Telkom's PR disaster
For this entity, listed on the JSE and the New York Stock Exchange and majority owned by the South African government, the first quarter of the year has been a public relations nightmare.
To a superficial observer, PR as a discipline, is a highly under-rated business function. But to an astute business executive, good PR is a powerful tool that, if used properly can cushion the company’s brand and present a clean face oozing with image and integrity.
Equally, if good PR is neglected, as in the case of Telkom, it can be a dangerous tool that can be used to destroy companies and send the leadership packing. Ask Khaya Ngqula, the axed CEO of South African Airways (SAA).
But PR, (good or bad PR) cannot exist in a vacuum. It flows from the overall corporate values and culture of a company. Unfortunately it seems from the news that Telkom does not present a picture of decent corporate culture and values.
For the board of directors, the ministry of communications, exco as well as the company’s spin doctors, Telkom has been a source of huge embarrassment as it shuffles from scandal to scandal.
As we know, this is dangerous for a listed entity. It blemishes the company’s image, tarnishes the brand quality and questions the integrity of its leadership. It erodes the value of your company, sending your share price crashing to a penny.
But there is only so much a company’s PR officer can do, particularly if there is a toxic underlying reason beyond control of the public relations business function, especially where the highest ranking executives are fingered.
That is why Telkom spokesman Pynee Chetty is going to have an uphill battle trying to convince the public (including investors, the media, trade unions and politicians) that all is well at Telkom.
At the heart of Telkom’s problems are billions of rands worth of alleged tender irregularities where some top members of the executive committee are allegedly involved.
It all started with an explosive dossier allegedly compiled by Telkom’s ex-operations chief Motlatsi Nzeku who was sacked in February.
The "dossier" is a thick, detailed document with startling allegations that include a flurry of letters and memos between executives. In the memos is a barrage of accusations and counter-accusations including tender irregularities and issues of mismanagement. Tender irregularities are specified and perpetrators are mentioned by name.
Group executive for network infrastructure provisioning, Marius Mostert, was suspended last week, apparently as a result of Motlatsi’s dossier.
As a result, the Telkom board has formed a sub-committee to investigate the authenticity of the dossier. And in turn, the subcommittee has enlisted the services of an independent audit firm to investigate the authenticity of the dossier.
Telkom has given no reason for the suspension of Mostert, but apparently he is mentioned extensively in the so-called dossier.
Over R2bn worth of tender irregularities are being investigated at Telkom and at least one is being contested in court.
A R1.5bn outsourcing tender for the management of telex services is being investigated, the second such scandal in a couple of months.
A black-owned company, Phutuma Networks alleges the tender was rigged and that it is already being carried out by a rival bidder.
Another case involving Maredi Telecom and Broadcasting is already in court.
In January Maredi Telecom and Broadcasting took an urgent application to court to stop Telkom awarding a R1.25bn microwave tender to Ericsson South Africa and Telsaf Data.
Maredi argues that Telkom violated the Promotion of Administrative Justice Act, which deals with the awarding of contract by state-owned entities. The company submits that Telkom acted in bad faith, flouted procurement regulations and circumvented tender procedures.
So, there you are. What a dose of bad PR!
It looks like soon, someone is going to fall on his sword at Telkom.
Moneyweb
Loading ...