SIU appeals ruling on Telkom investigation
The Special Investigating Unit (SIU) has filed papers to apply for leave to appeal the decision of the High Court of South Africa, Gauteng Division Pretoria, relating to the unit’s investigation into Telkom’s affairs.
This, after Telkom won its court case against president Cyril Ramaphosa over his directive that authorised a wide-ranging probe of possible maladministration in the disposal of Telkom’s assets – iWayAfrica, Africa Online Mauritius and Multi-Links Telecoms – during the telco’s sojourn in Africa.
The 2022 order gave the SIU authority to investigate possible maladministration in the sale of these assets, which resulted in the telephony company losing millions of rands.
Telkom is majority state-owned, with the South African government owning 40.5% of the JSE-listed company. In addition, 14.8% of the firm is owned by another state-owned company – the Public Investment Corporation – which is closely linked to the South African government.
In a statement yesterday, the SIU said: “Last month, the High Court ruled that Proclamation R49 of 2022 authorising the SIU to investigate allegations of serious maladministration, malpractice and possible corruption in the affairs of Telkom is declared unconstitutional, invalid and of no force or effect.”
It notes the High Court found Telkom is not a state institution and, therefore, the SIU could not investigate allegations of serious maladministration, malpractice and possible corruption in Telkom’s affairs.
“After consulting with our legal team, the SIU is of the opinion that there is reason for an appeal. The court needs to give a fuller picture of what constitutes a state institution, as this can set a legal precedent on which institutions the SIU can exercise its powers.”
According to the SIU, it is important that the issue of the “state institution” be decided and settled.
“If this is not clarified, it may create an unwelcome precedent that some public institutions may inadvertently be shielded from investigation by the SIU.”
Telkom sold its CDMA business unit Multi-Links to HIP Oils in 2011 at a large loss after a long legal battle.
The telecommunications company bought 75% of the CDMA operator for $280 million in March 2007, and almost two years later, bought out the balance for another $130 million. It subsequently wrote down the unit for more than its initial investments before selling it.
It was not immediately clear how much Telkom had spent on legal fees, as the company did not disclose this amount.
As for the iWayAfrica and Africa Online Mauritius assets, Telkom offloaded the businesses through a private sale to Gondwana International Networks.
iWayAfrica was formed as the result of the amalgamation of MWeb Africa and Africa Online in 2007, when MWeb Africa was purchased by Telkom.
The iWayAfrica business operated in eight countries in Africa, offering terrestrial wireless and VSAT services to business and residential markets, as well as via its channel partners in many other countries on the continent.
Telkom struggled to drive growth and profitability in the iWayAfrica business, resulting in the sale.
“Several years of poor performance of the iWayAfrica Group has resulted in continued negative earnings before interest, taxes, depreciation and amortisation contribution to the Telkom group,” said Sipho Maseko, who was CEO at the time.