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Former Eskom executive Dan Marokane has been appointed interim CEO of Tongaat Hulett, a company whose future is still in severe doubt after its crippling debt pile pushed it into business rescue last year.
Just how much power Marokane will actually wield is debatable, analysts said. SA’s biggest sugar producer has been under the control of its business practitioners Metis Strategic Advisors since October last year, when its lenders refused to greenlight its restructuring plan.
The potential failure of Tongaat’s rescue process would put 500 000 jobs across southern Africa at risk, but would have a particularly devastating effect on KwaZulu-Natal, where the company owns vast swathes of land and its SA operations are located.
Tongaat said in a statement that Marokane had more than 20 years’ experience in the oil, gas, power and agro-processing sectors and had been a “key member of the management team which led the turnaround journey of the company”. He will be taking over from former SABMiller executive Gavin Hudson, who had been at the helm since 2019 and is stepping down at the end of the month.
It said Marokane “played an important role in internal cash flow optimisation programmes and the management of the company’s asset disposals”.
He was appointed an executive director in November 2019 and was previously the chairperson of the company’s listed Zimbabwean subsidiary Hippo Valley Estates.
Marokane was also Eskom’s executive for group capital until 2015, when he was among four senior officials suspended in order to make way for a probe into the affairs of the state-owned utility. Marokane and two other officials ultimately agreed with Eskom to part ways.
The Zondo Commission of Inquiry concluded that the suspension of three of the executives, including Marokane, paved the way for the capture of Eskom. The primary purpose was to install Brian Molefe in Eskom as CEO and Anoj Singh as finance head, as it was believed they would favour the Gupta family and channel resources towards them, part four of the Zondo report reads. The report also noted that it was strange that Marokane’s suspension followed a week after its board had celebrated his performance in bringing the first unit of Medupi power station online.
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At the mercy of lenders
Tongaat, once considered a blue-chip champion of SA, became mired in an accounting scandal in 2019, when it emerged that key former executives including former CEO Peter Staude allegedly manipulated accounts for years. Since then, it has been in an uphill battle to turn its operations and debt situation around.
Chris Logan, MD of Opportune Investments, said Tongaat’s business rescue practitioners “would have all the powe” in terms of the Companies Act which gives them full management control of the company, adding that he was “even somewhat surprised” the group had appointed an acting CEO.
“I think the CEO has no power in this situation.”
Logan said it was questionable whether Tongaat could be saved but added there was “clearly value in the Mozambique and Zimbabwe operations”. Of major concern was its large debt and the fact that its “South African operations need huge work to turn them around”.
Sasfin Securities chief global equities strategist David Shapiro agreed that power lay with the business rescue practitioners, saying that the CEO in this situation would merely act as a “clerk” and be the “head of the negotiations”.
“At the end of the day it is up to the creditors and the banks whether they are going to come to the table.”
Shapiro said the socioeconomic stakes were high regarding Tongaat’s business rescue, adding that he “hoped they are able to get through it”.
Shapiro also did not believe that Tongaat’s was a “normal business rescue” because there were so many jobs at stake if it actually failed.
“You can’t afford to let them go. It is a political imperative that Tongaat survives. Whether the government steps in or whether local authorities step in, some has to step in and stop this from sinking.”
