Telkom admits to mishandling loan
The company has admitted to loaning R6 million to suspended CFO Jacques Schindehütte.
JOHANNESBURG - Telkom has admitted it loaned Chief Financial Officer Jacques Schindehütte R6 million to buy shares in the company.
The parastatal admitted the move may well have been illegal because of the way it was handled, but said it had no "untoward" intentions in granting the loan.
"Telkom's management has recognised that the loan made to such executive may not have been in compliance with the provisions of the Companies Act," it said in a statement on Monday.
Schindehütte was suspended last month pending a disciplinary process over allegations against him.
Few details were made available but Telkom said the suspension was related to personal misconduct, not insider trading.
Telkom Chief Executive Officer (CEO) Sipho Maseko told 567 CapeTalk/Talk Radio 702's Bruce Whitfield on Monday night the loan wasn't a dodgy deal, but conceded it wasn't handled correctly either.
"What we should have done, actually, is obtain a board resolution after the shareholder approval on the Friday - before advancing the loan - but we did it the other way around. We advanced the loan and then ratified it by a board resolution."
Maseko says auditors say the company shouldn't have done it in that order, but that it's merely a "process issue."
He says the loan is simply the result of a share scheme approved by shareholders and that there is a standing policy for providing loans to senior staff.
Maseko argues having employees own shares in the company means they will be more committed to its progress.
While lower-level staff are provided with free shares based on performance, Maseko says shareholders pushed for personal investment by higher-level workers.
"[The shareholders said] we want to see that the executives have their own money in this as well."
It is still not clear when the disciplinary process against Schindehütte will be completed.
Telkom also reported a sharp rise in first-half earnings on Monday.
It reported diluted headline earnings of 649.8 cents a share for the six months to 30 September, from a restated 24.9 cents a year earlier.
The higher earnings were largely because of an accounting gain related to its liability for health insurance for retired employees, it said.
Excluding that gain, headline earnings per share increased to 224.2 cents. It did not give an equivalent number for diluted headline earnings per share.
It says ADSL subscribers increased by 6.7 percent to 898,203 and active mobile subscribers increased by 6.9 percent to 1,598,173.
But it says its fixed-line voice business continues to be under pressure while the mobile business continues to face challenge of gaining market share.
It says it's now in talks with some parties over the future of the struggling mobile business.