Telkom CEO Sipho Maseko could face a fine of up to R1 million or criminal prosecution, should he default on a directive that he attends a corporate governance course, handed down by the Companies and Intellectual Property Commission (CIPC).
This comes after the CIPC issued Telkom with a Compliance Notice, about a month-and-a-half ago, after the company's executive granted its suspended CFO, Jacques Schindeh"utte, an interest-free loan in 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.
Maseko has until the end of June to attend a corporate governance and director's duties course, failing which he will face an administrative fine or be referred to the National Prosecuting Authority (NPA) for prosecution, in terms of the Companies Act of 2008.
CIPC commissioner Astrid Ludin says it is at the commission's discretion whether it applies for a fine to be imposed, or refers the matter to the NPA for criminal prosecution, should Maseko fail to comply with the notice.
The maximum administrative fine (as per Regulation 163 of the Companies Act) is R1 million, says Ludin.
Maseko, who is the first chief executive to receive a notice of this nature, responded to the February notice vowing to make the "necessary arrangements to attend such training" within the set timeframe (90 business days as of 24 February).
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.
Telkom had not responded by the time of publication.
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