Axed Andrew Darfoor takes Alexander Forbes to CCMA
Analysts say he was replaced with unusual speed, but brutal dismissals are a risk handsomely paid CEOs face
Just as Alexander Forbes announced the appointment of a new CEO with links to Sanlam and Patrice Motsepe’s African Rainbow Capital (ARC), Andrew Darfoor launched a challenge to his dismissal.
Darfoor, who was fired as CEO after the board lost "confidence and trust" in him, told Business Day on Monday that he had taken legal steps against Alexander Forbes.
"I can confirm that I have served and lodged a CCMA (Commission for Conciliation, Mediation and Arbitration) labour matter," he said.
The company announced the appointment of Dawie de Villiers, a former Sanlam executive, as the new CEO, less than a week after firing Darfoor. Both ARC co-CEOs, Johan van Zyl and Johan van der Merwe, are former Sanlam executives.
De Villiers, who has led Sanlam’s employee-benefits division since 2013, will start as the CEO of the country’s largest pension-fund administrator on November 1 2018.
Jean Pierre Verster, portfolio manager at Fairtree Capital, indicated he was not surprised by the swift appointment. He said: "I was expecting a replacement to be announced in a short time since the departure of Andrew was not a surprise to the board. The board initiated it."
With ARC being the second biggest shareholder at Alexander Forbes, analysts said De Villiers’s appointment might be a start of more things to come.
Verster said: "ARC has always said that Alexander Forbes is a key strategic investment for them in executing their financial-services ambitions. So it will be interesting to see what that means going forward, including closer collaboration or even M&A between Alexander Forbes and Sanlam."
The market cheered the news, with Alexander Forbes’s share price closing 12.53% higher at R5.57 on Monday.
Labour lawyer Andrew Levy said the swift appointment of De Villiers was not likely to strengthen Darfoor’s case.
"There is nothing wrong in law with running the processes of dismissing a person and looking for their replacement simultaneously, provided that the dismissal is lawful. In this instance, we can’t say if [Darfoor] has a case without knowing the basis for his dismissal, because Alexander Forbes has not given details," said Levy.
He said that litigation processes usually had no sympathy for CEOs because they were paid handsomely for performance and therefore bore the risk for brutal dismissal if their employers were not satisfied with their performance.
But another labour law expert, a senior partner at Cowan Harper Madikizela Attorneys, Rod Harper, said the speed at which this replacement happened was unusual.
"While companies normally start considering candidates for the position of the CEO beforehand, the period does seem very short," Harper said.
"It would be interesting to hear from the company if there were meetings that took place to discuss the issues with him before starting the replacement process and firing him," he said.
Alexander Forbes has meanwhile not elaborated on its reasons for losing confidence in Darfoor. Instead, board chair Nonkululeko Nyembezi said details of the former CEO’s termination remained confidential.