ROB ROSE: Why Investec blundered
The debacle over the bank’s ‘apology’ for its analyst’s view on Tongaat Hulett exposes an unhealthy conflict of interest in modern finance firms
Craig Butters, a veteran portfolio manager at Prudential Investment Managers, knows a thing or two about how tricky it is to take a contrarian and critical approach to a company. It was Butters who, in 2010, organised a meeting with Christo Wiese and advised him to "stay as far away from Steinhoff as he could". Wiese, famously, didn’t take that advice — an error that cost the Shoprite chair R59bn in the end. But the market for critical analysts, who can sound the alarm on corporate malfeasance or bungling, has been dealt a blow by SA’s fifth-largest bank, Investec. Last Friday, Investec fell over itself to apologise for any "embarrassment" caused to Tongaat Hulett’s CEO Peter Staude after an analyst in its brokerage business, Investec Securities, published a report arguing that based on the sugar company’s results, Staude should quit. That analyst, Anthony Geard, cited Tongaat’s "appalling" year-end results as the reason why "it is time for the CEO since 2002 to step aside". It wasn...
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