Has the Exxaro board of directors been in dereliction of duty?
CEO Nombasa Tsengwa has been placed on precautionary suspension, said chair Geoffrey Qhena last week. “The board is fulfilling its fiduciary duties by taking decisive steps to act in the best interests of the company and stabilise its leadership, while it conducts an appropriately thorough and independent investigation.”
The suspension follows reports of a mass exodus of senior executives from the mining company, apparently in reaction to Tsengwa’s management style. Yet the week before, Tsengwa was apparently exonerated after a board investigation.
Such tensions in big corporates do not arise overnight. Tsengwa, to use a sports analogy, must have “lost the dressing-room” a long time ago.
Qhena says leading law firm ENS will review the allegations. Yet Exxaro has 15 directors (excluding Tsengwa), 12 of them nonexecutive and nine of those listed as independent. It is evidently beyond them to conduct a “thorough and independent” investigation into Tsengwa’s leadership — but that is what nonexecutive directors are for. Their combined fee income was R14.3m in 2023.
Under the King codes, directors have duties of good faith, care, skill and diligence in looking after the assets of a company — and no asset is more important than its people. In the case of Exxaro, however, this is one box the board — described as “seasoned” by Qhena — was evidently unwilling or unable to tick.
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