Seaboard’s baffling Lesotho exit
- Multinational giant announces disinvestment from LFM
- Selling the farm while cutting the workforce
- Raising questions about motives, fate of the company
TEBOHO KHATEBE MOLEFI and
MOTSAMAI MOKOTJO
MASERU – In a corporate manoeuvre that has left industry observers and union officials scratching their heads, the American agribusiness giant Seaboard Overseas and Trading Group (SOTG) is pursuing two seemingly contradictory paths at its subsidiary, Lesotho Flour Mills (LFM) – creating a cloud of uncertainty over the company’s future and the jobs of its employees.
This confusion stems from two critical events. First, in a letter dated December 9, 2024, addressed to the Minister of Finance, Dr Retšelisitsoe Matlanyane, Seaborad formally announced its intention to fully disinvest from LFM.
The company, led by CEO Jack Bresky, stated that LFM no longer met its “strategic benchmarks” and revealed plans to hire a financial advisor in the first quarter of 2025 to value the business and manage its sale.
Simultaneously, and just last week, the very same company – operating through LFM management – issued a starkly different message to its workforce.
In a “Consultation Invitation” letter dated September 1 to the National Union of Commerce Catering and Allied Workers (NUCCAW), LFM’s CEO, Fourie du Plessis, detailed a desperate financial situation and formally invited the union to consult on a significant “operational right-sizing” – a corporate euphemism for mass retrenchments.
The letter paints a picture of a company on the brink, citing “tremendous financial pressure,” “continuous shrinking gross margins,” and sales volumes “far below” the break-even target. To stem the losses, management is not only asking employees to suggest cost-saving measures but is actively pushing for “voluntary retrenchment,” offering a five-month salary package for selected staff to leave.
This presents a bewildering paradox.
Why is a parent company, which has already decided to sell the entire business and is mere months from their stated period of commencement of formally starting that process, aggressively cutting the very workforce a potential new owner would inherit?
The timing and nature of these actions have sparked serious questions about Seaboard’s strategy.
“Is this a genuine effort to save a struggling company, or a sinister motive to dress it up for a sale by slashing costs and jobs, making it appear more profitable on paper at the expense of Basotho workers?” asked one industry analyst who wished to remain anonymous.
“A new owner would likely want a skilled, operational team, not a hollowed-out shell.”
The retrenchment letter, marked “Classified and Confidential,” acknowledges the obligation to consult in good faith but reveals management’s strategy is pre-approved by a board that is fully aware of Seaboard’s disinvestment plans.
This suggests the retrenchment process is a key part of the parent company’s exit strategy, raising ethical concerns about who truly benefits from these cost cuts – the future of LFM or just Seaboard’s bottom line during the sale.
NUCCAW General Secretary, Elliot Ramochela, who received the retrenchment invitation, now faces the strange task of consulting to save jobs at a company that its owner has already decided to abandon. The union must now confront a management acting on instructions from a parent company that has one foot out the door.
This situation leaves critical questions unanswered for employees, the union, and the government: Is the goal of this “right-sizing” to ensure LFM’s long-term survival under new ownership, or simply to maximise its sale value for Seaboard’s shareholders? And what guarantees are there that a leaner, cheaper LFM will be any more attractive to a buyer, or that the remaining employees will have job security after the sale?
As Seaboard prepares to find a new owner for one of the country’s key agricultural enterprises, its contradictory actions have cast a long shadow over the process, suggesting that the journey to a “smooth transition” promised in December may be far rougher and more contentious than anyone anticipated.
Internal strife at LFM coincides with continued external scrutiny
As a national watchdog Public Eye continues its longstanding investigations into the operations of government and multinational corporations within the country, a separate internal drama is unfolding at the LFM.
Leaked correspondence reveals a significant and tense breakdown in consultations between the company’s management and the National Union of Commerce Catering and Allied Workers (NUCCAW) over a contentious “operational right-sizing” plan – a move unionists fear is a prelude to large-scale retrenchments.
The dispute, captured in a series of letters dated September 1 and 2, highlights a profound communication gap and raises questions about corporate transparency at a time when the LFM remains under the microscope of this publications’ investigators.
The exchange began with a letter from NUCCAW General Secretary, Ramochela, on Monday, September 1. In it, he expressed surprise that LFM’s management was “going back to issues which we traversed previously.”
Referring to a meeting on August 27, Ramochela noted that the company had promised to take a plan to its board for a mandate, which would then form the basis of future consultation. The union’s proposed solution was to form a joint working team, assisted by legal advisors from both sides, to “work out a strategy to deal with this matter.”
However, du Plessis, responded a day later with a letter that was markedly more confrontational. He stated that the contents of the union’s letter were “not entirely clear” and interpreted its tone as a potential refusal to engage in the consultation process.
“With respect, in the face of potential retrenchments, it is not apparent what strategy could be contemplated,” du Plessis wrote, seemingly dismissing the union’s proposal for a mediated strategy session. He strongly contested the union’s view that discussions on the rationale for the restructuring were concluded, stating, “We believe that we are still at the beginning of the consultation process.”
The CEO’s letter took a firmer stance, implying that the company would proceed with or without the union’s cooperation.
“Should the union decline further participation… we will have no choice but to proceed with direct consultations with the employees, as the law requires,” the letter stated, framing the move as a legal necessity rather than a collaborative effort.
Perhaps the most significant revelation in du Plessis’s response was the confirmation that the company’s board had already approved a key element of the restructuring plan on August 29 – a financial incentive for employees who opt for voluntary retrenchment.
This approval was granted before the CEO’s letter of September 1 was sent to the union, suggesting that management is proceeding at pace with its plans, even as it invites further consultation.
This internal conflict emerges against a backdrop of continued investigations by the Public Eye.
For months, Public Eye has investigated the practices of the LFM, focusing on issues of alleged market monopolisation and labour practices that may disadvantage local workers and economies. While the current letters do not directly reference these investigations, the timing is conspicuous.
Industry analysts suggest that pressure from external scrutiny can often lead parent companies to implement cost-cutting measures, such as restructuring and right-sizing, at their overseas subsidiaries to maintain global profit margins.
The haste displayed by LFM’s management, combined with the apparent urgency to implement a voluntary retrenchment scheme, will likely be viewed by organisations like Public Eye as a potential red flag, warranting closer examination of the company’s broader motives and the fairness of its treatment of the Basotho workforce.
The lack of clarity and trust between LFM and NUCCAW is palpable. The union seeks a structured, legally-guided dialogue to mitigate the impact on its members, while management appears focused on executing a pre-approved plan with expediency.
Du Plessis’s final request for an urgent meeting before Friday, September 5, underscores the rapid timeline the company is working towards.
As this situation develops, all eyes will be on the LFM. The outcome of this labour dispute will not only affect the livelihoods of its employees but will also serve as a critical case study for how multinational corporations navigate restructuring in an era of increasing demand for corporate accountability.
The continued presence of investigators from Public Eye ensures that the company’s actions will be judged not just by its employees and the local community, but on an international stage. The hope for many is that this external gaze will compel a process that is not only lawful but also truly fair and transparent.
