A loan extended to the suspended Telkom executive may have been in breach of the Companies Act, but the CFO says he followed the correct procedure.
Telkom South Africa's suspended chief financial officer Jacques Schindehutte said he has been told to immediately repay a R6-million loan from the company, earlier than originally agreed with the board.
Telkom, Africa's biggest fixed-line phone operator lent Schindehutte the cash in late September so he could buy stock, chief executive Sipho Maseko said on November 18. Schindehutte would only be obliged to repay the zero-interest loan if he left the company, Telkom said in a statement on the same day.
The CFO was suspended in October following the outcome of an investigation into unspecified allegations of misconduct, yet remains a Telkom employee.
"The interest-free loan has nothing to do with my suspension as I followed the correct procedure to seek approval for the loan," Schindehutte said in an interview on Tuesday. "I've now been told that the company was unable to ratify the loan as they had indicated to the market and I've been called upon to repay the loan. I will do that forthwith."
Telkom spokesperson Pynee Chetty did not comment on the loan when contacted on Tuesday.
Schindehutte bought 243 700 Telkom shares for R5.96-million or R24.4523 rand each, the company said in an October 2 statement. The stock is now trading at R33.30, or 36% higher than Schindehutte paid, equating to a paper profit of R2.16-million.
The shares have risen almost 10% in the two trading sessions since the company said on January 10 it plans to fire 1 000 managers and reduce the workforce by about a third over five years.
Telkom's decision to grant the chief financial officer the loan may have been in breach of the Companies Act, it said in a November 18 statement. It didn't specify how the loan may have contravened the law.
Maseko said in an interview last month that the loan had been approved by the company's shareholders and the board. "It's a bit of a lousy process," he said, when asked how the loan to Schindehutte was granted. "What we should have done is go back to the board for the board to then advance the loan. We missed a step."
Maseko said in a December interview he would have preferred not to have probed Schindehutte's alleged misconduct. "If we were not listed no one would know about this, we would have managed it pretty quietly," Maseko said.
"It started off as a whistle-blowing, which the company then duly investigated. I, for one, wasn't keen to investigate it." – Bloomberg