Telkom deal draws more fire

By Iain Scott for Telkom
Johannesburg, 11 Nov 2004

The Congress of South African Trade Unions (Cosatu), has slammed the purchase of a Telkom stake by a black empowerment consortium led by former communications director-general Andile Ngcaba.

The consortium, led by Ngcaba and Women Investment Portfolio Holdings, with ANC spokesman Smuts Ngonyama acting as an advisor, earlier this week bought the 15.1% stake in Telkom held by Thintana Communications.

Thintana is a joint venture between the US`s SBC Communications, which owns 60% of the venture, and Malaysia`s Telekom Malaysia Berhad, which has a 40% shareholding.

Cosatu has always opposed Telkom`s privatisation, maintaining that Telkom and other essential services should remain in state hands to ensure efficiency and job creation.

Cosatu spokesman Patrick Craven says the latest deal "will do nothing to help the overwhelming majority of South Africans and it epitomises the very worst form of so-called 'black empowerment`, which benefits only a tiny elite".

He says the inclusion of Ngcaba and Ngonyama in the consortium raises fundamental questions about the involvement of former and present government and political leaders in share buying schemes.

"Is this not a typical example of a government policy-maker throwing a javelin into the private sector and then picking it up, before it has landed, as a businessman?

"Is there also a conflict of interest between his shareholding in Telkom and his current position as chairman of DiData, which is a potential rival to Telkom?"

Cosatu is calling for a law prohibiting former public officials from owning shares in companies falling within their line of function in government, for a specified number of years.

"Otherwise there will remain a real risk that present and recent officials of government and political parties will at best have a serious conflict of interests and at worst be involved in outright corruption by using their political contacts to enrich themselves."

Ngcaba said earlier this week that he did not believe there would be any conflict of interest issues relating to his position as chairman of Dimension Data SA. He said there were opportunities that could be explored between DiData and Telkom, but where there were possible conflicts of interest, he would recuse himself.

This was echoed by Dimension Data CEO Brett Dawson, who said any possible conflicts of interest would have to be managed carefully by Dimension Data.