Picking up the pieces
Since picking up the pieces after the bread price-fixing and collusion scandals, Tiger Brands
has been on the difficult road to rebuilding its reputation, said CEO Peter Matlare at the GSB
Distinguished Speaker’s Programme (DSP) last week.
At the DSP, sponsored by Deloitte and Webber Wentzel, Matlare’s presentation, ‘Rebuilding
our Reputation – The Road to Success is Always Under Construction’, revealed not only the
difficulties the organisation has faced over the last few years, but the changing nature of
business practice in the country.
In late 2007 the Competition Commission fined Tiger Brands R100 million for bread pricefixing. And then, a few months later, in 2008, Adcock Ingram Critical Care (AICC) – owned
by Tiger Brands Limited – was penalised with a R53 million fine for collusive tendering. At
the time this penalty was the highest, percentage wise, ever levied for collusion.
"It was very embarrassing for us and we had to admit to the wrongdoing and start rebuilding
our reputation. Ultimately the test was 'how to rebuild trust and confidence in Tiger again?'"
said Matlare. For Matlare, the real challenges at the time were regaining shareholder value
and re-establishing integrity.
He said that initially the most serious repercussions for Tiger Brands were not felt in the
market – although the market share price initially dropped in that period, it subsequently
recovered for the long term. Rather, the greatest impact was felt within the company.
"Staff morale had dropped with negative sentiment invoked internally. We lost some great
people in that time; people who decided that the company no longer resonated with who
they are as individuals. Some senior staff left, which was painful because we lost friends," he
said.
"So there was this imperative to start to rebuild from within," he said. An internal survey was
undertaken which brought to the fore employee issues like working conditions for staff, the
biased profit focus, as a basis for how business had been conducted and strong views on
how staff thought things needed to drastically change.
"When we went to the market and spoke to our suppliers and customers, we saw that most
of them just wanted to get past it all and move on. We were very apologetic and approached
these guys from a point of moral rectitude," he said, "and this proved again to the
organisation that the business culture of Tiger Brands had to evolve."
"Everything had to change so as to enable us to trade better in the new business
environment. We had to modify the ways we do business: be aware of the implications of the
language we were speaking, our behaviour, documentation, everything had to change. It has
been difficult and we have been forced to trade differently, and rebuild trust especially with a
government that does not stand for bad corporate practices," he said.
"What happened with the price-fixing and collusion was absolutely wrong and we got
smacked for it," he said, "and we have not been fully forgiven."
Matlare said that in light of the findings of collusion and price-fixing, the company set up a
corporate governance section within the organisation. The unit is led by Thulani Kunene,
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and its purpose is to ensure full compliance with regulations. The unit will build an
embedded knowledge and practice within the company on how to do business in an
increasingly competitive South African environment.
"We asked ourselves whether anti-competitiveness is entrenched in how we do business in
South Africa, or the extent to which this is a consequence of our past," he said, pointing to
the alarming statistic that at any given time a number of companies are in front of the
Competition Commission looking for amnesty. He pointed out that some of those companies
are "big local brands on the JSE practising unethical behaviour and being anti-competitive.
"And Tiger Brands’ reputation has come under scrutiny in the past few years as a
consequence."
When asked whether he thought the penalties paid were enough and whether he thought
they were fair, Matlare said that there were other ways to make amends and that the next
strategic step was in rebuilding the company's reputation as a good corporate 'citizen'.
"We understand the idea of giving back and we need to find new ways of giving back to the
community," said Matlare, also mentioning the many community initiatives Tiger Brands
supports.
"But, this is being done from a point of authenticity. We are not trying to merely build brand
loyalty. This citizenship drive should not be a PR exercise. It forms an integral part of Tiger
Brands’ effort to taking stock, making holistic changes and moving on," he said.
The main lessons learned, according to Matlare, were that investors are seriously concerned
with transparent governance and that "we will always have a tale, a history, and that we
have to learn to trade fairly and openly even with that tale."
Ends
Media interested in an interview or more information can contact Jane Notten or
Michael Morgan on 021 448 9465 or email info@rothko.co.za.
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