Tiger Brands’ baffling attempt to hide the identity of its insurer, which is pulling the strings in a class action lawsuit brought by listeriosis victims, has come to nought.
The lawsuit was lodged a year ago, claiming damages on behalf of some of the 218 people, including 93 babies younger than 28 days old, who died from the worst outbreak of listeriosis ever in 2017 and 2018.
Even though the National Institute of Communicable Diseases traced the outbreak to Tiger Brands’ Enterprise factory in Polokwane, the company has refused to admit culpability. This attracted sharp criticism: Prof Ilse Struweg of the University of Johannesburg said previously that the company "will be remembered for trying to deny responsibility and refusing to apologise".
Perhaps to shield its insurers from also being painted as insensitive, Tiger Brands CEO Lawrence MacDougall told the FM last month that "we’re not sharing the [name]".
Now, however, it has emerged in legal papers obtained by the FM that the insurers are Stalker Hutchison Admiral (SHA Risk Specialists) and QBE Insurance Group.
SHA, founded in 1985, bills itself as SA’s alternative to Lloyd’s for liability insurance. However, SHA is 100% owned by Santam, the short-term insurance subsidiary of Sanlam. So why did Santam not want its name known, as the ultimate owners of the company fighting the listeriosis victims?
Contacted by the FM, Santam CEO Lizé Lambrechts said her company hadn’t demanded its identity be hidden. "Tiger Brands are the clients — if they don’t want to disclose anything, I can’t voluntarily disclose it," she said.
Later, Santam spokesperson Thabo Mabaso said the insurer "did indicate in our 2018 results … that we were impacted by the listeriosis event across several contracts of insurance, which we had underwritten for various insured clients".
The lawyers acting for SHA are Clyde & Co. In November, Clyde & Co partner Daniel le Roux also told the FM he was "not permitted to say" who the insurers were. He denied that the secrecy was aimed at protecting the insurer from being labelled "cold-blooded" and "heartless" — a characterisation to which he objected. However, it was Le Roux’s own complaint to the Legal Practice Council, a statutory body with oversight over lawyers, about the lawyer representing the listeriosis victims, Richard Spoor, which ultimately revealed the insurer’s identity.
In that complaint, Le Roux says: "I act on behalf of SHA, underwriting managers of Santam and QBE Insurance Group, who are the liability insurers of Enterprise Foods. Our client insures Tiger Brands in the class action emanating from the listeriosis outbreak."
This sideshow illustrates how ill-tempered this legal battle has become. Le Roux’s complaint is that he and Spoor were engaged in "without prejudice negotiations" about how to split the costs of a media campaign over the listeriosis case, when details of these discussions leaked to journalists.
In his response in October last year, Spoor wrote back to the Legal Practice Council saying that after Clyde & Co refused to split the costs of the campaign, he confirmed to a journalist that they had "refused to contribute to the costs".
"There was no breach of confidentiality … the complainants were never in a position to insist their position on that matter could be withheld from public scrutiny," he said.
Asked what had become of the case, Spoor said this week: "I responded to the Law Society, and I’ve heard nothing since."
Contacted and asked four questions about the secrecy around its relationship with Santam, Tiger Brands spokesperson Nevashnee Naicker said the company "has nothing further to add to the comments previously provided".
The uncertainty over the listeriosis lawsuit is one of many factors weighing down Tiger Brands. Over the past three years, its share price has fallen 47% — compared to a 6.2% fall for rival AVI, a 33% fall at Pioneer Foods, and a 44% drop from Rhodes Foods.
For Tiger Brands’ past financial year, revenue inched up 3%, while operating profit dived 20% and margins took a knock. It has led analysts, including Investec Securities, to argue that an overhaul is needed to restore it to its former glory.
At least, Tiger Brands executives aren’t being lavishly rewarded for this subpar performance. Its annual report released in December revealed that for the second year running, MacDougall and FD Noel Doyle failed to qualify for bonuses. Nonetheless, MacDougall was paid R9.46m (a 5.1% rise on the year before), while Doyle got R11.26m including R4.4m in "share appreciation rights".
In the report, chair Khotso Mokhele said an "independent effectiveness review" of the board, while "generally positive", had flagged some areas where it fell short. This included the board’s efforts to "built a performance-based culture with more robust accountability mechanisms" and "oversight of the company’s talent management activities".
Of 15 key performance indicators, both MacDougall and Doyle only "met" or "exceeded" six.
Tiger Brands’ poor handling of the listeriosis case has ratcheted up concerns over its governance.
Brokerage Legae Peresec, in a report compiled by FarSight Research last year, red-flagged how MacDougall "puts blame on consumers with weak immune systems, while taking an accountant’s view of the damage caused to the business". Also, its reporting on ethics was considered "boilerplate, and conforming to minimum compliance".
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