It is ironic that South Africans speak of the centrality of corporate governance, yet when a company’s board is restructured to implement this through the appointment of independent non-executive directors, it is presented by elements of the media as a negative as opposed to a positive development.
This is an example of what AYO Technology Solutions Limited, the country’s largest BEE ICT JSE-listed company has been subjected to in recent times.
AYO has a significant shareholder in the Public Investment Corporation (PIC). As part of the PIC’s governance processes, Salim Young, the former deputy chairperson of AEEI stepped down as the independent non-executive chairperson of the AYO board, to fulfil the ESG requirement for a three-year cooling off period. I was subsequently appointed as the new non-executive chairperson.
Over and above that, AYO directors, who were associated with AEEI as well as other companies within the Sekunjalo Group, were also asked by AYO to step down, in order to support the initiatives of strengthening corporate governance.
In their place, black directors with a high level of corporate expertise, were appointed to key positions on the various committees, thereby further strengthening corporate governance. As with most companies, executives come and go. This is particularly prevalent in the very dynamic ICT industry.
In AYO’s case, the recent resignation of two executives was met with an unusually high amount of negative media exposure. They resigned the day after the appointment of the new board, which was done to ensure stringent corporate governance, the continued pursuit of a prudent investment strategy and rigorous criteria for executive performance.
New highly experienced executives from the ICT sector were appointed to augment the current executive team.
There is a narrative being propagated by detractors, both in the media and asset management environment, that AYO is a new company that has suddenly emerged and has received funding from the PIC.
The truth is that AYO has existed for more than 20 years, has a track record and has significant businesses in the following areas: health system technologies; enterprise security management; storage management; data governance; compliance; security services; headsets; audio-conferencing; digital media solutions; enterprise-level software solutions; change management and process improvement solutions.
This fact is conveniently ignored that AYO as a group, which currently employs more than 200 people who are highly-skilled in ICT, is a significantly profitable company in all of its businesses and has recently, on its own merits, against strenuous competition, secured a large-scale ICT contract with Sasol.
I recently joined the AYO team on visits to both the PIC and Sasol. In both instances, the PIC as an investor was pleased with the feedback given by the new board and congratulated the board on its direct approach in strengthening corporate governance. By all accounts, the feedback from Sasol executives indicate that, to date, the contract is performing in line with the service level agreement as expected.
In spite of AYO performing optimally, carrying out its dutiful obligations in terms of its business contracts and having strengthened its executive teams to ensure that its high level of performance is enhanced in all its existing customer relationships, every attempt is being made to attack the company and sabotage our business and create the impression that AYO is under investigation.
This smacks of racism and is blatantly opposed to the transformation of the South African economy. Surely as one of the largest black ICT companies in the country, AYO should be judged on its performance and not on hearsay or insinuations.
In AYO’s case, it has presented a business case to its investors to become one of the largest black ICT companies in the country. Its business plan is not short-term – it is long-term, to create a sustainable and highly successful and profitable black ICT business. In this regard, it successfully raised capital to augment its profitable existing businesses in order to grow and acquire new business.
It is ironic that this same business model is used by countless companies when they approach institutions, including the PIC, to invest. Their executives are seen as innovative and forward thinking when they present business plans to grow successful companies and, notwithstanding the valuation of those companies, the market tends to applaud them for innovation.
In the case of AYO, it is clear that the same standard is not applied. Is it because AYO is a black owned company? Or is it that AYO is part of the larger Sekunjalo Group which has been subjected to a media campaign by Tiso Blackstar and Media24 to undermine its businesses?
AYO is being attacked because it represents a threat to existing ICT businesses in this country. The focus on AYO’s listing on the JSE is simply the oldest trick in the book. Keep on bashing the company and ask your hedge fund friends to shorten the share in order for you to profit from the share. We need just look at what happened to other companies on the JSE when they were bombarded with negative stories which had no basis to it. for example Aspen – hedge funds shorted the share to their benefit and potential detriment of Aspen.
As AYO, we do not take our instructions from asset managers that have an intent and vested interest in retaining the status quo, which is anti-transformation. They are not investors in our company. We do not need them as investors in our company.
We have strong shareholders that will support the growth of our business. We will continue to make acquisitions at our pace and build value for our shareholders, which fit into our strategic growth plan. We will continue to grow our customers base and service them with excellence. That will remain the best antidote to the racist diatribe against our company.
South Africa produces many overt racists, such as Adam Catzavelos and AfriForum, who defend minority interests, overlooking the position of the majority. But there are also covert racists, those who serve to undermine and sabotage a legitimate black business through hearsay and gossip.
In this regard two examples stand out. Our media detractors consistently write that the PIC is investigating AYO as part of a commission implemented by the Minister of Finance and the State President. This, despite numerous statements clarifying that such a commission is aimed at looking into the structure of the PIC and has nothing to do with PIC investments, including AYO.
In fact, in AYO’s case there is nothing to investigate since the company is not responsible for the decisions of the PIC. Are they going to investigate AYO’s business case? If so, then they must investigate every single company in which the PIC has invested on the JSE, including companies such as Tiso Blackstar and Woolworths, where the PIC has recently had to mark down its investment by billions.
This is done with a clear agenda, to undermine the business confidence in AYO and to create the impression that AYO has done something wrong. It is the old adage – if you tell a lie often enough you hope that people believe what you are saying.
The public is not going to be fooled by these campaigns to undermine a legitimate black company. At no stage has anyone pointed out what AYO has done wrong. It has simply presented a business case for which it has won support.
Why should the PIC not invest in AYO? The PIC’s role is to support innovative business, especially in the ICT sector, but more importantly, to support transformation of the ICT industry in this country. The overt racism from some asset managers should not be surprising, since in their world black people should be “gardeners and maids” and have employment in those areas.
AYO is a proudly South African company that happens to be black and deploys its capital in South Africa and Africa. It has not deployed its capital in other countries. It deploys its capital for the benefit of its own people. A second narrative that is being advanced by sections of the media is that a list of shareholders purporting to buy AYO shares recently were all linked to Sekunjalo chairperson, Dr Iqbal Survé.
In this regard, the reporter even went so far as to provide a graph of these shareholders. If this reporter did the most basic homework, he would have seen that the list of shareholders, which he claimed were linked to Survé, have in fact been shareholders for the past two decades.
When I assumed the chairpersonship and asked for the facts relating to the outrageous accusations by this reporter, I was shocked to discover that his information was based on completely false assumptions.
Many of these people were shareholders of AYO in its previous iteration as Sekunjalo Technology Solutions. In any event, let’s assume that the reporter was right, then why can’t people associated with AYO shareholders purchase the AYO shares? What is wrong with that?
AYO is a victim of an orchestrated and organised disinformation campaign, with the sole purpose of undermining its legitimate business. It is tragic that this campaign is driven largely by business people, detractors and competitors of AYO, and some of the detractors and competitors of the Sekunjalo Group with the sheer determination to prevent black business success in our country.
Should we, therefore, be surprised when the majority of people in this country see no hope in doing business properly when they are undermined through invisible hands and through corporate collusion against a legitimate black business?
At a time when there is huge public debate about land expropriation, it must be understood that black business can never defend people that are against land expropriation. This is because black business is a victim of existing business interests and a cabal that is determined to undermine and sabotage a legitimate black business – a black business that has never done anything wrong and has a proven track-record of success.
The struggle for economic liberation continues. A luta continua!
Dr Wallace Mgoqi is the non-executive chairperson of AYO Technology Solutions.