Dorbyl's disgraced former executive director Edwin Vorster has been ordered to repay the company almost R43 million, money that the courts have found he effectively stole, mostly by way of “secret profits”.
Vorster lost his job at Dorbyl some years ago after the company discovered what he’d been up to during a period of unbundling.
He and a fellow official, Rob Duff, were investigated by the Scorpions, but while Duff has since settled with Dorbyl, Vorster contested the company’s claim against him and the matter went to court.
Argued earlier this year before Judge Dimpheletse Seun Moshidi in the Johannesburg High Court, the matter has now been finalised. The company asked that the court order Vorster to “disgorge” secret profits he obtained “in breach of his fiduciary duties”.
These profits amounted to virtually R37m. In addition Dorbyl wanted irregularly obtained “disbursements” of R316 000 to be repaid, with R4.5m paid to Vorster by way of a management participation scheme.
The court found that Vorster breached key rules and ethical standards. Under his contract with Dorbyl he was not allowed to do paid outside work without Dorbyl’s written permission.
Vorster nevertheless took part in a number of deals, for which he was paid considerable sums, without the company’s knowledge let alone its go-ahead.
Listed as an elite “category 1 executive”, Vorster would profit handsomely by overseeing Dorbyl’s “refocusing process”.
Yet while he owed the company a fiduciary duty to ensure he acted in its best interests, he did not disclose the millions he was making from purchasers of Dorbyl’s assets through the agency of IFS Consulting.
Vorster claimed he was paid by the new purchasers for consultancy work but Judge Moshidi did not believe him, saying Vorster only offered value during discussions about the sales when he was a member of Dorbyl’s negotiating team.
It was highly unusual, said the judge, that Vorster, as a full-time member of Dorbyl’s board, “participated in discussions leading up to the approval or otherwise of a proposed sale, while the other members of the board did not know that (he) had a very real interest in the purchaser whose transaction was under discussion”.
Vorster owed a fiduciary duty to his employers, but did not inform them of the offers made to him by IFS on behalf of the would-be buyer and took the benefits for himself without Dorbyl’s consent.
One witness, Bill Cooper, Dorbyl’s former chief executive, told the court Vorster had not revealed his interests in any of the transactions, and because Vorster had not been given permission to “engage in extramural work for remuneration”, all the shares and cash Vorster had received during this period were obtained “contrary to his contract of employment”.
Cooper said the management participation scheme was intended to reward executives who stayed with Dorbyl to the end of its refocusing process.
The category 1 executives would divide any surplus remaining after the sale of the company’s assets, with Cooper receiving half, and Vorster and another director getting a quarter each.
Meanwhile, of course, the executives continued to be paid their normal salaries and benefits.
It’s been a long tale of woe for Dorbyl and its shareholders, many of whom still can’t understand why the company was stripped of so many assets, and why its executives were paid magnificent bonuses at a time when profits fell disastrously.
Cooper himself, who left suddenly over a scandal about whether he had benefited personally from some of the asset sales, was paid R11.1m when he left. I might not know much about life and living in the stratosphere where an individual can make and lose R43m, but if business can refuse to countenance corrupt personal enrichment and shady deals, why can’t the public sector show the same gumption? Vorster’s case illustrates many things.
Among them, two stand out: first, that like corrupt politicians, businesspeople can make obscene amounts of money, sometimes unlawfully; second, that business, unlike the government, might occasionally do something about it.
Imagine what salutary fear and alarm could be caused if a case like this were brought by the government to retrieve secret profits pocketed by corrupt officials at the expense of the public.
The courts strictly uphold the notion that company executives have a fiduciary duty to act ethically with their employer’s funds. Why don’t members of the public insist that politicians and public servants are held to a similar duty of good faith towards the people of South Africa?