Photo by Simphiwe Mbokazi
Allan Gray, whose clients own 25percent of Group Five, says its motive for calling a meeting of the listed construction and engineering group’s shareholders was not related to the company’s strategy but the independence and expertise of its board.

Andrew Lapping, the chief investment officer at Allan Gray, confirmed yesterday that the asset management company had lost faith in the ability of Group Five’s board to act in the best interests of all stakeholders, given its unsatisfactory response following a large number of resignations of key individuals in recent months.

“They have been unable to regain our trust following numerous meetings and engagements,” Lapping added.

“Our motivation is not related to Group Five’s strategy, involving the unbundling of assets, or otherwise. We simply want a board that is independent, with the relevant skills that will protect and grow value for all stakeholders,” he said.

The attempt to change Group Five’s board will come to a head at a shareholders’ meeting that is scheduled to take place on July 24.

Five of the seven members of the board announced their resignations on Friday. This left recently appointed chief executive Themba Mosai and chief financial officer Cristina Teixeira as the only surviving directors.

Allan Gray’s suggested nominees to the board include former Group Five managing director Mike Upton.

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Lapping said that, if elected, Allan Gray’s suggested nominees would result in a more transformed board that complied with the specific criteria, including relevant expertise, experience, continuity and institutional memory, sensitivity to historical industry behaviour,fundamental and strategic commitment to transformation, execution of the company’s strategy to deliver across the full infrastructure life cycle, and maximum shareholder support.

Lapping said Allan Gray believed that Upton met these criteria.

“Mike was recognised for proactively initiating the investigation into industry collusion. Under his tenure, Group Five was rewarded for this proactive action with the granting of amnesty and did not have to pay any punitive fines.

“It is our opinion that a new non-executive board will be able to propel the company forward and ensure Group Five continues to play an important role in the future of South Africa,” he said.

UPHEAVAL

The executive management and board upheaval at Group Five started in February, when the group announced that chief executive Eric Vemer would leave within a few weeks and that engineering and construction executive director and member of the executive committee Willie Zeelie would leave at the end of March but would continue working for the group under a consultancy agreement for 12 months.

Other resignations since then include Jon Hillary, the company’s former group executive committee member and head of investments and concessions, and Jesse Doorasamy, a former executive committee member and head of human resources.

Allan Gray has nominated five new directors and the Public Investment Corporation and Mazi Capital have each nominated two.

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