Rhamaposa slammed for Shanduka, MTN conflict
Cyril Ramaphosa‘s ties to the Shanduka Mauritius purchase of a minority stake in MTN Nigera has been described as “pushing the envelope” of the tycoon’s position as chairman of both holding companies.
Ramaphosa has become the center of controversy over an alleged conflict of interest present in his investment company, Shanduka’s acquisition of a “minority stake” in MTN Nigeria.
On 28 November, Shanduka Group, a company founded and chaired Ramaphosa, paid $335 million for a stake in MTN’s Nigerian business.
The acquisition of the “minority stake” had been purchased through Shanduka Telecommunication (Mauritius), a wholly-owned subsidiary of the Shanduka group.
Rhamaphosa has now become a matter of media attention in the deal, as sitting as chairman for both parties in the transaction – MTN Group and Shanduka group – poses an alleged conflict of interest, bringing the transaction into question.
Managing conflict
Speaking to 702, the institute of directors of Southern Africa CEO, Ansie Ramalho, explained that the alleged conflict of interest is technically legal and above board according to South Africa’s Companies Act.
“The presence of a conflict of interest does not necessarily taint a transaction in terms of corporate governance – nor is it unlawful,” Ramalho said.
“[In business] it’s difficult to avoid conflict altogether, and it’s for this reason that our company’s act actually provides for such a situation.”
“The standpoint, legally, is that a conflict should be avoided as far as possible; if the conflict cannot be avoided, [the legal processes] involve declaring the conflict as soon as it becomes known to the director, and also refraining from participating in the decision-making process concerning the transaction,” Ramalho said.
Ramalho continued: “Any company with good corporate governance would make a point of documenting these decisions – documenting that it’s been raised with Mr Rhamaphosa and the decision that was taken – in order to manage this conflict.”
Ideally, Ramalho said, first prize is that these kinds of transactions are avoided.
“We need clean business”
However, outspoken chief investment officer at First Avenue Investment Management, Hlelo Giyose, still criticised Ramaphosa and the deal on 702.
Giyose said that Ramaphosa “has even more responsibility to ensure he is above reproach on factors beyond technicalities.”
“You don’t do things on the basis of their technicalities – you have to look beyond the technicalities, especially if you are as intertwined as Cyril is,” Giyose said.
“People take for granted how implicit the government is in MTN’s success – in no small part because of him (Ramaphosa) playing political cover for MTN.”
“He’s running a play he has set a long time ago – and he knows it more than anyone else. And that’s not really what you want to teach kids in business schools,” Giyose said.
“We (South Africa) need really good, clean business here.”
Giyose continued, saying that the political climate – where Ramaphosa is pegged as a potential new deputy president of the country – and the Shanduka/MTN deal, is leaving Ramaphosa open to many insinuations.
“If you want to be in the political arena – in a position to serve people and get their trust – you need to do things that aren’t self-serving,” the chief said.
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