Tsogo Sun Faces Criticism over Executive Loan
South African gaming and hotel group, Tsogo Sun has come under continuous fire for its decision to grant an unsecured loan to five executives worth R200 million. The loan was given to the executives on an interest free basis and there is no specified date when the money needs to be returned.
One of the entities opposed to Tsogo Sun’s decision was the National Union of Mineworkers which said that it was “disgusted” with the move and said that it was an insult to ordinary employees who could not enjoy such excellent loan conditions.
Tsogo Sun director, Marcel Golding, was once deputy general secretary of NUM.
The union put a call out to other worker bodies in South Africa, including the South African Commercial, Catering and Allied Workers Union, as well as the Food and Allied Workers Union to oppose Tsogo Sun’s interest free loan to the executives.
It took particular issue with the fact that a very few “rich individuals” were being empowered by this decision.
“This empowerment of the few individuals is an insult to the ordinary employees of the company,” said NUM in a statement. “The lowest paid workers continue to earn poverty wages and Tsogo Sun does not see it necessary to empower these exploited, hardworking and vulnerable workers.”
The loan was sought within the context of SABMiller’s sale of its Tsogo Sun shares, and the five directors are hoping to buy 7.76 million shares at a price of R25.75, pending the approval of the R200 million loan.
Recently, the Tsogo Sun board urged shareholders to approve the loan to the directors to allow them to buy part of SABMiller’s 39.6% stake in the company.
Those Tsogo Sun executives seeking the loan are: Chief Executive Officer of Tsogo Sun, Marcel von Aulock (R86 million), Chief Financial Officer Rob Huddy (R27 million), Human Resources Director Vusi Dlamini (R20 million), Gaming Managing Director Jacques Booysen (R47 million) and, finally, Tsogo Sun’s Legal Director, Graham Tyrrell (R20 million).
Calculations show that if just half of the R200 million loan amount sought was shared across Tsogo Sun’s 9,500 employees, each one would benefit from R10.5K worth of shares.
Tsogo Sun, however, has said it was approving the loan in order to “align the interests of the five directors with the company,” according to Business Day.