Telkom announced yesterday that it had suspended its chief financial officer Jacques Schindehutte, pending a disciplinary process. Although Telkom has yet to explain exactly what he is accused of, it says that Schindehutte has been suspended as the result of certain allegations made against him. The Mail & Guardian has speculated that the issue may be related to Shindehutte’s recent purchase of R6m-worth of Telkom shares in the open market, but as yet no one really knows what has gone down. Whatever the actual issue, however, the move has certainly raised eyebrows in the market. In this interview, IDC telecoms expert Spiwe Chireka argues that the move is an encouraging sign that Telkom is taking problems at the board level more seriously. The board’s decision to pursue disciplinary action against one of their own is, says Chireka, an encouraging sign that the telecoms giant wants to deal with impropriety, fraud, mismanagement, and low standards (whatever the issue may be in this case).– FD
We received this statement this morning from Jacques Schindehutte: “I respect the right of the Telkom Board with regard to the steps instituted against me I am happy to be granted the opportunity to give account of my conduct and take full accountability for all my actions. I had the opportunity to resign to avoid disciplinary action but such action is not congruent with my value system. The comings days will be challenging but I believe that I always act competently and in good faith to enhance the interests of my employer and all its stakeholders. Please direct all further enquiries to Telkom as my focus will be on discharging this challenge and supporting my family.”
The tweet below from mining entrepreneur Bernard Swanepoel is instructive:
“@alechogg: Telkom CFO’s suspension. Good guy, bad company, what gives? Let’s wait for Telkom. Don’t we always
— Bernard Swanepoel (@zbswanepoel) October 25, 2013
To view this CNBC power lunch video click here
ALEC HOGG: Alright let’s pick up with Jacques Schindehutte, Chief Financial Officer of Telkom suspended today. Spiwe Chireka who is from IDC. What is your take?
SPIWE CHIREKA: Well I guess it is still very vague as to why he has been suspended. All we know, is that there is a suspension based on certain allegations. However, on the one hand it creates a positive view on Telkom. A lot of things have gone wrong at Telkom. Things have not necessarily moved, at the top and therefore to see Telkom actually making a move to correct whatever it is that has happened is definitely a view that it might be a time when caucas government is moving forward.
GUGULETHU MFUPHI: Spiwe, your thoughts on Jacques suspension. He only joined the company recently, I think just under two years ago. In that period what do you think his legacy with the company might be.
SPIWE CHIREKA: Well, I wouldn’t say a legacy left behind, because as I said, it is a suspension, who knows it might turn to be otherwise. But I guess like most of the previous Execs at Telkom they have to work in very challenging positions. It has been a situation of whether we hold the CFO accountable or do we hold the CEO accountable. I guess when you look at the whole echelon, it would be quite tricky to say what kind of legacy really, because at the time he has been there, Telkom has been going through a lot of problems.
ALEC HOGG: He was at ABSA for eleven years though. So it is a guy who is very well known in the business community. Clearly, that 4% declined in the share price on the initial announcement, it has since recovered a little to be 3% down. Do you think that is an over reaction of traders?
SPIWE CHIREKA: Please can you repeat the question.
ALEC HOGG: The fact that the share price of Telkom has dropped 3% on the news, is that just an over reaction by traders?
SPIWE CHIREKA: Well like I said earlier, I would view it more as a positive thing in the sense that we are actually starting to see some degree of accountability within Telkom which I guess is my uninformed opinion to an extent, I would have expected the share price to move overwise.
GUGULETHU MFUPHI: Spiwe, just looking at MTN’s quarterly update, we can’t let you go without touching on that mentioning there, that there is top competition in the market but no mention of the termination rates cut.
SPIWE CHIREKA: I am sorry, I am going to ask you to repeat the question once more.
GUGULETHU MFUPHI: Looking at MTN, they were out with their quarterly update today, they mentioned that competition was tough in their market, but no mention of the termination rate cuts.
SPIWE CHIREKA: Yes, I guess it’s a situation where most of the dominant operators are probably still trying to figure out how exactly are we going to respond to this, how exactly we going to fix this. I think until such time when it is confirmed that there is something, nothing is going to be done, then I guess there is no surprise that there is no mention.
ALEC HOGG: Thankyou Spiwe, the telecom’s researcher at IDC.
