By: Sibonelo Radebe
Petrochemicals giant, Sasol, is facing a rising tide of protest from its former South African employees who feel robbed after they were excluded from benefiting in the winding down of Sasol’s 10 years old broad based black economic empowerment (B-BBEE) deal.
One former employee, Joyce Hackenberg, is reported to have suffered a “heart attack” and died soon after discovering the disappointing news that the 10 years old employee share ownership styled chapter of the B-BBEE deal would not pay a cent at termination point.
Hackenberg’s pain was clearly spelt out in a comment she posted on ProBonoMatters, a social media platform which has picked up the Sasol Inzalo grievances and is preparing to lodge them with the BEE Commission.
“I am an ex-employee of Sasol Oil,” wrote Hackenberg. “I was offered retrenchment in 2010 with the promise that I will not lose my 850 (Sasol Inzalo) shares… l trusted Sasol’s promise…”
She demanded Sasol to “own up” a situation she described as exploitative. In what was clearly an expression of great pain Hackenberg added that “This is affecting people’s health. It is gross exploitation… I trust the real truth about what is happening in the dark shall come out in the light soon.”
The mother of two daughters from Port Elizabeth was part of a group of former Sasol employees who feel robbed by the outcome of Sasol’s R30 billion B-BBEE deal of 2008. Their cries are all over, in the mainstream press and social media -mainly in a Facebook page titled “Sasol Inzalo robbed us”
Many of the protests come from a group of Sasol Oil ex-employees who were enticed to take voluntary retrenchment packages in 2010. Mxolisi Nkosi, another ex-employee, explains his disappointment succinctly: “During the year of 2010, Sasol Oil was downsizing for business optimisation. Employees were given options of early retirement or voluntary retrenchment. One the benefits was retention of the Sasol Inzalo shares, which came with dividends and promise of a lump sum pay out. Had I seen the future to loose like we have, I would not have taken the package.”
Hackenberg is said to have suffered a “heart attack” and died on the 14th of September 2018. “There is clearly a connection between her death and the Sasol news,” said her friend who is also a former Sasol employee, Beverly Damons.
Speaking to this reporter, Damons said people around Hackenberg saw how her health deteriorated sharply after the Sasol news. “I did speak to her after she suffered her first stroke and had recovered a bit. She told me Sasol is to blame for all the stress they caused her.
“All of us have been devastated by this. For 10 years, we were made to believe and live with a hope, that we will get something out of the Sasol deal.”
The matter could raise hell for Sasol which is already facing multiple challenges on how it reprogrammed the failed Sasol Inzalo B-BBEE transaction. The group’s white employees who were included in the 2008 deal and were excluded in the recent extension of the deal have also registered their protest through industrial action.
The extension of the deal under the title “Sasol Khanyisa” seem to be Sasol’s attempt to compensate for the flop of the first deal.
Using the compensation angle it becomes reasonable for people who participated in the first deal to expect inclusion in the follow up deal. That’s partly because Sasol derived a material benefit from the Sasol Inzalo deal. It derived B-BBEE credits from listing people like Hackenberg as beneficiaries of its B-BBEE deal. If this was in vein, it could mean that Sasol must be dogged of the B-BBEE points it derived from the deal, at least the equivalent of the disappointment.
The compensation angle
Seeing that the Sasol Inzalo transaction was set to flop, Sasol set out to establish what can be considered a compensation deal towards the end of last year. This is after the Sasol’s share price had remained largely depressed throughout the 10 years tenure of the transaction.
The Sasol Inzalo deal was struck at R366 per share in 2008 using borrowed money. It needed to pay back the debt first before it could make money for its beneficiaries. The engineers of the deal hoped that it would make money on two factors. Dividends from Sasol would be applied towards retiring debt. And an appreciation of the Sasol share price would create capital value at a rate that frees the deal from its debt.
Things didn’t work out as planned. That’s partly because the deal was almost a bet on high oil prices.
The deal was prepared in 2008 on the back of a peaking oil price. This is after the oil price had lived around $20 per barrel from the 1980’s to the early 2000s. It entered what would be a remarkable rally in 2004 which saw it scale through the $100 per barrel and flirting with $150 in 2008.
Sasol makes more money from higher oil process. And so its share price was also excited when the oil price peaked in the 2000’s. Sasol share price more than doubled between 2007 and 2008 from about R200 per share to about R500. That means the deal was done at the top of the market with a bet that the share and commodity prices would continue to rise. It was a bad miscalculation.
Prices did the opposite. The oil price started skidding towards the end of 2008 from its more than $100 per barrel level to flirt with $30. This was followed by ups and downs with extended periods of depression. The Sasol share price followed suit. A depressed Sasol share price was bad news for the Sasol Inzalo transaction. For the most parts of its tenure, the transaction was suffocating under a mountain of debt.
Sasol started to panic towards the end of last year. In September 2017 Sasol announced that there was a possibility that the B-BBEE transaction might not make money. And so Sasol created a follow up deal, that’s better structured and with a better chance of making money for its beneficiaries. Titled Sasol Khanyisa, the succeeding deal also came with a 10 year tenure beginning in 2018 and ending in 2028.
In winding up the flopping 2008 deal, Sasol allocated shares of the new deal for free to the old beneficiaries who had held onto their shares. These include individuals and groups who had bought into the public chapter if the Sasol Inzalo scheme and current black employees.
Former employees who had lived with a hope of cashing out in 2018 were excluded from the make-up deal. That’s why they are raising hell.
The Esop chapter of the Sasol Inzalo deal was wound up on the 4th of June 2018. Responding to questions, Sasol said the employee chapter of the deal was in the red at the time of termination. The group spokesperson said “For there to be any pay-out for employees the Sasol share price needed to be R905 per share.” Sasol share price was trading around R550 per share in June.
And “Ex-employees who were not employed by Sasol on 1 June 2018 were ineligible to participate in the Sasol Khanyisa transaction.”
He further noted that “employees who participated in the Inzalo Employee Share Ownership Plan did not make any upfront payment” and they received dividend payment of about R57 000 per employee over the past 10 years.
The unwinding of the broader transaction, the chapter for general members of the public plus poor communication from Sasol may have further soured the view of Sasol ex-employees. Shareholder of the public chapter of the deal shared a R1.3 billion payout or R85.63 per share at the point of termination.
Former Sasol employees have come out guns blazing on the ProBonoMatters platform and in other social media platforms. These include the anchoring lament by Michelle Richean who said: “Upon exit from Sasol, mainly due to retrenchment, each employee signed a form that was indicative that we retain our shares and they will not be forfeited. When we queried in May this year, when the maturity of the shares was evident, we were told that the fund was in debt and did not make the finances to pay individuals out.”
Innocent Chauke notes that “I am an ex- Sasol employee who served from 2007 to 2014… Sasol knew that they have financial constraints in 2014 but they didn’t have the decency to share with the employees.”
Wouter van Rooyen who worked for Sasol for 33 years says “I planned my future with this (Sasol Inzalo) agreement that was in writing. It stated a lump sum in 2018 would be paid.”
Norman Bam says “Like a lot of Sasol pensioners I’ve been waiting 10 years for the Inzalo shares to mature. What a kick in the gut when I found out the shares were useless. That money that we were promised after 10 years would have gone a long way to make ends meet. Thanks for nothing.”
Noteworthy Disclaimer: Sibonelo Radebe is a journalist and publisher of social media platform ProBonoMatters.