Ex-Arivia CEO 'was not pushed'

By Martin Czernowalow for arivia.kom
Johannesburg, 16 Nov 2006

Former arivia.kom CEO Zeth Malele was not pushed to resign from his position due to problems at the IT services outsourcing parastatal, says his successor.

Acting CEO Kiruben Pillay, appointed to drive to conclusion government's involvement with the company, says Malele's contract simply expired at the end of last month.

Since his resignation and the announcement by government that arivia would be privatised through the withdrawal of shareholders Eskom and Transnet, market observers have linked Malele's departure to the company's disappointing performance during the last financial year.

Despite a large-scale company-wide restructuring exercise, that took more than a year to complete, and was touted to streamline arivia's operations, the group's revenue dropped 7.1%, to R1.5 billion, and its earnings before interest, tax, depreciation and amortisation margin decreased to 9.7%.

The company blamed this on cost pressures and expected new business that failed to materialise. Arivia stated in its annual report that it expects its investments in organisational restructuring will prove fruitful in the coming year.

Profitability not achieved

Pillay believes Malele was not forced to resign due to these problems. "You can say that, from a financial perspective, the restructuring has not achieved the desired results. But the restructuring has never been a significant topic that was raised among the shareholders.

"Operationally, the changes were visible, but the intended profitability was not achieved."

Pillay says much of the company's financial woes can be ascribed to a lack of focus and involvement in too diverse projects.

He states it is understandable a company's negative performance would cause some discomfort among shareholders, but says no specific individual is being blamed.

"When a company is not performing, one group of people - namely management - is looked at. Some poor decisions have been made and couple of lessons have been learnt. But I believe that arivia has huge potential. A couple of things have to be tidied up and some policy issues have to be looked at."

At the time of his resignation from arivia, 47-year-old Malele said he may remain in the IT sector, but did not rule out moving to another industry.