Tiger Brands CEO Peter Matlare comes clean about collusion.

Bruce Whitfield:
The big story on the day is the news that Tiger Brands has admitted that its healthcare business Adcock Ingram Critical Care was involved in price collusion. It has agreed to a fine of about R53.5-million with the Competition Authorities. It is the second fine for Tiger Brands and it takes the total to more than R150-million so far. And of course, Edward Nathan Sonnenbergs, their lawyers are digging deeper at the behest of the Tiger Brands board to see whether or not there are other skeletons in the closet as well.

We will talk to the Competition Commission’s Shan Ramburuth in just a little bit, but first, Peter Matlare, the new chief executive of Tiger Brands. And Peter, you took the job at Tiger Brands knowing full well that this was something that was hanging over the company. But nevertheless, a disappointing decision to have to take that you have to pay R53.5-million for something that happened in a division of Tiger Brands.

Peter Matlare:
Well yes, these things are never acceptable Bruce. Good evening to you and everybody else. It is the kind of behaviour that we at the executive as well as the board have clearly spelt out is unacceptable. So we have taken responsibility. We have as you said, asked Edward Nathan Sonnenbergs to do a detailed study for us in terms of the referral of the Commission. They came back with a finding that under balance of probabilities that the legalese says, these allegations were true.

We entered into discussions with the Competition Commission. And you will have also seen from the Commissioner, this was an outcome that he believes was a fair outcome. And we now want to make sure that we rebuild the organisation’s reputation and move forward.

Bruce Whitfield:
Well, Adcock Ingram is a division which Tiger Brands wants to unbundle before the end of September next year. So very soon it won’t be your problem anymore.

Peter Matlare:
When you say very soon it won’t be our problem anymore, the reality is that the strategy around the unbundling is something that was decided sometime ago. We are going ahead with that particular strategy. We do obviously want to make sure that notwithstanding that, that the governance measures throughout the corporation are absolutely in place. The behaviours are the correct behaviours. So no entity that would be unbundled, we would simply wash our hands off. We want to make sure that we have instituted the rights things and we think we have.

Bruce Whitfield:
First it was the bread division. There was a fine there of nearly R100-million. Then comes Adcock Ingram. Your board has asked the Edward Nathan Sonnenbergs to look into each and every single division within Tiger Brands. Just how deep do you fear that this perhaps goes?

Peter Matlare:
It is never useful to speculate about these things. Intuitively, and I have now spent a lot of time in factories, in bakeries etc. I don’t believe that this is pervasive throughout the organisation. We do however need to establish the facts. Certainly the people I work with, and that I have been working with, are the kind of South Africans that you and I work everyday. And I have absolute confidence in them. Having said that, I think the board is absolutely correct in making sure that this study is undertaken. And as soon as we get those facts, we can then move forward.

Bruce Whitfield:
How long does the process take? Just how many divisions does Edward Nathan Sonnenbergs have to go through?

Peter Matlare:
Well, as you know, Tiger has a number of divisions ranging from Cool Langeberg right the way through to Bromor Foods we bought etc. So there are a number of these. It will take at least two to three months I would imagine to be quite frank because we want it to be a thorough job and not a rushed job. And I think it is in the shareholders interests and our interests that it is exactly that, a thorough job. It is worth waiting for the end result.

Bruce Whitfield:
Now the level of sanction, R53.5-million, this has come almost voluntarily. You have carried out the investigation at your own cost into this division. You have then taken the findings to the Competition Authorities. Yet they slap on a fine of eight percent of turnover of Adcock Ingram. Is that not perhaps too harsh a sanction on a company that is co-operating? Are you not fearful that if there are another one or two divisions within the group that are participating like this, that the fines could be significant?

Peter Matlare:
It is so difficult to comment as to whether it is too harsh or not too harsh. For a first time offender which Adcock Ingram Critical Care is, the amount would ordinarily be somewhere around six percent. And quite clearly there is a range between six percent and 10 percent.

After the discussions and after the negotiations, we came out at a figure of eight percent and that is where we have ended up. I think that in order to make sure that we can move forward, we have to accept that. That is the one comment.

The second is, if you read the press release that has come from the Commission, they have clearly said that, they thought that we played a very constructive role in dealing with this matter. Shan Ramburuth has said that it might well have gone all the way and it could have cost both the public and everybody else a lot of money. So this is an outcome I think that everybody is happy with, not happy, but settled with and we must now try and get on with it Bruce.

Bruce Whitfield:
And Peter we spoke to Lex van Voight when the bakery story first broke. He guaranteed that all the findings from Edward Nathan Sonnenbergs within Tiger Brands would be made public. Do you as the new chief executive, stand by that particular commitment?

Peter Matlare:
Sorry, which findings? Certainly the specific finding with respect of the Critical Care matter has been given to the Competition Commission. So that becomes a public document. Certainly, all of the other work that we do now to the extent that we come across anything that is wrong, we would bring that to the attention of the relevant authorities.

Bruce Whitfield:
Peter Matlare, the CEO of Tiger Brands. Thanks very much.