Pinnacle executive director Takalani Tshivhase has asked to take an immediate "leave of absence" until criminal proceedings around his alleged attempt to bribe a police officer have been wrapped up.
Tshivhase was charged on Monday with attempting to bribe a senior South African Police Service official with R5 million so the company could win a R182 million contract to supply about 3 000 handheld MaxID devices.
The handheld hardware is used by the police for investigation purposes and to store information related to crimes, and is distributed locally by Pinnacle.
Pinnacle says once the matter has been resolved, "Tshivhase's association with the company can be reviewed".
Despite the charge implicating the company, Pinnacle CEO Arnold Fourie has not returned several messages seeking comment. In yesterday's statement to shareholders, the group says the matter is now sub judice and it would not be proper for it to comment further.
Pinnacle says based on the available evidence, "it has no reason to doubt the veracity of Tshivhase's denial of the allegations of any impropriety".
News of the charge, released in a short statement on Tuesday, sent Pinnacle's shares into free fall.
Yesterday, its stock continued to slide, losing another 23.67%, to close at R11.45. This followed Tuesday's sell-off, which saw the stock lose R5, to close at R15 - a 25% decline on its opening price.
The share sell-off means Pinnacle's market capitalisation is now just under R2 billion. Its shares, which are again at a new 52-week low, closed at R20 on Monday, the day before it informed the market of the charges against the director.
Speculation
Pinnacle says it acted on legal advice when it only told the market on Monday that Tshivhase had been charged, because this was the "appropriate time". Before the charge was filed, it was a "matter of speculation whether any charge would, indeed, be brought". Tshivhase was arrested on 5 March, at his Kempton Park office.
However, after Tshivhase was arrested and released on R10 000 bail, he sold 200 000 Pinnacle shares to raise R4 million. That trade took place on 19 March.
Pinnacle says Tshivhase had asked for permission to trade the stock on 27 January, which was granted on 10 March, after the end of the close period. The listed company says the sale represents a "very small percentage" of Tshivhase's holdings and "was related to the need to fund a specific transaction of a personal nature".
The company says it has received requests from various directors to buy stock and has granted permission for these transactions.