Sasol’s joint CEOs are stepping down Thursday following an independent investigation into Lake Charles Chemicals Project, in what the company’s board of directors describes as a “leadership reset” designed to restore trust.
In announcing the departure of joint CEOs and Executive Directors Bongani Nqwababa and Stephen Cornell on Monday, Sasol’s board noted no misconduct or incompetence on the part of the two executives. Executive Vice President Fleetwood Grobler will assume the roles of president, CEO and executive director on Nov. 1.
The board placed the blame for the troubled project squarely on the former leadership of the LCCP’s Project Management team, noting it was “engaged in conduct that was inappropriate, demonstrated a lack of competence and was not transparent.” However, the board concluded there is not “sufficient evidence to conclude that these individuals acted with an intent to defraud.”
Disciplinary action has been taken against one executive vice president, the company said, with “negotiated separation” from Sasol for another three senior vice presidents—actions Sasol referred to as “consequence management.” The joint CEOs and other executives were awarded no scheduled short-term incentives.
The board noted that while some of the driving factors behind the cost and schedule increases are common in projects of the size and scope of the one in Lake Charles, “some are shortcomings that may have been avoided.” Also to blame was a “culture of excess deference,” specifically on the part of a Steering Committee created to oversee the project, which the board said exhibited “insufficient skepticism toward reporting by the LCCP leadership team.”
The company is implementing new control measures and culture transformation initiatives—among them escalating ethics complaints and internal investigation findings. “The board believes further remedial steps are required to embed a new culture at all levels in the company,” the statement says. “At the leadership level, there needs to be more robust challenge of key decision making. A spirit of ‘constructive dialogue,’ which includes empowering challenge and avoiding conformity needs to extent through the company so that people always feel able and free to speak up without fear for their prospects.”
While the board did note the shortcomings of the Lake Charles project have “negatively impacted” the company’s reputation and financially weakened it, there was no suggestion that capital expenditure on the facility would be beyond the $12.6 billion to $12.9 billion estimate from May. As of the end of September, spending had reached $12.2 billion.
