MTN’s new chairman raises eyebrows
MTN has come under fire for its decision to appoint former CEO Phuthuma Nhleko as its new chairman – a move that goes against the King Code, amongst other concerns, the Sunday Times reports.
The King Code states that a CEO should not become chairman until 3 years have lapsed since his departure, and that the board “should elect a chairman of the board who is an independent non-executive director”.
Quite the opposite, Nhleko, who stepped down as MTN CEO only two years ago, still owns shares in the operator and is thus not independent.
According to the report, the move to place Nhleko as chairman on the company, has raised many eyebrows from governance experts.
Experts raise concern over how quickly Nhleko was appointed after Cyril Ramaphosa left the position earlier this year.
Nhleko too close to management?
Another concern raised is that Nhleko may be a little too close to management, and such a position would upset the balance of power at the company.
Spiwe Chireka, program manager of Telecoms at the IDC, told BusinessTech that, while Nhleko’s appointment is a positive one for the group, it may well be difficult for him to avoid getting into the everyday operations of the group.
“There is a possibility that the lines could become blurred between chairman and CEO,” Chireka said, noting that in many instances, chairmen are appointed with very little knowledge about the industry in which a particular company operates in.
Nadim Mohamed, investment analyst and partner at First Avenue Investment Management, said that Nhleko is no stranger to being a board member only, since his resignation from MTN.
“Mr Nhleko is a good appointment and has extensive experience in telecoms within African and emerging markets. I think he will settle well into the chairman role as he has been on a few boards such as Anglo American over the past two years.”
Turkcell claims
Other questions of neutrality were raised, and on top of everything, the fact that Nhleko was CEO at the time Turkcell claimed MTN was involved with corruption in Iran.
As part of the case, former Iranian head, Chris Kilowan claimed that Nhleko authorised bribes to former South African ambassador, Yusuf Saloojee.
However, MTN director, Alan van Biljon fluffed the claims, saying that “if historical issues such as this arose in future, Nhleko would simply have to recuse himself from discussion and he (Van Bijon) would take over.”
MTN’s Hoffmann committee, which investigated the case, gave MTN and Nhleko the all-clear, and Turkcell has since withdrawn its case against MTN.
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