South African petrochemicals group Sasol parted ways with its two joint chief executives on Monday over a troubled $13bn US chemical plant project that has imperilled the company.
The world’s biggest coal-to-fuel manufacturer and largest company by sales in Africa’s most industrial nation said that Stephen Cornell and Bongani Nqwababa would step down as part of a “leadership reset” over the blunders.
Shares in the company rose up to 10 per cent in Johannesburg on the news.
Sasol said that it had sustained billions of US dollars in setbacks over the construction of an advanced chemicals facility in Lake Charles, Louisiana, which “negatively impacted our overall reputation, led to a serious erosion of confidence in the leadership of the company and weakened the company financially”.
The project was intended to diversify Sasol away from coal-to-liquids production in South Africa and tap into demand for advanced plastics. But since its launch in 2014 the scheme’s costs have spiralled and twice led to the delay of Sasol’s financial results.
An independent review on Monday found that no restatements of Sasol’s earnings or cash flow were required but it did uncover shortcomings that tarnished the company, Sasol said.
“To be clear, the board has neither identified misconduct nor incompetence on the part of the joint CEOs,” the company said. But there had been an “improper tone at the top” and “culture of excess deference” at the Lake Charles project as overruns mounted, it added.
Fleetwood Grobler, executive vice-president for chemicals, will take over as chief executive this week.
Sasol said that primary responsibility for failings over the Lake Charles project lay with a project management team whose conduct “was inappropriate, demonstrated a lack of competence and was not transparent”.
“However, on balance, the board finds that there is not sufficient evidence to conclude that these individuals acted with an intent to defraud.”
The company has launched disciplinary action against one executive vice-president while other senior executives have left.
“Further remedial steps are required to embed a new culture at all levels in the company. At the leadership level, there needs to be more robust challenge of key decision making,” Sasol said.
Despite the delays, the Lake Charles plant “will soon start delivering significant strategic and financial benefits” and will help Sasol to compete internationally, the company said.
Mr Cornell and Mr Nqwababa, who were both appointed in 2016, did not immediately respond to a request for comment. The company said that neither men would receive short term bonuses for this year.