The events leading to the dismissal of Andrew Okai as Group CEO of Letshego Holdings have emerged in court. In replying to an affidavit by Okai, Dr Gloria Somolekae, an independent director of the microlender, chronicled Letshego’s account of Okai’s alleged conduct that resulted in loss of trust and confidence between the parties.
EOI to buy Letshego
Her narration said things took a dramatic turn in November 2021 when the board received, through Chairman Enos Banda, an expression of interest by a third party (Bayport Management Limited) to acquire majority shares in Letshego. The expression of interest, according to Somolekae, was the beginning of the end of satisfactory working relations between Okai and the board. She wrote that Okai began to conduct himself in an unbecoming manner particularly towards the board. “The applicant’s conduct begot acrimony in the relations between the board and the applicant and the result thereof was irretrievable breakdown.”
In response, Okai denied any unsatisfactory working relationship due to his actions, although admitting that there was a difference of opinion between the board and himself. In his opinion, such difference did not strain the relationship or interactions as he remained an employee and accountable to the board.
Somolekae points out the board had a legal obligation to follow up the expression to a point where a report could be compiled and presented to the shareholders for consideration and ultimate decision making. In Somolekae’s view, Okai seemed unsettled about the receipt and possibility of consideration of the expression of interest. But the former CEO countered, arguing that he also had legal obligations and the board had to act properly within the ambit of the law. “I was not unsettled about the receipt and consideration of the expression of interest and no factual basis for Dr Somolekae’s perception has been set out,” he said, adding that there was a difference among the directors as to the process to be followed in arriving at a decision to be made
The court file shows that on 9 December 2021, the board resolved to constitute an Independent Board (IB) for purposes of considering and carrying forward the expression until it is presented to the shareholders. This became a project called “Project Leopard.” According to Somolekae, this resolution was guided by the fact that the board is mandated by the Botswana Stock Exchange Listing Requirements, which have adopted the Fundamental Transactions and Takeover Regulations of the South African Companies Act, to constitute an Independent Board when an offer is made for change of control of the company or takeover. Okai denies that there was a resolution to constitute an IB as appears from the minutes of such meeting. Despite Dr Somolekae stating that she has access to and control of the file relating to this matter, Okai said she has not annexed a copy of the resolution referred to or minutes of such meeting evidencing the said resolution.
While the CEO said he had accepted not being part of the IB, Somolekae alleged that he “fought tooth and nail to be included in the IB but the board was of the view that he did not meet the requirement to be a member thereof,” wrote Somolekae. In other words, she said, the contention was that Okai “was not an independent member of the board. Quite apart from the fact that an executive director is the antithesis of an independent board member, in a transaction that involves change of control a chief executive officer who faces the possibility that he may lose his employment is clearly conflicted”.
Despite this, documents show that Okai was nevertheless invited to attend meetings of the Independent Board but with no voting rights. Okai admitted to the invite but disputed the construction placed on the position of an executive director, arguing that his position is supported by the CDH opinion.
Questions over legality of Independent Board
The Independent Board Sub-Committee (IBSC) convened on 11 January 2022 for purposes of discussing the shortlist of Financial Advisors to be included in a Request for Proposals Process. Dr Somolekae said Okai attended that meeting and thereafter questioned whether the Independent Board had been properly constituted and why he had no voting rights on the Independent Board. “He demanded that a legal opinion be sought and the IBSC agreed with him on the hopes that once the opinion had been sought, he would stop proceedings and progress,” Dr Somolekae said. Save to deny that he was interrupting the board’s proceedings, Okai concedes he requested the board to obtain a legal opinion which was acceded to.
In furtherance of this, an opinion dated 21 January 2022 was obtained by the independent board from the firm of Messrs Armstrongs Attorneys, according to Somolekae’s account. She said the nub and substance of the opinion was that although Okai could participate in deliberations of the Independent Board by invitation, he could neither constitute part of the Independent Board nor have any voting rights therein. Okai contested that the opinion was not correct and the IB sub-committee authorised the Company Secretary to obtain a further legal opinion.
“One would think that the above opinion would mark an end to the applicant’s disruption on the IBSC, however, the applicant persisted with his position,” recalls Somolekae. She told the court that Okai, through the Company Secretary and without authority of the board, commissioned and on 10 February received a further opinion from a South African law firm, Cliffe Dekker Hofmeye (CDH). She said CDH opinion also drew a similar conclusion to that of the Armstrongs in that it concluded that “in such cases, in our view the proper procedure would be for such non-IB member to participate in the general discussions but to recuse themselves prior to the IB embarking on the actual decision making process and voting on proposed resolutions.” Okai contested such a conclusion and argues that CDH’s opinion is being quoted out of context.
He insisted that the opinion highlighted that the Independent Board was improperly constituted. Yet again, the parties were at an impasse and it is at this point that Somolekae said Okai started to decline attending meetings of the IBSC. Okai flatly denied this without any “proof thereof being adduced”.