/ 14 April 2014

Telkom boss ordered to attend corporate governance course


Telkom chief executive Sipho Maseko faces referral to South Africa's national prosecutor or a fine if he fails to attend a corporate governance course as ordered, a state department said.

Maseko faces an administrative penalty of as much as R1-million or referral to the National Prosecuting Authority for criminal prosecution if he doesn't take part in the training within a 90-day period, Companies and Intellectual Property Commission head Astrid Ludin said in an emailed response to questions. He is the first South African chief executive to receive a notice of this type, according to Ludin.

Maseko was told by regulators to attend a director duties course in February after a loan awarded to the chief financial officer of Africa's biggest fixed-line operator was judged to have breached corporate rules.

Telkom has rejected the CIPC's authority to impose sanctions, Business Day reported on April 10, citing an interview with Maseko.

Telkom spokesperson Pynee Chetty declined to comment on the Business Day story when called by Bloomberg News on April 10 and the company didn't immediately respond to phone calls seeking comment on Monday. "Should the CEO not comply with the Compliance Notice, the Act allows for the CIPC to either apply to a court for the imposition of an administrative fine or refer the matter to the National Prosecuting Authority for prosecution," Ludin said.

Public reprimand
Sanctions, such the one imposed by the commission, are uncommon in South Africa, according to Kate Turner-Smith, a Cape Town-based analyst for BPI Capital Africa. "The CIPC's instruction regarding Maseko's requirement to attend a course is effectively a public reprimand," Turner- Smith said on Monday.

Telkom, which is 39.8% owned by the South African government according to data compiled by Bloomberg, received the notice that Maseko must attend the course on February 10. The penalty was placed on the chief executive after Telkom awarded a R6-million  interest-free loan to chief financial officer Jacques Schindehutte to buy shares in Telkom.

CIPC said the loan was prematurely authorised and hadn’t been approved by the board, according to a Telkom statement on February 24. Schindehutte, who has been suspended from Telkom for an unrelated reason, has repaid the loan.

Telkom shares traded 1.3% higher at R39 at 2.01pm on Monday in Johannesburg, extending the year's gains to 39%. – Bloomberg