As more facts come to light around former Telkom CFO Jacques Schindeh"utte's time with the telco, the less clear the listed company's behaviour becomes around why he was suspended, and then - almost a year later - retired on full benefits.
Telkom has yet to clarify what charges its former CFO faced, disclose what benefits he will receive, or clarify who will be appointed to that post now, although Deon Fredericks has been acting CFO since 24 October. Telkom has also not explained why it initially said a R6 million loan granted to him was ratified, and then contradicted itself by saying Schindeh"utte personally oversaw that loan to himself.
Schindeh"utte, who joined the group as CFO in August 2011, was suspended on 24 October, a move that followed "the findings of an investigation by an independent law firm, commissioned by the board, following receipt of certain allegations levelled against Mr Schindeh"utte by an anonymous whistle-blower".
Schindeh"utte's attorney, Maurice Crespi, managing partner at Schindlers, confirms media reports that the probe started last August, and had nothing at all to do with the loan and share purchase. However, the first inkling the market had that anything was amiss was when Schindeh"utte was suspended.
Perfect world?
Schindeh"utte used the money to buy 243 700 shares on 30 September, just days before the company issued a trading statement indicating earnings would be at least 20% higher when it reported interim results. Telkom said, on 25 October, the disciplinary was not linked to the share trade, or allegations of insider trading - which was an immediate assumption made by many.
The share trade was investigated by the bourse as a possible contravention of its listing requirements, and Schindeh"utte was cleared. Andre Visser, GM of issuer regulation at the bourse, says it "did not find any breaches of the listings requirements". Telkom - despite knowing this since November - has not told its shareholders.
Werksmans director Shirley Fodor notes that, because the loan was void in terms of the Companies Act, it had to be repaid, and Telkom CEO Sipho Maseko - who was personally liable under the law - was required to attend a governance course by the Companies and Intellectual Property Commission. "In an ideal world, everyone in a fiduciary position understands the nature and scope of the responsibility that such office requires. This is unfortunately not the case and many directors do not understand that their position is not merely one of power."
Clear as mud
Ovum analyst Richard Hurst says Telkom has been throwing out bits of information, but there is no clarity as to what is going on, and why. He says the entire matter could have been handled better. "Jokes aside, the more we find out, the less clear it becomes."
While Telkom has not provided details around the suspension, a November Sunday Times article provides some insight into why the CFO was suspended. In the article, Maseko is quoted as saying the suspension was "broadly of a personal-conduct nature" and had nothing to do with share trades, and would not require Telkom to restate its numbers. In addition, Maseko said the issue had nothing to do with fraud, management style, or anything of a "sexual nature".
Maseko also told the paper that Schindeh"utte's suspension had nothing to do with Telkom's relationship with government - which has a 39% stake in the telco. The article suggests, however, that whatever the three to five charges were about could have been linked to Schindeh"utte's appointment of an investment relations consultant without going through the proper procedures, although this was apparently cleared by former CEO Nombulelo "Pinky" Moholi.
In fact, according to a Bloomberg article from December, the probe should never have gotten off the ground. The wire service quotes Maseko as saying: "If we were not listed, no one would know about this, we would have managed it pretty quietly... It started off as a whistle-blowing, which the company then duly investigated. I, for one, wasn't keen to investigate it."
Telkom did not respond to a request for comment.
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