Telkom says it has received a Compliance Notice from the Companies and Intellectual Property Commission (CIPC) relating to its interest free loan granted to suspended chief financial officer, Jacques Schindehütte.
Schindehutte was granted a loan of $538,000 by Telkom in September 2013, to buy shares in the group.
He has since been ordered to pay that money back, after the company admitted that the loan “was granted in a manner that was inconsistent with the provisions of the Companies Act, making the transaction null and void”.
In a statement on SENS on Monday (24 February), Telkom advised that the CIPC has notified the group that it believes that the Telkom contravened Sections 44 and 45 of the Companies Act No. 71 of 2008 “as the payment of the Loan was authorised prematurely and prior to the board of directors of Telkom passing the necessary precursory financial assistance resolutions”.
The compliance notice requires Telkom to do the following:
- Update the Commissioner of the CIPC on a monthly basis on the progress made in recovering the loan amount from Mr J Schindehütte;
- Mr S Maseko to attend a corporate governance and a director duties course within 90 business days from the date of the Compliance Notice; and
- Inform shareholders of the contents of the Compliance Notice.
Telkom said it has confirmed to the CIPC that the full amount of the loan has already been
recovered from Schindehütte.
“Maseko has noted the directive to attend a corporate governance and a director duties course and shall make the necessary arrangements to attend such training within the stipulated timeframe,” the group said.
The fixed-line operator suspended Schindehutte in October, pending its disciplinary process over allegations against him. It has said that the suspension was related to personal misconduct, not insider trading.
In a recent interview with Bloomberg, Schindehütte defended his conduct in procuring an interest-free loan, rejecting the company’s claims that he authorized it himself.
“The board cannot and did not ratify the granting of the loan,” Telkom said in a statement on January 14. “He was actively involved in the processing of this loan and personally oversaw the advancement of the payment of the loan amount to himself,” it said.
According to email correspondence seen by Bloomberg however, it was revealed that Telkom’s chairman and head of its remuneration committee “supported the granting of the loan”.
“It would be unheard of to suggest that I had any influence in granting my loan because the decision was there for HR and the group CEO to make,” Schindehutte said.
“I’ve acted totally appropriately with regard to this loan and I followed the normal process, which includes seeking the authority of my superior manager.”