Johannesburg - Telkom chief executive Sipho Maseko faces referral to South Africa’s national prosecutor or a fine if he fails to attend a corporate governance course as ordered, a state department said.
Maseko was told by regulators to attend a director duties course in February after a loan awarded to the chief financial officer of Africa’s biggest fixed-line operator was judged to have breached corporate rules.
Telkom has rejected the Companies and Intellectual Property Commission’s authority to impose sanctions, Johannesburg-based Business Day newspaper reported on April 10, citing an interview with Maseko.
Pretoria-based Telkom spokesman Pynee Chetty declined to comment on the Business Day story when called by Bloomberg News on April 10 and the company didn’t immediately respond to phone calls seeking comment today.
Maseko faces an administrative fine of as much as 1 million rand or referral to the National Prosecuting Authority for criminal prosecution if he fails to attend the course within a 90 day period, CIPC head Astrid Ludin said in an e-mailed response to questions.
“Should the chief executive not comply with the Compliance Notice, the Act allows for the CIPC to either apply to a court for the imposition of an administrative fine or refer the matter to the National Prosecuting Authority for prosecution,” Ludin said.
Sanctions, such the one imposed by the commission, are uncommon in South Africa, according to Kate Turner-Smith, a Cape Town-based analyst for BPI Capital Africa.
“The CIPC’s instruction regarding Maseko’s requirement to attend a course is effectively a public reprimand,” Turner-Smith said in an e-mailed response to questions today.
Telkom, which is 39.8 percent owned by the South African government according to data compiled by Bloomberg, received the notice that Maseko must attend the course on February 10.
The penalty was placed on the chief executive after Telkom awarded a 6-million rand interest-free loan to CFO Jacques Schindehutte to buy shares in Telkom.
CIPC said the loan was prematurely authorised and hadn’t been approved by the board, according to a Telkom statement on February 24.
Schindehutte, who has been suspended from Telkom for an unrelated reason, has repaid the loan. - Bloomberg News