loss to it. Preliminary feedback has also ruled out any evidence of fraud or criminal conduct.

While it is cleaning up the mess that former chief executive Imraan Soomra left behind, the Oceana board has appointed Ralph Buddle as the interim chief financial officer.

Although the public statement to shareholders made much of Buddle’s extensive 35 years of experience in listed retail and fast-moving consumer goods industries, it failed to mention that he previously served as executive assistant to the CEO and director of strategy and business development at Woolworths from 2015 to 2019. 

Coincidentally, Zarina Bassa, who sits on the Oceana board as an independent director, is the lead independent director and an independent non-executive director at Woolworths Holdings and has been since 2011, so she clearly has an existing working relationship with Buddle.

On Friday last week, Oceana released an update for shareholders, advising that the long-awaited provisional results for the year to September 2021 would be released on Wednesday, 9 March, and audited financial statements by Friday, 25 March. 

However, this action was prompted by an order from the JSE to immediately update shareholders or face a suspension from the JSE. A notice from the JSE was published on Friday, 25 February advising that it had instructed Oceana to release a further announcement to ensure that comprehensive and detailed disclosure of all relevant facts is made, and shareholders informed of the proposed timing of the publication of the provisional report.

Oceana has also published a detailed summary of the ENSafrica Forensics investigation. The JSE statement notes that in light of Oceana’s statement issued on Friday, it will not proceed with a suspension of Oceana’s listing but warns that this will be reassessed if Oceana fails to publish its provisional report on or before 9 March.

This is in line with the JSE’s responsibility of ensuring that sufficient disclosure of relevant information is made available publicly and timeously, so investors are able to inform themselves of all relevant facts before deciding whether to trade in a particular company’s shares.

The forensic investigation is expected to be completed by Friday, 4 March, but according to preliminary feedback, “no current or former employees and/or directors are likely to be implicated in any matters resulting in financial loss”. 

In fact, the company goes on to say that none of the matters considered as part of the ENSafrica Forensics investigation is likely to result in a financial loss to the company. Preliminary feedback has also ruled out any evidence of fraud or criminal conduct. 

This is strange indeed, given the recent sudden departure of Soomra, who was the chief financial officer of Oceana at the time of the Daybrook acquisition in 2015 and when Daybrook was subsequently purchased by the former chief executive Francois Kuttel in 2018. Soomra supposedly resigned for “personal reasons”. The company declined to comment on his reasons for leaving or to reveal what financial payout he walks away with in lieu of his six-month notice period.

Oceana has confirmed that when Soomra resigned on 14 February 2022, the board had already commenced “a process to deal with certain of the matters which related to the CEO’s conduct and which had been investigated or arose during the investigations conducted by ENSafrica Forensics”. This sounds remarkably like Soomra was being hauled in for a disciplinary hearing, although the board seems to be tiptoeing around it and seems to be letting him off lightly with a “voluntary resignation for personal reasons”.

Oceana’s chief financial officer, Hajra Karrim, remains on “precautionary suspension”, pending a disciplinary process. She has lodged her own grievance regarding her suspension, so a second disciplinary process is pending. The board finally clarified that neither disciplinary proceeding is in any way related to financial matters and finally cleared Karrim’s name, saying there is no alleged complicity on her part regarding the ENSafrica Forensics investigation, or any improper conduct.

 Why hasn’t Oceana been suspended yet?

Responding to queries from Daily Maverick, the JSE advised that the last three companies to have their listings suspended were Nutritional Holdings, New Frontier Properties and Delta Property Fund Limited. The suspensions were as follows:

  • 15 December 2020 – Delta Property Fund is suspended after announcing on 9 December 2020 that it was withdrawing its February 2020 annual financial statements.
  • 27 January 2021 – New Frontier Properties is suspended after failing to publish its provisional financial statements for the period ended August 2020. In this case, the suspension came five months after the financial year-end.
  • 16 May 2021 – Nutritional Holdings is suspended for various non-compliance with JSE listing requirements including filing late and incorrect financial statements.

Andre Visser, director of issuer regulation at the JSE, says there is no prescribed period within which a listing can be suspended. 

“The JSE is required to follow the prescribed process in the Listings Requirements and the Financial Markets Act, which includes affording the company with an opportunity to provide submissions as to why its listing should not be suspended. Companies are also afforded the right to object once the JSE has decided to suspend. Each case must also be considered based on its own facts and circumstances. For these reasons, there is no prescribed period to suspend but rather a prescribed process,” he says.

The JSE website notes that where it finds that an applicant issuer or its director(s)/officer(s) have contravened or failed to adhere to the Listings Requirements, the JSE may:

  • Censure the issuer and/or the issuer’s director(s)/officer(s);
  • Individually or jointly, by means of private or public censure:
  • Impose a fine on the issuer and/or the issuer’s director(s)/ officer(s), individually or jointly;
  • Disqualify an issuer’s director(s)/officer(s) from holding the office of a director or officer of a listed company for any period of time; and
  • Issue any other penalty that is appropriate under the circumstances.

However, last month was the first time the JSE censured any directors for bad behaviour when it cracked down on two former AYO non-executive directors, disqualifying them from serving on the board of any listed company for the next five years.

The prolonged leniency in holding back on suspending Oceana is of some concern, especially if you take a closer look at the JSE board. Bassa, a non-executive director on the Oceana board also sits on the JSE board as an independent non-executive director and sits on the JSE’s Group SRO Oversight Committee. This particular committee is responsible for oversight of all regulatory matters at the JSE, and the issuer regulation department which would be responsible for suspending a company’s listing falls under this committee. DM/BM

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  • “The board finally clarified that neither disciplinary proceeding is in any way related to financial matters and finally cleared Karrim’s name, saying there is no alleged complicity on her part regarding the ENSafrica Forensics investigation, or any improper conduct.”

    Wow. This is huge. The CFO who had been suspended and intentionally or unintentionally implicated in murky matters, has been cleared. I have not seen this reported elsewhere. T

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