Interpreting Complex Finance Across Cultures, Charters and Listed Reporting. Beulah Van Wyk

Speaker A: Hello, my name is Caroline Garnham from boutique law firm Garnham Family Office Services. We protect and preserve, uh, the wealth of hard working entrepreneurs, but having a good lawyer is only part of the solution. My podcast series, how to Keep youp Money draws on my 30 years of experience and extensive network of award winning professionals to interview so that you can be better informed on how to keep your money. Subscribe to our weekly newsletter, uh, on Caroline's Club Notes from Caroline, where you can read a short topical blog every week and listen to the next episode of how to keep your Money. Hello, my name is Caroline Garnham, founder, uh, and CEO of Caroline's Club. Caroline's Club is where growth is sustained through increased visibility and strategy. Professionals often overlook that to win business they need to be visible as a person, not just a brand. The club makes its members visible through podcasts such as these and promoting them with a digital business card appended to their email signature and the email signature of their colleagues. It also works strategically with its members to record responses to case studies with other professionals who work for similar clients. This has been called a client first revolution. I'm joined today by Buhle von wyk for episode 65 of how to Keep youp Money. Buhle is an accountant, former finance director and manager, and is now in business to troubleshoot, interpret, communicate and resolve complex financial situations to stakeholders. Beulah welcome to how to Keep youp Money.

Speaker B: Good morning Caroline. Thank you for having me on this podcast.

Speaker A: Excellent. You were born and brought up in South Africa. You studied accountancy at the University of Stellenbosch, where you won 2 Rue de uh, Paul prizes for auditing and accountancy, a beautiful part of the world with great wines, before moving on to sit the Public Accountants and Auditor Board exams. What attracted you to becoming an accountant for which you are obviously gifted?

Speaker B: Bulla well, it's actually not something that I envisaged doing. I went through my youth, as we all do, thinking that accountancy was too nerdy, too geeky, too degree. I didn't want to be the gray accountant. I wanted to be an engineer. So I went through my high school years with a bias of engineering or even astronomy, science, outer space, much more weird and wonderful things than accounting. And so I went off as a student to go and write my tests for the career guidance counsellors. And it came back saying that despite my bias on my interest being towards the engineering questions, the primary choice is accountancy. Now, at that point I decided to give in because it runs in the family Both my grandfathers were in finance. My father was a chartered accountant, my brother's a chartered accountant, my cousin's a chartered accountant. And so I decided, well, I guess I have to stop trying to pretend that I want to be something else and go with the flow and do as they suggest. And here I am today.

Speaker A: And do you regret being an accountant? You're obviously very gifted and you've obviously got it in your blood.

Speaker B: No, I don't regret being an accountant. But what I do regret sometimes is that I belatedly realized in my career I had a passion for the legal side of the accounting subjects. We had to do commercial law, insolvency law, company law, and those types of subjects as they are relevant. I enjoyed them a lot and I've often subsequently thought that maybe having done a, uh, BCom law which combines the legal and accountancy may have been something that I would have enjoyed. But I haven't regretted it now.

Speaker A: The but you've done quite a lot of structuring in your time as well, which involves quite a legal component.

Speaker B: Yes, I do a lot of structuring and a lot of M and A work. So uh, I get my fill of legal through that. Also some tax related matters. So there's always a bit of a combination of everything.

Speaker A: Well, it seems as if you're incredibly well connected and educated and brilliant at this area of work that you've chosen. You've worked for many resource and investment holding companies such as Sasoil and Shinduka, I hope I've pronounced those correctly. As the finance director and general managers in finance respectively, your tasks ranged from the implementation of new financial accounting and reporting systems to their mergers and acquisitions. Tell me about your time and experience as an in house finance director and manager. I'm sure it's a very male oriented environment.

Speaker B: Oh, uh, that it is definitely. And I started in an even more male oriented environment, especially in the South African context when I was young as I started in investment banking and from there I then moved into sasol heading up their emergence and acquisitions department first. So I came at the financial accounting and CFO role, always from the M and A and investment banking side. And I find that quite an interesting angle. So I went from the M and A side into standard operational role where you're responsible, um, for financial reporting, management reporting, taxation, procurement systems, finance systems and the real very broad role. And in SASOL at the time it was a very interesting time when I moved across because I moved across into a section of the business that at the time was going through a lot of change. It was a regulated industry. We'd given notice on uh, a supply agreement that had been in force for 50 years and that affected the whole industry as it was structured. It was structured initially as a strategic fund to the country and all oil companies were obliged to buy from Sasol. And that was about to fall and to become a completely free and open market. So that was quite an interesting time. What I did learn in my time, I have always had a penchant coming from the investment banking side to focus on the management reporting and information and the value creation. And that at times can be quite different to the financial reporting requirements that you have in listed organizations. And I still believe today that that is something that not all accountants always bear in mind. They're very focused, especially in large listed corporates on the financial reporting and the quarterly reports that goes to the stock exchange and the shareholders. And, and sometimes those reporting issues does not always reflect the best value. And that's one of the things when you, an in house accountant as opposed to a M and a advisor, you live with a consequence of your decision. You tell the CEO, uh, that this is going to be earnings accretive and the accountants do their allocation of goodwill and all of a sudden there's a dilution in the first quarter. You very quickly get a call and better jump around and explain how he's got to explain this to analysts. That I find quite interesting. And I think the important aspect that one should always bear in mind, balancing the value and how that may turn out in listed entities in their reports.

Speaker A: I would have thought that being an in house accountant, finance director or manager, you see the whole picture rather than a snapshot with which you would probably see if you were uh, working in an accountant's office. Is that right?

Speaker B: That's correct. And hence having to live with a decision when you're an M and A advisor, you give the advice, you disappear three months later. Somebody's got to explain to analysts why this deal didn't turn out that way. You also stuck with as we had systems implementations that didn't turn out very well and all of a sudden you have to report and the system systems aren't supporting you. You've got a new system, you've got problems with the system, it's a month to quarter end and therefore you see the whole picture and you have to always explain the whole picture, guide people in the right direction and keep your accountants aware of the business issues. And the one lesson I was always taught was I expect you to implement controls and tax efficient systems. However, do not ever let one of the operational people come to me and complain that the product's not flowing.

Speaker A: Yeah, you're now self employed and you say that you have strong analytical skills which enable you to cut to the bone of issues fast and efficiently. For example, you say that in South Africa, as indeed in most countries, there are, uh, government constraints. On one occasion, the company you were working with was obliged to separate various products, but they were integrated in one plant as one output and couldn't be physically subdivided. You therefore created a contractual solution that complied with the constraints while maintaining operational integrity. Tell me a little bit more about this type of work.

Speaker B: It's a common practice within the resource industry globally that you have an indigenization requirement and a, uh, local ownership requirement. And this is what happened in South Africa post 1994. Prior to 1994 the resource industry was completely private. But post 1994 there was a, uh, what they call referred to as black economic empowerment was brought in. And this then required that every corporation in South Africa, major corporations, it started with the major ones and then filtered down to the smaller ones, had to have a local requirement if they wanted to have any form of mining license. And then it also was rolled along to the fuel industry, which was a strategic industries and financial services. So most of the strategic industries then were provided with an industry charter which spoke to percentage ownership, black ownership, training, management, et cetera. And what happened in this particular case was the business spanned three different charters. So we had a mining component, we mined coal, then gasified the coal to create a synthetic crude which was then refined in a refinery, somewhat similar, but not entirely similar to a crude oil refinery, and then sold together with a multitude of other chemical byproducts. So we had a mining charter that applied to one part of the business. We had a liquid fuels charter that applied to the other part of the business, and the general industry charter that applied to the chemicals part of the business. The complication was that the plant was one integrated plant. The mining side was easy to separate out, but the chemicals and the liquid fuel side was one plant. And you could not physically divide the assets between the two charters. And needless to say, the charter says that they must have ownership of the assets and the be partners insisted on having ownership of the assets. However, we couldn't physically split them. It took quite some crafty footwork were the technical people and the legal people and the finance people to carve up physical plant boundaries and say this is the battery limit that belongs to only the liquid fuels industry and the transfer pricing between the various streams to be able to give them the economic value of a business that you couldn't physically segregate and then had another partner that had to have ownership of a different part of the business. And, uh, the reason you could, in theory, some people would say, why don't you just do it at the top and give them a cross? The problem was that the three charters didn't have exactly the same requirements. And it is very costly for the shareholders to implement this because effectively they have to finance the whole operation. The partners come in because of their local content ownership requirement and do not come with commercial funding. So in most instances the business had to provide the funding to the partners. So you don't want to provide them with more than you need to because it's extremely costly to your shareholders. And it took us, think, the better part of 18 months to finally carve out the assets and the product flows and the associated profit streams and get that converted into legal documents in a manner that was fully compliant with the charters.

Speaker A: Wow. And that all came out of government constraints. But you came up with a solution which is admirable. Moving on to another area that we were discussing. You worked as an interim caretaker for a company while it was recruiting permanent staff. You said you had inherited a bucket full of holes. Lovely expression. Tell me what you meant by this, what you did about it and what was the outcome?

Speaker B: So I was recruited by a company that had just taken over the African business of, uh, AIM listed who resource entity. What we found was the operation spanned seven different countries in Africa, a number of different minerals and mining products, different cultures, French, English, swi, whatever. You, you had different legal systems, some British, some Portuguese, some French. And they were cobbled together by entrepreneurs and sold off very quickly. The systems were never integrated. So you had the Congolese doing what they were doing, the Mozambicans doing what they were doing, and somebody in Johannesburg trying to control this with a London listed entity above it that had very specific timeframes for reporting. And so the core thing was to get control over the situation very, very quickly. And we had to have a look and say the most critical thing to manage in order to manage these operations, which had no internal controls to speak of. And that was via procurement, via the money flow in. The product sale out was relatively easy. That went through a marketing company. But controlling everything we got to via centralized, uh, procurement and controlling the money in. And then they had to budget and they had to report before they got the Next tranche of money and weekly cash flows. How much do you need this week? Here's your cash for the week. What did you do with the cash I sent you last week? Why is this creditor still there? You asked me for money for it last week. And it took a, uh, very experienced team. So what we did at the time, and that's where it became very clear experience counts. We needed experienced managers because we did not have a system within the business that pushed the task from desk A to desk B. If desk A didn't know that they had to send this to B or B know that they had to ask A, and you had inexperienced managers, everyone would just operate in silos. So to get that flowing, we very quickly had to say, no one's telling us to do this. We all know how this is supposed to be. We've all come from large corporates. This is where it has to happen. At least in the South African office, we have to work in this manner. And each of us have to get our, uh, various direct reports in the various countries up to speed to report to us in this manner because otherwise it would be reasonably chaotic.

Speaker A: It sounds a bit like herding cats. How did you manage to stamp your authority on what seems to be a very disparate organization?

Speaker B: It took a lot of persuasion because that's the other thing we face. We face very large cultural hurdles. And there was one individual, he was a finance individual. I got along extremely well with him because I understood that as a black male, respect is integral to him. And I'm a female, and they don't accept easily female authority. But having my time in Shanduka came in quite handy because I worked within this black culture and I came to understand it reasonably, uh, well. And I understood that my best bet was to make him my ally and treat him as an equal, although he was my subordinate. And that worked. So I referred to him when it came to cultural issues within the Congo. How do I deal with people? How do I deal with the government? And when it came to issues within the company, he then accepted that I had more knowledge of that and he would take my lead on that. And that worked. And years later I had a call from somebody saying to me, do you get along with this person? None of us can get any information out of him. He's just being obstinate. Can you help? So I said, well, okay, what's the problem? And I phoned, I said, I don't understand this. It's not like him at all. And I phoned and it, it turned out he had a real problem on the ground that people didn't understand and therefore he couldn't do what they demanded. And they were just shouting louder instead of listening. And I came up with some premise. I said, okay, you can't do this. Can you do X? Yes. Okay, well please give them X and problem solved. So it's not stamping authority, it's actually coercing and building cooperation that's important.

Speaker A: I think I would summarize that, that you were a wily woman and you used your intuition and emotional intelligence to get the job done. So well done. And this is a very good example of what you were saying earlier, which is, you know, you have to be experienced, you have to bring in personalities into it and adapt your behavior in order to get the right outcome. So you certainly did in that situation. You refer to yourself as being an interpreter between the technical financial accounting staff and the non financially trained managers. It's a uh, communication issuer. And you say interpreter. Give me some examples of what you mean by this.

Speaker B: In practice I find that fairly often you find that between senior government or in a family office, between the entrepreneurs who built the business, they have a requirement to achieve some objective. And they walk into the finance office and they would say to them, I want X or give me this report. And the financial person would produce a report within their frame of financial reporting or management reports that they used to producing. And boss would say, well what am I supposed to do with this? It doesn't work. One example was somebody that I worked for was trying to. It was a listed property company and they were trying to sell a building. The manager that was responsible for the sale was from a leasing legal background. So he walked into the accountant's office who on a monthly basis draws up uh, the profit for the building being rental income minus expenses and asked the person for what's the profit? And the accountant kept giving him the rental income minus expenses, this is the profit. And they went round and round and round and finally I had to step in and say to them, okay, what you're actually looking for is you're looking for the headroom whilst you're negotiating, you trying to find a compromise on asking a price. Mr. M. Accountant, can you please give me figure A, figure B, figure C, calculate and say this is your gain and this is how much head you have in terms of price in your negotiation. So they walk in, they use a term that in accounting has a very defined meaning and they don't understand that the accountant understand what they mean similarly, you have someone that has a vision, for instance, in this company with a bucket full of holes, they walk in, they want the standard of a London listed company. You're dealing with an accountant in the Congo. He has never experienced a London listed company's quarterly reporting requirements. And they just don't meet and they just don't understand what, where the problem is or what their board report should look like and what they should put in their board report. We had a visit from the London office once and the CEO said to me, because they were unhappy with the performance of the African business and the CEO said to me, well, what's going on? So we were briefed, we need to brief him properly. So we briefed him properly, we gave him all the information he needed. And he looked at me afterwards and said, but I never knew this. I said, yes, you never knew that for the reason that your quarterly report is based on the majority of the listed company's operations, which are not small exploration assets in Africa. So your template and my information doesn't fit. So I have to make my information fit your template and then actually I need to send you another report on the side of it for you to actually understand what's going on. So it's a case of understanding what is required and then tailoring, um, the information to it as opposed to answering the question. Because they may not actually even know what the question is. They know what they need, but they don't understand how to frame the question.

Speaker A: So I can understand why you're saying that you are an interpreter not only about cultural differences but also about experiences of what a London listed company requirements are and then explain that to the person who's providing the information. It feels like juggling and you're throwing the balls way up in the air and hoping you'll catch them on the way down. But this sort of issue must come up quite a lot in multi jurisdictional companies.

Speaker B: It comes up a lot in all kinds of companies. It comes up in small family offices where you have an entrepreneurial owner who's not first in the corporate universe. And you have auditors who require things in specific fashions. You have accountants who come from these corporates saying, okay, I need to implement the system, but does not understand the owner's vision. And it becomes a question of saying, okay, I need to understand where you want to go, where you want to take the business. Then I have to take that and I have to translate that into my domain of finance and then break. So to go there, I need the following Systems and the following controls and the following information in place and then translate that into tasks for each person in the office to say, this is what I need from you, this is what I need from you. And this is what I need from you. When we took over the bucket full of holes and the demands kept changing because the London listed demands kept changing, they were refining their systems and the people in the bottom could not even give me consistent figures from month to month. And just as we got the one set correct, the demand at the top had changed. And eventually the accountant just threw up his hands in the air and said to me, I don't know what to do anymore, I don't know what you want from me anymore. And you had to go and say to him, okay, this is your little box for the day. These are the boundaries. This is exactly what I need from you. And you have to shield them from too much confusion from conflicting requests and literally say, uh, this is what I need and break it down into bite sized chunks for them.

Speaker A: Wow, quite a challenge. Now a bit about you, Bula. You live in Malta and your hobbies are reading, horse riding and travel. You will certainly need to enjoy traveling to live in Malta. But are there many opportunities to horse ride and what sort of riding do you enjoy? What other travel do you like and what style of books do you like to read?

Speaker B: Well, I ended up in Malta after a uh, eight year stint in Gibraltar. So when I left South Africa I decided to move somewhere else and I at the time Delta Loftworth's London. So Gibraltar was a reasonable choice. I could go to London or I could go to Gibraltar. So we decided it was useful to be in Gibraltar where I wasn't affected by any management and control issues when it came to offshore structures. And then after eight years in Gibraltar, Brexit happened and I then had to find another place to move to because living on a Peninsula with 6 square kilometers with a Spanish EU border wasn't something that appealed to me. And then came to Malta. Uh, firstly because it's yet again an ex English territory, so the legal system is reasonably familiar and makes coming from South Africa at least all of that is you don't need have a language barrier, you don't, you generally understand the legal system that you're operating in. But yes, it is not. Small environments is not for everyone. Island living is challenging at uh, the best of times and you get cabin fever from time to time, which traveling helps to relieve. And it helps if you like traveling, because if you don't like traveling, it's certainly not comfortable. So I tend to travel everywhere and anywhere. A lot of short city breaks and I tend to prefer nature. So my longer trips would be into nature, into Peru or where have I been? Peru, Jordan. All kinds of interesting, weird and wonderful places. South Africa obviously. Still I go to from time to time as I have family there. And yes, horse riding in Malta is not easy to do. So essentially I, I started off riding when I came here and I reasonably soon abandoned riding when I'm in Malta for two reasons. There's no space, it's a very small island and exceptionally built up. So it's very, very difficult and you end up just going round and round in a uh, arena and most of the arenas is not of the quality that people that know British Horse Society standards would approve of. So I stop for that reason also because weather wise most of the summer it is just way, way, way too hot and it's almost 40 degrees and humidity in the 80s. So I just find it crew on the horse to exercise them in, in that heat. In fact they uh, two, three years ago made it a law here that the horse and car, the tourist carriages, the horses have to be off the road during the middle of the day I think from 12 to 4 or something. They have to take them out of the tourist areas, back to their stables and take them out of the heat because of the climate. So nowadays don't ride that much. But I used to do a little bit of everything and obviously in South Africa we had space so we go on hacks every weekend for two, three hours at a time, which was lovely. But I can still do that in Spain occasionally when I, when I go back there on holiday, but in Malta not so much.

Speaker A: Thank you Poola for joining me on how to Keep youp Money and sharing your experience and its benefits for the work you do for your clients. I understand that your private practice is growing and you want to assist your clients in delivering solutions in complex financial situations. You've certainly got plenty of experience of that. If you would like to learn more about our uh, client first revolution and be more visible for the work you do for your clients, please get in touch with me and learn more about how you can grow your business strategically. Bula, thank you again for sharing your story with us. It has been informative and very educational. Thank you.

Speaker B: Beulah, thank you very much for offering me the opportunity.