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Legalbrief   |   your legal news hub Friday 29 March 2024

Parastatals hit by walk outs

The telecommunications sector was in shock this week following the sudden and unexpected resignation of its CE Papi Molotsane, while the Post Office was reeling after two senior officials, including the head of the parastatal’s audit committee, quit their posts.

In both organisations issues of good governance have surfaced, notes E-Brief News. Trade union Solidarity has appealed to the Department of Communications to conduct an independent inquiry into the problems, including allegations of corruption, in Telkom following Molotsane’s decision. Two other senior officials left in March. A number of reasons have been bandied about for Molotsane’s move, including that he was bumping heads with the government over certain contracts, that he was given the push, and that his move comes after President Thabo Mbeki complained that telecommunication costs in SA were too high. The latest reports suggest that corruption may have played a role. Solidarity deputy General-Secretary Dirk Hermann said the organisation believed that government interference in the management of Telkom could have prompted Molotsane to quit, according to the Mail & Guardian Online. ‘It remains a bone of contention to us that government, which is responsible for regulating the telecommunications industry, is at the same time the largest shareholder (38%) in Telkom,’ said Hermann. He added that corruption allegations by Solidarity members working at Telkom also needed to be cleared up, notes Finance24. ‘The problem is that allegations of corruption surfaced at the resignation of the company\'s previous CE. These allegations can only be allayed by an independent investigation.’ Telkom spokesperson Lulu Letlape told FIN24 said she was not aware of any corruption allegations. Full Finance24 report Full Mail & Guardian Online report

The allegations of corruption surfaced in a Business Times article which suggested that Molotsane was beginning to feel alone and frustrated in his bid to clean up inherent corruption within the group. According to this article ‘his business associates say Molotsane was regularly pressured from powerful political quarters to influence decisions concerning the awarding of contracts. His resistance cost him key political support’. He was also constantly running into difficulties while trying to execute his vision for Telkom, said the report. Telkom has denied that government had any role in his departure. Full Business Times report

More questions regarding corruption at Telkom have been stirred up by Duncan McLeod, Financial Mail associate editor. In his blog, says a report on the MyADSL site, he suggests that ‘Molotsane’s sudden exit is related, at least in part, to the company’s $280m acquisition last month of Multi-Links, a private telephone operator based in Nigeria’. According to McLeod ‘two separate sources, both outside Telkom but with close links to the company, allege that it paid $20m more than the owners of Multi-Links were asking for the business. The sources do not say what might have happened to this money.’ Telkom denied these allegations, stating that: ‘The asset was evaluated by independent evaluators at $303m. The sellers wanted $290m. Telkom offered $280m, which was accepted.’ If the assertions by the two sources prove to be credible it further justifies Solidarity’s call for a full scale investigation into corruption at Telkom. Despite great uncertainty regarding Molotsane’s departure at Telkom and widespread speculation as to the reasons behind his sudden move, the incumbent operator remains tight lipped about the issue saying that they are not willing to comment. Full MyADSL report Duncan McLeod blog on Financial Mail site

The Post Office also appears to be in crisis, with another two senior officials, including the head of the parastatal’s audit committee, quitting this week in protest at the decision by Communications Minister Ivy Matsepe-Casaburri to sideline CE Khutso Mampeule. This is in addition to the three directors who quit in December, after Mampeule was suspended, and puts pressure on Matsepe-Casaburri ahead of a shareholders’ meeting on April 23 at which the Minister intends to fire Mampeule as she has ‘lost confidence in him’. Two weeks ago, Matsepe-Casaburri said there had been a ‘breakdown of trust between the board and (Mampeule) as a result of his failure to provide the board with relevant, appropriate and accurate information’, according to Business Day. But this week Victor Christian, a non-executive director and head of the Post Office’s audit committee, and Lesley Plaistowe, who serves on the organisation’s executive committee and who heads the shared services division, confirmed they had both quit the parastatal. In addition, company secretary Hennie van Staden will also leave at the end of the month. While neither executive would reveal their reasons, sources say it was because they were concerned about the ‘overall corporate governance ... and would not want to continue to align themselves with an organisation that upholds these sorts of standards’. Full Business Day report