Knobbs and MH Mathe quit last week as directors of Wesizwe, less than a month after CEO Mike Solomon and former chair Rob Rainey were controversially re-elected at a tempestuous shareholder meeting by barely 52% of shareholders.
But Knobbs's resignation latter, dated January 11 (of which Business Times has a copy) is a harsh indictment of the company.
In it, Knobbs said that "the rules of good corporate governance, transparency and the like have been flouted over a long period of time", and that "revelations of further transgressions can be expected" once a full probe is completed.
Knobbs described the sacking of chairman Iraj Abedian and the re-election of Solomon and Rainey late last year as a "perverse state of affairs".
Solomon and Rainey were accused of a litany of governance violations - which were probed by Deloitte - yet both were reappointed despite the accusations. "The Deloitte report ... is a terrible indictment of the management of (Wesizwe) ... heaven knows what the shareholders were thinking when they sacked Iraj and reinstated the old guard led by Solomon and Rainey," he said.
Deloitte concluded that it "could not find authority" for changing a R14.8-million bonus paid to Solomon from a share-based payment to a cash payment and that the bonus scheme for bosses did not comply with the King 3 governance code.
According to Abedian, Solomon also spent R2.8-million on the company credit card account in "unsubstantiated expenditure", including allowing his wife to buy oysters and having them shipped to their house in Cape Town.
Knobbs said Solomon and Rainey "are not the right people to clean up the company (because) it is, after all, their mess".
Though Solomon promised after his re-election in December to improve governance, Knobbs said this was tantamount to "rearranging the deck chairs" and nothing would change "until a new CEO is appointed".
"Without a new team ... my voice of dissent and disagreement, possibly echoed by one or two other directors, will not be sufficient to change the way business is, and has been, conducted in the company," he said.
However, one concern of Knobbs has been addressed, as Rainey is no longer chairing Wesizwe.
The new chair is Dawn Mokhobo, who is currently in China with Solomon trying to nail down a deal for more funds to exploit the mine.
Mokhobo told Business Times this week that Knobbs was "entitled to his opinions, so I cannot comment, other than to say we've found ourselves in a position where the shareholders reappointed us".
Ironically, Wesizwe is planning to re-hire Deloitte (which issued the original critical report) to extend its investigation into all the issues raised by Abedian at the December meeting.
Mokhobo said "everything will be investigated" by Deloitte, partly because "I, as the new chairman, am as anxious as anyone to ensure all this stuff comes out in the open".
For Knobbs to resign in the way he did is unusual. Not since Nic Frangos quit Corpcapital in 2002, citing "a collapse of governance", has any director of a JSE-listed company actually resigned for such reasons in the full glare of the public spotlight.
The resignation ratchets up the tension on Wesizwe to breaking point at a time when the JSE itself is probing the platinum company to see if it broke any listing rules due to poor governance.
Andre Visser, GM of issuer services at JSE, confirmed that the probe was still continuing. "We're awaiting feedback from the company, which we expect in the next week," he said.
Curiously, Wesizwe told Business Times on Friday that the JSE had not contacted it as part of any "investigation".
Knobbs is not a lone voice. Brokerage Imara SP Reid published a report recently that said Wesizwe's shareholders' "commitment to corporate governance is questionable". The brokerage said the claims of governance breaches "were never fully addressed, and somehow Solomon and Rainey were reinstated onto the board by the slimmest of margins".
Wesizwe's major problem now is that it must raise cash to be able to exploit its platinum resource.
But, as Imara SP Reid argues, "no sensible financier would back such a hotbed of dissent ... (so) despite the obvious potential in the resource, we feel the corporate disorder is a near-fatal major disadvantage."