It has been a tumultous few days for Gold Circle. With a need to unlock funds ring-fenced from the Clairwood Racecourse sale, there is uncertainty as to the tangible plans in place for a workable turnaround.
This led to concerns being raised by owner and member Nic Jonsson, and a dramatic response from Gold Circle Chairman Neil Butcher.
The man in the middle, as it were, Director Peter Gibson, writes to his fellow Gold Circle members:
Much has already been stated about the crisis facing our sport, the collapse of Phumelela only marginally eclipsed by COVID-19, so there is little point dwelling on these matters in the context of this letter which is to present my version of events that led to the Chairman of Gold Circle condemning my actions in a letter to the Membership on Friday 12 June.
Peter Gibson
After being nominated to stand for election in 2017 and 2018 (getting close on both occasions), I was invited (co-opted) to join the Main Board of Gold Circle in December 2018 when the Vice Chairman at the time resigned.
You could argue that people of my age group (50 +) enjoyed the best era of racing in KwaZulu Natal, witnessing the many great champions that graced our three tracks, the top class horsemen and women and the huge participation the sport enjoyed in those times.
Call me a purist if you want, but those early racing experiences led me to devote much of my working life to serving the sport.
Therefore, it came as a great honour to serve the Company, its diverse membership and the sport of racing in KZN. I undertook to actively participate in Board meetings, often critically, and to perform my duties as a Director to the best of my abilities.
When the full extent of the cash flow crisis was revealed, the Board and Management had little choice but to approach the Members to seek its approval to tap into the ring-fenced funds.
It is well understood that these funds had been tightly preserved for the future development of the sport of racing in KZN, but not many racing jurisdictions around the world have escaped the damage of this pandemic, so in these circumstances it was not only essential, but also appropriate to access the ring-fenced funds to sustain racing operations during the crisis.
When management presented the first draft resolutions to the Board, I opposed them on the basis that they were “unconditional”, in other words rewriting the constitution to allow Board and Management unfettered access to the entire investment of ring-fenced funds.
Whilst nobody is suggesting anything untoward, it removes a critical layer of checks and balances.
Additionally, I proposed that the Board create an “Oversight Committee” made up of individuals with appropriate expertise drawn from the Membership.
This would serve to align with the objects of the Companies Act, 2008, in that it will encourage transparency and high standards of corporate governance and regulation, thus reaffirming the ethos of the company as a means of achieving longevity, economic and social benefits for all stakeholders.
Furthermore, in their communication with Members, I urged Management to go into detail about cost reduction measures and plans to grow revenue, all for the purpose of encouraging Members to support the release of the ring-fenced funds at the Special General Meeting.
In other words, my sole intention was to ensure accountability and transparency, never to block the release of the funds as has been cynically suggested in various social media platforms. I too have shares in horses that need to pay their way.
However, the record will show that the resolutions remain in their original form (unconditional) and my position remains unchanged to this day.
Whilst the Chairman’s letter dated 21 May revealed the proposed drawdowns for the current financial year and beyond, there is no detailed explanation (business plan) as to how Management intend steering its way through the crisis.
Secondly, the proposed plan to incorporate up to three individuals drawn from the Membership has thus far failed to take root, so the only conclusion the Membership could reach was that the Board and its Management team were confident of their abilities to manage the funds effectively and responsibly.
It would be disrespectful or worse, insulting to the many passionate Members of Gold Circle to believe that they did not share my concerns about the manner in which the resolutions were framed.
The fact that a prominent Gold Circle member and significant investor in the sport was able to share his views with his fellow members has become the main focus of the Chairman instead of opening up meaningful and effective dialogue with the very constituents the Company represents.
Overwhelming support in the form of proxies received last Friday opposing the resolutions appears to suggest we are not alone.
In these unprecedented times, there are many challenges that face the industry, not least the outcome of Phumelela’s Business Rescue Plan and its impact on Gold Circle and Kenilworth Racing.
By urgently engaging the best minds in the business, Gold Circle can reshape the constitution to allow for a controlled release of funds whilst still protecting the bulk of its war chest for the rebuilding of the sport for the benefit of its many loyal members and stakeholders.
