Behind the HCI boardroom bust-up

2014-10-29 14:09

The HCI boardroom debacle, which claimed another senior executive today with the resignation of e.tv’s COO Bronwyn Keene-Young, is, on the face of it, a fight between those (HCI CEO Johnny Copelyn and the remaining members of the HCI board) who believe HCI’s former executive chairman Marcel Golding bought Ellies shares without authority, and those (Golding, Keene-Young and former HCI board member Barbara Hogan) who believe there was attempted political interference in e.tv.

THE COPELYN OPTION: Golding, who resigned at the end of last week, bought R24 million of Ellies shares without authorisation.

At face value, this is true, but seems unlikely to have caused such an irreparable rift between Copelyn and Golding.

HCI has always been a fairly opaque company, run by Golding and Copelyn more as a private fiefdom than a public company.

It just seems unlikely that the two would split a highly successful multi-billion rand company and a relationship of decades over this amount.

Numerous sources indicate that this would not have been the first deal transacted without board approval and, in the grand scheme of things, is a relatively small deal.

Copelyn, however, told employees categorically that the share acquisition was the reason for HCI’s decision to implement disciplinary proceedings, saying it was concealed from the board and paid for by private arrangement and not registered in HCI’s name.

Golding had the opportunity to disclose this at two board meetings, but chose not to.

THE GOLDING/KEENE-YOUNG OPTION: Copelyn and the HCI board were aware of the R24 million and no one acted on it for months.

The real issue is continued political pressure exerted on e.tv to be a government mouthpiece. Copelyn felt this was important to HCI and its relationships, Golding and Keene-Young felt this was contrary to media integrity and independence.

Copelyn said there “is simply no way that HCI could ever be indifferent to political interference.”

There is some correspondence between board member Yunis Shaik and Golding/Keene-Young which seems to indicate some disturbing attempted political interference in news choice, including attempts to get e.tv to cover a speech by Ibrahim Patel and a dam opening by President Jacob Zuma.

But this is not uncommon in newspapers and media organisations, who are often pressured by various interest groups. Their independence is judged by their ability to deflect this, and e.tv does not seem to have done too badly.

Keene-Young’s letter to staff said “Copelyn is silent on how he has attempted to manipulate this company from behind the scenes”.

She said that when she resisted editorial instructions from Shaik, Copelyn “sought my removal”, and then let her stay on, but sidelined her.

She said Copelyn told the exco that eNCA’s news coverage is “problematic” for HCI’s other interests and that “our news had to be reined in so that it didn’t affect HCI’s ability to source gambling licences from government”.

This statement is telling. An R11.7 billion deal between Sun International and Tsogo Sun, in wich HCI increases its stake in Tsogo from 41% to 47% and gets dominance in the Western Cape, is contentious and on the face of it stands little chance of getting through the competition authorities.

This leads to the THIRD OPTION - that the Ellies deal and the political interference options, while both serious in themselves, are red herrings and not the main reasons behind such an acrimonious split.

The Copelyn/Golding brotherhood had been under pressure for some time as Golding wanted to expand the media business into something vaguely resembling that of Naspers, hence his interest in Ellies and set top boxes.

It is understood he has been looking at acquisitions in China.

Copelyn said Golding wanted to buy the media business from HCI last year, taking Sactwu with him as his partner.

This has not happened, and this, and other differences of opinion like on potential issues with gambling licences, may be some of the causes or effects of the souring of relations between the two.

What is certain is that this boardroom bust-up is bigger than the two sides are letting on.

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