An analyst has described the acrimonious exit of Exxaro CEO Nombasa Tsengwa, who resigned on Thursday after a failed attempt to have her suspension lifted, as “not good for the company”.
Yonelisa Petse of Aeon Investment Management was critical of the way the board of the coal miner handled its disagreement with Tsengwa.
“This situation raises questions about the board’s oversight and why these issues weren’t addressed earlier. The oversight of the board has been brought into question with all the allegations which may or may not have credence,” Petse said.
He now anticipates investors will exercise caution when dealing with the company.
“While the company’s survival is unlikely to be threatened due to its essential role in the energy sector, investor caution is anticipated, potentially leading to a governance overhang, increased M&A risk and valuation impacts.”
Meanwhile, the fight between Exxaro and Tsengwa might not be over.
Her lawyer, Eddie Classen, said his client was aggrieved at how the board handled the disciplinary process and investigation conducted by the law firm ENS Africa, describing both as unfair. He hinted she might go back to court to seek some form of redress.
“She is presently considering her remedies and is reserving her rights,” Classen said.
Tsengwa was placed on precautionary suspension in December pending the outcome of an independent investigation into workplace conduct and governance issues.
In November, Business Times reported how nine executives had either resigned or been suspended since she took the reins at the company in November 2022. One of the executives who left described working under Tsengwa as “the worst time of my career at Exxaro”.
Tsengwa responded by writing a letter to staff, pleading her innocence and telling them that an investigation had been conducted into these allegations, which cleared her. However, this sparked action from the board, which immediately placed her on suspension pending an investigation by ENS.
She was never part of the succession plan, because they were forced to appoint her, because the head of coal usually is the one to take the helm of the company. It is going to change now because of Nombasa leaving. She was in the way, and there are big deals that are going to be announced, and people don’t want her in the way
— Source close to former Exxaro CEO Nombasa Tsengwa
Last Thursday, Tsengwa approached the Pretoria high court seeking to challenge her suspension, but a judge ruled on Wednesday that the matter was not urgent.
The next day, Exxaro announced her resignation as CEO and board member with immediate effect. The company said it had commenced the search for a new CEO.
A source close to Tsengwa described her resignation as a boardroom coup, claiming the board did not want Tsengwa to finish her term.
“The suspension was about taking over the CEO’s office and about control of the company’s resources. It was a boardroom coup. The issue was to get her to leave,” the source said.
He said it was clear the board wanted her out as she was pushing back against some of their decisions.
“She was never part of the succession plan, because they were forced to appoint her, because the head of coal usually is the one to take the helm of the company. It is going to change now because of Nombasa leaving. She was in the way, and there are big deals that are going to be announced, and people don’t want her in the way.”
Classen said Tsengwa went to court to be heard as she had stated throughout the fight with the board that she had no trust in the ENS investigation.
In court, she described her suspension as unlawful and asked that it be overturned. She argued that the board chair had overstepped his powers by suspending her and described the ENS investigation as a “witch hunt”.
The court also heard how the suspension of Kgabi Masia, the head of coal operations who was served with a letter while on a work trip to Switzerland, led to Tsengwa offering to resign.
In her resignation letter, first reported by News24, Tsengwa said she had received a charge sheet on Monday containing accusations related to her late boyfriend. The first charge, of conflict of interest, underpinned by gross misconduct, accuses Tsengwa of advancing the business interests of her boyfriend’s company.
“Specifically, I am accused of advancing payment of his companies’ invoices by Exxaro, gave phone numbers of Exxaro employees to him and facilitated [the] purchase of 150 books from his company by Exxaro,” Tsengwa wrote in her letter.
The second charge is for breach of duty of good faith, “underpinned by instructing my then driver to assist my late boyfriend carry out his errands”, she wrote.
“All these allegations and their printed-out evidence of many pages are derived from more than 1,000 WhatsApp private messages between myself and my late boyfriend from June 2023 until recently. It is clear to me that a narrative that is not so clear to me from these romantic messages has been somehow created by the investigators hellbent on proving my ‘breach’ of Exxaro policies,” she said.
The source close to Tsengwa described the ENS investigation as a personal attack on her and not in line with the terms of the precautionary suspension announced in December.
“The issue about her boyfriend was not part of the investigation, it was created to make sure that they undress her in public. They were dirty, she had to leave,” the source said.
The reason for the suspension was the letter. She went to court because they wanted to silence her version. They started not liking her because she suspended Kgabi Masia for incompetence, breach of contract and insubordination. You can’t win with those three charges, but I can tell you he will return to Exxaro because he is protected by the board
— Source
“They really destroyed her. They were telling staff not to speak to her and they cannot mention her name in the corridors. They went for the jugular with her. Even when you bury the dead you bury them with dignity, not like this. Clearly, she was in their way.”
He accused the board of trying to silence Tsengwa.
“The reason for the suspension was the letter. She went to court because they wanted to silence her version. They started not liking her because she suspended Kgabi Masia for incompetence, breach of contract and insubordination. You can’t win with those three charges, but I can tell you he will return to Exxaro because he is protected by the board.”
An Exxaro spokesperson said the ENS investigation had largely been concluded and would be wrapped up before a report is submitted to the board.
Riaan Koppeschaar will continue in the acting CEO role until a replacement is found.
“Exxaro’s board will initiate an expedited process to identify and appoint a new CEO who will continue to drive growth, excellence and innovation within our business,” a spokesperson said.
“The board and management team will continue to drive Exxaro’s strategy of maximising the value of its current assets and continuing its measured and responsible transition into a diversified minerals and renewable energy solutions business that will thrive in a low-carbon future.”
The company last week defended its handling of the matter.
“The board takes its fiduciary duties towards the company and its stakeholders extremely seriously. As a matter of course — if the company receives material allegations or identifies material issues related to conduct, performance or governance — it will conduct an appropriately thorough and independent investigation in line with company values and policies,” it said.
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