Former AngloGold Ashanti CEO Bobby Godsell said last week that if he were still a manager today, he would refuse to deduct garnishee orders, which he believed played a nefarious role in the build-up to the Marikana tragedy.

The Business Leadership South Africa chairperson also advocated that further thinking be given to executive pay and fixed executive contracts.

Speaking on day two of the Joburg 2013 Investing in Resources and Mining in Africa conference, attended by the who’s who of South African mining, the former mining luminary recalled that the garnishee deduction issue had loomed large in the period of pay tension ahead of the gruesome killing of 34 mineworkers at Marikana in August last year.

Intense discussion had centred on whether rock-drill operators were taking home the R10 500 a month that they were paid or the R2 000 reflected on the payslip.

The substantial deductions turned out, in the main, to be garnishee deductions, on which he believed there should be a national debate.

Garnishee orders are court orders that require employers to withhold part of an employee’s wages and to pay the amount instead to that employee’s creditor to settle debt.

“If I were a manager [of a mine] today, I would refuse to deduct garnishee orders,” Godsell said, adding that, in such circumstances, he would challenge the retailers and the banks to take him to court.

Retailers and bankers should be responsible for their own credit control, and he would refuse to do it for them.

In a sensible world where people took responsibility, mine supervisors should be made aware of employees who were taking home a mere 20% of gross basic pay, instead of this being “a mystical secret of the payroll, which is outsourced to a fancy company in order to cut costs”.

He advocated that payroll companies be obliged to make supervisors aware of the deductions and that employees, in turn, be warned of the unsustainability of uncontrolled credit.

If mineworkers, who were today among the best paid, were experiencing poverty, the country needed to take serious note.

Executive Pay

Further thinking was also necessary on executive pay that was made up of low basic pay and high variable pay.

While in theory the take-home pay of executives could vary massively, in practice, it did not seem to, which posed questions on how closely company budgets coincided with the long- and short-term incentives of remuneration committee formulae.

Fixed-term contracts for executives were another source of concern.

“When I joined Anglo, I had 30 days notice,” he recalled.

The two factors that moved the share price of AngloGold Ashanti during his 12 years as CEO were the dollar price of gold and the rand:dollar exchange rate – both external factors beyond the control of mining executives.

“I am suggesting a conceptual rethink, so that we can very honestly stand in front of shareholders and boards can stand in front of shareholders and absolutely defend the pay levels of their executives,” Godsell said.

Remuneration committees wanting pay at the 75th quartile was worse than a labour union wanting inflation-indexed wages, he added.

Godsell recalled that, during the anti-apartheid struggle years, mining business leadership and the National Union of Mineworkers (NUM) had been able to develop a sense that the mining industry was a national asset and that it would only benefit the people of South Africa if the mineral wealth could be extracted profitably.