Telkom says it has received a Compliance Notice from the Companies and Intellectual Property Commission (CIPC) on its granting of an interest free-loan by Telkom to its suspended CFO, Jacques Schindeh"utte, last November.
Schindeh"utte used the loan to buy 243 700 shares in Telkom, just eight days before the company issued a trading statement indicating earnings would be at least 20% higher when it reported interim results.
Telkom has said the loan was granted in a manner that was inconsistent with the provisions of the Companies Act, making the transaction null and void. "The board cannot and did not ratify the granting of the loan." The company asked Schindeh"utte to repay the money, which has since happened.
The fixed-line operator previously said Schindeh"utte personally oversaw the advancement of the payment of the loan amount to himself. However, Bloomberg has reported that Schindeh"utte said he received the appropriate signoff from his superiors when procuring the loan.
Now, the CIPC has notified Telkom that it believes it has contravened sections 44 and 45 of the Companies Act as the payment of the loan was "authorised prematurely and prior to the board of directors of Telkom passing the necessary precursory financial assistance resolutions," Telkom says in a statement.
Sections 44 and 45 of the Companies Act deal with the correct procedure when issuing loans or other financial assistance to directors. The CIPC has issued a compliance notice requiring Telkom to update its commissioner on a monthly basis on the progress made in recovering the loan amount.
It also wants CEO Sipho Maseko to attend a corporate governance and a director duties course within 90 business days from the date of the compliance notice.
Telkom says Maseko "has noted the directive to attend a corporate governance and a director duties course and shall make the necessary arrangements to attend such training within the stipulated timeframe".
Schindeh"utte is currently involved in a confidential disciplinary hearing, on a matter of personal misconduct, which follows his suspension last October, after Telkom received a tipoff from a whistle-blower.
Telkom has not stipulated the exact nature of the charges Schindeh"utte is facing, but has said it has "no connection whatsoever" with the share trade.
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