Impala chairman Roux leaves amid tension with CEO

People and Appointments

Dr Fred Roux said he has been “fired” as chairman of Impala Platinum Holdings Ltd because, it was alleged, he had a “strained, distant” relationship with the company’s chief executive, David Brown.

Dr Roux said that on Oct 18 he received an e-mail from Niall Carroll, the chief executive officer of Impala shareholder Royal Bafokeng Holdings Ltd, suggesting that he step down because of the breakdown of his relationship with Brown.

“The relationship between David Brown and me has been under a measure of strain recently,” Dr Roux said in a statement that he handed to Bloomberg at the company’s annual general meeting in Johannesburg today. “I did the unthinkable and actually criticised the Implats executives for a sub-standard performance during the past year.”

Impala, the world’s second-biggest platinum producer, said on Aug 27 that full-year net income fell 66% because of a decline in metal prices. The company also failed to complete a plan to take over Mvelaphanda Resources Ltd and Northam Platinum Holdings Ltd because of disagreements over the value of the offer.

Dr Roux said that the Impala board asked him to resign after meeting without him, and said that if he didn’t step down then his chairmanship would be “deemed to have been terminated.”

“Since I have refused to resign, I am no longer chairman of Implats as a result of, and in my opinion, an unjustifiable dismissal by the board,” he said. He was ‘fired,” he said in a separate interview.

Mr Brown, in an interview, said Dr Roux’s departure was a “board matter” and there had been a “perception of tension” with himself and other board members.

Before leaving yesterday’s board meeting, Dr Roux told the board he was considering resigning after he received Mr Carroll’s e-mail, Michael McMahon, Impala’s acting chairman, said in an interview.

Dr Roux then handed out copies of the e-mail from Mr Carroll and said he wanted to consider his resignation overnight, Mr McMahon said. Dr Roux then declared the meeting closed and went back to his office. Another board meeting was immediately convened and the directors voted to remove him as chairman.

“Fred picked up a loaded gun, put it in our hands and walked out of the room,” Mr McMahon said, adding that he doesn’t intend to become the permanent chairman of Impala, a position he has held before.  “This is not a murder or an assassination. It is an assisted suicide.”

According to comments in a copy of Carroll’s e-mail distributed by Roux, the Impala chairman became confrontational toward other board members and the dispute related to the proposed transaction with Mvelaphanda. “I’m not commenting on what I believe is private correspondence,” Mr Carroll said in an interview.

Mr Brown needed the support of Dr Roux because of his relationship with Mark Wilcox, the chief executive officer of closely held Mvelaphanda Holdings Ltd, a shareholder in Mvelaphanda Resources, could “cloud” his judgment, Mr Carroll said in the e-mail.

“David Brown and I are friends, and I am friends with many CEOs in South Africa,” Mr Wilcox said in an interview from the Democratic Republic of Congo today. “Notwithstanding our friendship, David Brown always conducted himself with the utmost professionalism,” he said, adding that the failure to agree on the transaction had strained that friendship.

The disagreements over the proposed Mvelaphanda transaction were a “catalyst” in Dr Roux’s departure, McMahon said, adding that there had been other tensions.

Mr Carroll suggested Dr Roux step down in favour of Khotso Mokhele, the chairman of ArcelorMittal South Africa Ltd and Adcock Ingram Holdings Ltd. This proposal had the support of three of the company’s four major shareholders and the fourth had yet to be spoken to, according to the e-mail.

Mr Mokhele, currently a board member at Impala, said it would be a board decision and he couldn’t comment when called on his mobile phone. Mr McMahon said it wasn’t up to Mr Carroll to make suggestions for the post of chairman as it was a board matter.

“Uncertainty is the big thing with these developments,” Abri du Plessis, chief investment officer at Gryphon Asset Management, said in an interview from Cape Town. “People don’t know what happened and this creates uncertainty in the company, even when they come out with the full story.”

Royal Bafokeng Holds 13.2% of Impala, according to Bloomberg data, while the Public Investment Corp, which oversees the pensions of South African government workers, owns
8.5%.

Impala shares rose R7.73, or almost 5%, to R173.73 in Johannesburg, giving the company a market value of R105 billion (US$14.1 billion).

The price of platinum rose for a third day, trading at US$1.364/oz as of 4:02pm in London, and the rand declined 1.3% against the dollar. Impala sells metal for dollars and pays most costs in rand.

(Bloomberg, Oct 22)