MTN sponsorships questioned

·29 Aug 2013

MTN has confirmed that it is reviewing its sponsporship strategy, after BusinessDay reported that an audit in its possession had flagged more than R19 million in irregular agreements.

According to the report, a KPMG audit of MTN highlighted a lack of process, policies and procedures with regards to sponsorships at the mobile operator.

It questioned sponsorship payments made through agencies – amounting to R62 million for the current year – despite the company having a sponsorship account for that purpose.

Key beneficiaries, according to the report, were football clubs Bloemfontein Celtic and Golden Arrows; annual football tournament, MTN8; cycling team MTN, Qhubeka; and music group, Joyous Celebration.

In a written statement, MTN confirmed that an audit was conducted “in line with normal business practices linked to governance”, but declined to comment on any additional details.

“Accordingly, the company would like to reiterate that the decisions to sponsor or not are always informed by MTN’s strategic direction,” it said.

Mounting issues

MTN has come under the spotlight in recent months after the resignations and suspensions of a number of executives and managers.

Eleanor Potter – GM for branded retail channel at MTN – has left the company, with MTN confirming that an investigation had been launched against Potter in 2012 over a R120 million tender irregularity.

The operator also suspended its chief corporate services officer in South Africa, Robert Madzonga, in August, because he authorised R12.3 million in questionable payments to a legal friend.

Madzonga has since filed legal papers against the company over his suspension, arguing that he was suspended because of an internal grievance claim against senior manager, Lily Zondo.

Zondo accused Madzonga of receiving some of the money paid to former communications minister Dina Pule’s boyfriend Phosa Mngqibisa, as a management fee for the ICT indaba in 2012.

According to BusinessDay, MTN is also facing a challenge by a black-owned project consulting firm whose R150 million site-build contract was prematurely terminated.