The dispute between Telkom and its suspended chief financial officer (CFO) Jacques Schindeh"utte continues as the executive rejects allegations against him, claiming a R6 million interest-free loan he took from the company was above board.
Bloomberg yesterday reported that Schindeh"utte said he received the appropriate signoff from his superiors when procuring the loan. The international publication says the CFO - who is currently involved in an unrelated disciplinary with Telkom - claimed last week that Telkom CEO Sipho Maseko and human resources officials approved the loan.
Telkom previously said Schindeh"utte personally oversaw the advancement of the payment of the loan amount to himself. He used the loan to buy 243 700 shares, just eight days before the company issued a trading statement indicating earnings would be at least 20% higher when it reported interim results.
Appropriate action
Two weeks ago Telkom 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.
Sections 44 and 45 of the Companies Act deal with the correct procedure when issuing loans or other financial assistance to directors.
Telkom says Schindeh"utte was "actively involved in the processing of this loan and personally oversaw the advancement of the payment of the loan amount to himself".
Bloomberg cites the CFO as saying: "It would be unheard of to suggest that I had any influence in granting my loan because the decision was there for HR and the group CEO to make. I've acted totally appropriately with regard to this loan and I followed the normal process, which includes seeking the authority of my superior manager."
According to e-mail correspondence in Bloomberg's possession, on 27 September Schindehutte asked Maseko, Chairman Jabu Mabuza and Santie Botha, the head of the remuneration committee, if he could take out a loan. Using the loan to buy company shares would deliver a "huge show of confidence" to the market, he said in an e-mail.
Mabuza and Botha both replied the same day saying they supported the transaction, Bloomberg says the correspondence shows.
No deal
"I also want to follow up on this and follow Jacques," Maseko said in a reply to Mabuza and Botha after receiving Schindehutte's proposal. "Want to be able to consummate the transaction on Monday," Maseko said.
Bloomberg cites further electronic exchanges from Maseko, revealing he was unable to buy the stock. The publication cites an e-mail from 1 October: "My broker did not execute on the transaction. I would not want to push it now given the rules. I'm miffed but rather safe than sorry". Bloomberg says the mail was from Maseko to Schindehutte and other company officials.
Schindeh"utte is in the middle of a confidential hearing, on a matter of personal misconduct, following his suspension last October when Telkom received a tipoff from a whistle-blower. In a statement, which Telkom did not publish on the JSE's news service, the group says it tasked a legal firm to investigate the allegations.
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