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Economic populism Focus on 2% growth distracting SA 22 OCTOBER 2018
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NEWS BUSINESS BRIEFS

Transnet CEO fired,

AUDITOR-GENERAL
Clover milks it
with buyout talks
JSE-listed Clover Makwetu’s
Industries’ share price shot
up as much as 18% on
Friday after the company
personnel

but battle is not over

reported it is in negotiation
Lesetja Kganyago with a third party for its terrorised at
acquisition. /Page 11
Kganyago Comair teams up
municipalities
decries populist with global IT firm

economy fixes
Reserve Bank governor Lesetja
Kganyago says it is better to
have unpopular central bankers
than allow runaway inflation in
order to please populists.
Speaking at the Association of
Black Securities and Investment
Professionals’ conference a few
hours before a panel was due to
debate the nationalisation of
the Bank, Kganyago said SA
had no space for “macro-
economic adventurism”. /Page 2
Deadline set for
public health system
The presidency has
acknowledged the crisis
gripping the public health
system and concluded a two-
day summit at the weekend
with a commitment to devise a
plan for fixing the sector’s ills by
early December. /Page 3
State eyes transport
investment drive
The department of human
settlements and mayors of
ageing cities and towns plan
to launch an investment
drive to get the Strategic
Integrated Projects Seven off
the ground. /Page 3
US ‘wants total
supremacy’
•
JSE-listed aviation
company Comair is
widening its diversification
strategy with the creation
of a joint-venture business
with global information
technology (IT) company
Infinea. /Page 11
RAC goes digging
beyond mining
RECM & Calibre (RAC) is
actively looking for new
opportunities, as the
investment company
moves to further reduce
its exposure to the cyclical
mining and construction
sectors, which weighed
on its first-half
performance. /Page 12
Arcelor secures
Canadian funding
Canadian government
funding for ArcelorMittal is
the first of a series of steps
the country will take to
support the steel industry
amid a tariff fight with the
US, Canada’s industry
minister says. /Page 12
Hong Kong real
estate mogul dies
Walter Kwok, the former
chair of Hong Kong real-
estate developer Sun
Board chair says Gama failed to make representations on why he should not be axed
Genevieve Quintal
Political Writer
Transnet has fired its embattled
CEO Siyabonga Gama and will
pay him out for six months.
In the notice of termination of
employment letter, served on
Gama on Sunday and seen by
Business Day, board chair Popo
Molefe said the CEO had failed
to make representations on why
he should not be fired by the
deadline of October 15.
“As a result of your failure to
make representations, the board
has therefore resolved to termi-
nate your appointment as group
CE on six months’ notice,”
Molefe says in the letter.
“You are not required to
work out your notice period and
will be paid six months’ remu-
neration in lieu of notice.”
Gama was paid R8.108m
in the 2018 financial year,
according to the latest Transnet
annual report.
Gama has been in the line of
fire after investigations found
that he, former CEO Brian
Traditional right of way: People watch a flock of sheep during the annual sheep parade through Molefe and Gupta associates
Madrid on Sunday. Shepherds parade the sheep through the Spanish capital every year in order to may have acted unlawfully in
exercise their right to use traditional routes to migrate their livestock from northern Spain to winter relation to the purchase of 1,064
grazing pasture land in southern Spain. /Reuters locomotives for R54bn. Leaked
Gupta e-mails contain claims
that the Gupta family received
multibillion-rand kickbacks as
part of the purchase.
Gama’s removal comes after
several new board members
were appointed at Transnet in
May as part of President Cyril
Ramaphosa’s drive to root out
corruption at state-owned
enterprises (SOEs).
The Transnet board told
Gama in the letter that his
last working day would be
Monday, October 22 and that he
was required to collect his
belongings and return the SOE’s
belongings, which include an
iPad, cellphone, laptop and
access keys.
The board reminded the
embattled CEO that despite the
termination of his contract he
was still obliged to keep
company information and any-
thing regarding agreements he
had signed during his employ-
ment confidential.
Last week Gama approached
the labour court in Johannes-
burg in a bid to stop the board
from terminating his contract.
The court on Friday stayed
Gama’s application and ordered
that the dispute between him
Continued on Page 2
Claudi Mailovich
Political Writer
It is becoming increasingly diffi-
cult for the auditor-general of SA
to perform its work in some
municipalities as staff members
have had to face a hostage
situation and threats from
municipal officials and have
even been shot at.
These are some of the
instances of intimidation
auditor-general Kimi Makwetu
raised in a letter to parliament’s
standing committee on the
auditor-general. In the letter,
dated October 15, Makwetu
specifically details instances of
intimidation at the municipalities
of Emfuleni, Tshwane, Madibeng
and Moretele.
Makwetu says in the letter he
believes the instances of intimi-
dation deserve national atten-
tion, even though the office of
the auditor-general will still
work with the local and provin-
cial governments in question.
“These instances not only
pose a threat to the life and
limb of innocent professionals
employed by the AGSA [auditor-
general SA], but also put the
broader public interest at risk,”
he said.
The finances of municipali-
ties, which are tasked with basic
Continued on Page 2

Moscow on Sunday warned Hung Kai Properties, died PHARMACEUTICALS

US President Donald Trump
that his plan to ditch a Cold
War-era nuclear weapons
treaty with Russia is a
dangerous step. /Page 6
Allies scoff at
Saudi account
Saudi Arabia faced a growing
chorus of incredulity on
Sunday over its belated
explanation of how critic Jamal
Khashoggi died inside its
Istanbul consulate, as world
powers demanded answers
and the whereabouts of his
body. /Page 7
Brooks Koepka is
the new world No 1
Triple Major champion Brooks
Koepka will overtake Dustin
Johnson and Justin Rose to
become world No 1 for the
first time after winning the
CJ Cup on Sunday by four
strokes. /Page 18
Chippa skipper in
dispute with Tinkler
Chippa United coach Eric
Tinkler would only say he “did
what I felt was necessary”‚
explaining his first-half sub-
stitution of captain Mark
Mayambela in Saturday night’s
1-0 Telkom Knockout loss
against Orlando Pirates. /Page 19
No ‘Beast’ for Boks
on their UK tour
Tendai “Beast” Mtawarira will
miss the Springboks’ November
tour of Britain and France‚
robbing the squad of their most
experienced player for four
tough Tests. /Back Page
on Saturday morning at the
age of 68, according to
a statement from his
family. /Page 13
Congo moves on
hydropower plant
The Democratic Republic
of Congo gave two groups
of investors a four-week
deadline to submit a joint
proposal on the
development of the
multibillion-dollar Inga 3
hydropower plant. /Page 14
Saudi investment
summit in crisis
Saudi Arabia will host a key
investment summit on
Tuesday, overshadowed by
the killing of critic Jamal
Khashoggi that has
prompted policymakers
and corporate giants to
withdraw. /Page 15
Software stalls
electric Audi SUV
Audi’s first electric sport
utility vehicle (SUV) will hit
showrooms four weeks
later than planned because
of a software development
issue, a spokesperson for
the luxury car brand said
on Sunday. /Page 15
JSE closes flat on
lack of direction
The JSE closed flat on
Friday but ended the week
2.58% lower, after neither
global markets nor the rand
gave the local bourse a
clear direction. /Page 16
Aspen lifted as founders
buy shares worth R110m
Nick Hedley
Senior Business Writer
Aspen Pharmacare’s founders
bought R110m of the company’s
shares on Friday, taking advan-
tage of a sharp sell-off since
September 13.
CEO Stephen Saad bought
R93.9m worth of his company’s
shares on the open market,
while his deputy, Gus Attridge,
bought stock worth R15.6m.
The transactions helped
Aspen’s shares gain 2.16% on
Friday to close at R156.93.
“We bought the shares
because we believe in Aspen
and what we do,” Saad told
Business Day.
Both are significant share-
holders of Aspen, with Saad
holding about 12% through trusts
and in his individual capacity,
worth R8.6bn at Friday’s close.
Attridge directly and indirectly
owns about 3.4%, worth R2.4bn,
according to Bloomberg data.
The company’s shares have
lost 42% of their value since it
published annual results in
September and said it would
sell its nutritionals business for
significantly less than the mar-
ket expected.
The group also paid a divi-
dend on October 8.
André Bekker, an equity ana-
lyst at Arqaam Capital, said the
sell-off ensued because invest-
ors had been left disappointed
by the group’s numbers, includ-
ing operating margins, cash
flows and gearing levels, which
meant “the narrative around the
Aspen story has changed a bit”.
Analysts and fund managers
had revised their earnings
forecasts lower because Aspen
was facing a “tough year” in
2019, partly due to the loss of
certain manufacturing contracts,
a “one-off” gain in anaesthetics
sales in Japan in 2018 and
increased pressure on high-
potency and cytotoxic generic
sales in Europe.
Aspen said in September it
expected organic revenue
growth of 1% to 4% in its com-
mercial pharmaceuticals busi-
ness for the 2019 financial year.
The company also said the
sale of its nutritionals business
was expected to bring in net
proceeds of about €644m
(about R10.6bn).
It said that the funds would
be used to reduce group debt,
“creating greater headroom
and capacity”.
Net borrowings totalled
R46.78bn at the end of June,
reflecting a 26% year-on-year
increase.
Meanwhile, Bekker said
Aspen was also facing regul-
atory headwinds in countries
such as Japan and Australia
and this would weigh on
medicine prices.
While the company previ-
ously traded at a premium to its
specialised generic pharma-
ceutical peers, the market
2.16% was now “toning down that
the increase relative premium”.
in Aspen’s He also disagreed that the
share price on sell-off was the result of Aspen
Friday, which getting a lower-than-expected
saw the price tag for its nutritional unit,
stock close at as some market commentators
R156.93 had claimed.
“What was more important
about that deal was that it was
likely done out of need,” he said.
Aspen would have been in
breach of its debt covenants in
2019 had it not raised capital via
an asset sale, as it had to settle
deferred liabilities, R11bn in cur-
rent debts, and also maintain
capital expenditure.
Vestact wrote in a research
note shortly after the sell-off
started that investors had been
“jittery” since the Steinhoff
accounting scandal was
unearthed, and blue-chip com-
panies, including Aspen, had
been taking strain as a result.
Aspen’s shares had also been
dented by “general gloominess”
surrounding emerging markets.
“We still own Aspen for
clients, but I don’t think the
share price will pick up until the
current negative cloud lifts,” the
money manager said.
The stock is trading about
64% below its 2015 high
of R439.69.
hedleyn@businesslive.co.za

FT-JSE INDICES BONDS/FORWARDS CURRENCIES COMMODITIES FOREIGN MARKETS

All Share Top 40 R186 R207 R / US$ R / UK£ R/€ Gold PM fix Brent Futures Dow Jones Ind FTSE 100
52,093.00 45,895.40 0 0 14.4161 18.8388 16.599 1,223.00 79.98 25,444.34 7,049.80
0.08 0.09 100.00 100.00 0.00 0.00 0.00 0.49 0.00 0.26 0.32
IG.com
Figures at 8pm SA time All bold figures are expressed as a percentage move
CFDs: INDICES | SHARES | FOREX | COMMODITIES

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