Where to draw the line between interests can be as clear as mud. Take Bernard Swanepoel's case, for example. His consultancy To the Point Growth Solutions owns 48% of Village Main, one of the oldest companies on the JSE.The company also consults to Village Main and charges a 1% fee for any successful deal it brings to the Village board.
Swanepoel says that's a low fee, which it is. Fair enough.
The Village board is made up of three independent non executive directors and three other non executives.
Potential pitfalls lie in the fact that two of the non executive directors - chairman Mike Pleming and Ferdi Dippenaar - both share an extensive background with Swanepoel. Dippenaar is a personal friend, and served under Swanepoel as Harmony Gold's marketing director from 1997 to 2005, when he left to head Canadian gold junior Great Basin. He even used to go jogging with Swanepoel in the mornings, though they don't anymore. The former Harmony CEO jokes: "He's too fit and I'm too lazy."
Dippenaar chairs Village's transaction committee, which decides on any potential deals To the Point presents to it. Pleming is on the committee. He was also a director at Harmony when Swanepoel was CEO. Pleming joined the gold major in 1998 and left in 2005.
The only person on the transaction team who doesn't have any obvious links to Swanepoel is Georges Rawstorne, a CA. But even he was recruited by Clinton Halsey (cofounder with Swanepoel of To the Point, and his right-hand man). Halsey's also a non exec, along with Swanepoel.
The other non executive at Village is Dalu Ncube - who used to work at Harmony, and joined To The Point in March 2008. The whole board is connected in one way or the other with Swanepoel.
So doesn't this compromise any deal Village would do with To the Point? Swanepoel says no. "These guys are people I know, but I know many people in the mining industry."
Since To the Point bought its 48% of Village in July 2008, all has been quiet on the western front. The rapid-fire speed at which Swanepoel built Harmony up created an expectation in the market that a similar deal spree might emerge out of Village. After all, it took Swanepoel less than 10 years to grow Harmony from a single mine to the fourth-biggest gold producer in the world.
But finally - and by his own admission it was "a long time in the making" - Swanepoel has swooped on a deal, in the form of platinum junior Lesego. The company has been hobbling along since it had to abandon its listing plans at the last minute. It was on an investors' road show just as the financial markets hit the wall.
The Industrial Development Corp has since stumped up R140m for Lesego to finish a feasibility study on its Phospiri prospect in Mpumalanga.
Village has agreed to buy the company for R411m in shares, in what is effectively a reverse listing of Lesego, under the name of Village.
With Lesego shareholders owning about 60% of Village, To the Point will end up owning only about 5m of Village's 225m shares. There will be a new chairman and most likely a few new Lesego representatives on the board, including Roy Pitchford, the man who sold African Platinum to Implats in 2007.
Swanepoel will most likely be interim CEO of the new Village, but he stresses this won't be for long. And any new deals Village does after the Lesego one should then raise fewer questions about potential conflicts of interest.
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