Telkom closes Schindehutte book – needs to open one on AGM management

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27 Aug 2014, 12:49 pm

At its AGM this morning, Telkom closed the book on the fracas that is known as the Schindehutte saga. The former CFO, who has been on suspension with full pay for a quarter of the time he was employed by the group, has apparently decided to take early retirement. So Telkom's "Dream Team" can focus all its attention on justifying the dramatic re-rating of its shares over the past year and a bit (see right). Although valuations have surged, numerous areas for improvement remain. Including Telkom's management of AGMs – the one chance shareholders get to quiz management. At this morning's event the media were blocked from asking questions and shareholders restricted in their engagement. Neither of which is good governance. Chairman Jabu Mabuza needs to brush up on the Companies Act. – AH

By Nicola Mawson, ITWeb news editor.
Johannesburg, 27 Aug 2014

Telkom this morning defended former CFO Jacques Schindehütte's early retirement, saying it was in line with the company's policy, and freed the team up to focus on commercial aspects.

Schindehütte, who joined the group as CFO in August 2011, was suspended on 24 October, a move that followed "the findings of an investigation by an independent law firm, commissioned by the board, following receipt of certain allegations levelled against Mr Schindehütte by an anonymous whistle-blower".

His "early retirement" was quietly announced just before close of business on 8 August, and came in the midst of a confidential disciplinary process.

Telkom will not clarify what charges its former CFO faced, and has not disclosed what benefits he will receive. It also has yet to clarify who will be appointed to that post now, although Deon Fredericks has been acting CFO since 24 October.

Telkom chairman Jabu Mabuza, addressing the group's annual general meeting this morning, noted the company will not provide further information, because it is honouring the non-disclosure agreement.

In the end,Schindehütte, who celebrates his birthday in April, decided to retire as he had reached 55 years of age, explainedMabuza. He said staff can take early retirement at 55 without the company's consent, a situation that is provided for inTelkom's policy.Schindehütte's early retirement was carefully considered by the board, and accepted, noted Mabuza. He said Telkom's main job is to focus on the business of the day, and sustainable growth for the future, and Schindehütte's retirement frees CEO Sipho Maseko and his team to focus on commercial aspects. "It was the most sensible thing to do."

Mabuza added Schindehütte's departure has "nothing to do with share trading, nothing to do with anything else. That is exactly what happened." Telkom has also not explained why it initially said a R6 million loan granted to him was ratified, and then contradicted itself by saying Schindehütte personally oversaw that loan to himself.

Telkom had no choice but to act when presented with a report on its former CFO, says chairman Jabu Mabuza.Schindehütte used the money to buy 243 700 shares on 30 September, just days before the company issued a trading statement indicating earnings would be at least 20% higher when it reported interim results. Telkom said, on 25 October, the disciplinary was not linked to the share trade, or allegations of insider trading – which was an immediate assumption made by many.

Schindehütte used the money to buy 243 700 shares on 30 September, just days before the company issued a trading statement indicating earnings would be at least 20% higher when it reported interim results. Telkom said, on 25 October, the disciplinary was not linked to the share trade, or allegations of insider trading – which was an immediate assumption made by many."When a board, any board worth being called a board," receives an independent forensic audit report implicating a director, it must act, says Mabuza. He says due process was followed and, although lengthy, this was also independent.

"What are we being accused of?" asked Mabuza, saying the company honoured due process, and its retirement policy. He added the group intends to bulk up its board, as it has space for complementary skills, and this process should be done by the next annual general meeting.

First published on ITWeb | www.itweb.co.za

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