Why Tiger Brands' CEO couldn't say sorry
- On Monday, Tiger Brands CEO Lawrence MacDougall refused to publicly apologise for the listeriosis outbreak traced back to the company's production facilities.
- He probably followed legal advice.
- One investor believes Tiger Brands should, instead ,'over-react'.
At a media briefing in Johannesburg on Monday, Tiger Brands CEO Lawrence MacDougall was hounded for an apology to customers and the public after the listeriosis outbreak was traced back to its production facilities.
But MacDougall treaded carefully, denying culpability and avoiding an apology.
When asked if he met with legal counsel before addressing the media, MacDougall said “doing the right thing and saying the right thing does not need legal preparation.” However, his handling of the questions around liability suggested otherwise.
Apologies, interpreted as an admission of guilt, could come back to bite a company. Therefore, corporate attorneys advise against apologies to reduce potential liability.
Dan McGinn, CEO of strategic communications firm TMG Strategies, says most legal advisors will caution CEOs against apologising before liabilities are determined - "which tends to be in conflict, of course, with the expectations of the media and the public."
When Goldman Sachs came under fire for shorting securities that it had sold its clients in the wake of the 2008 financial crisis, the CEO, Lloyd Blankfein famously never uttered a single apology.
Bright Khumalo, portfolio manager at Vestact asset management, tells Business Insider South Africa that Tiger Brands should be completely transparent.
"What I've learned is that when you have a crisis like this one, producers should overreact. You recall your product and you track all the batches to the last spaza shop in the village of KwaNongoma and proceed to destroy the goods that are implicated.
"(Tiger Brands needs to help) with medical costs of all those affected. This helps preserve consumer trust in the brand with consumers. In that whole process, transparent communication with employees and the public needs to be maintained at every step.
"This might be expensive in the interim, but the affected brands have to think long term if they want to be here tomorrow," Khumalo added.
Tiger Brands' share price fell more than 7% to R393,38 on Monday.
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