Daggers drawn as Telkom meets
The sacked head of operations at Telkom is at the centre of a bitter spat that will see the telecommunication giant’s boss questioned by the board of directors on Tuesday.
A senior Telkom official said the board meeting would determine whether Reuben September was fit to carry out his fiduciary duties as chief executive.
“He is in deep, serious trouble,” said the official.
The board meeting comes after the company’s chief operations officer, Motlatsi Nzeku, was denied access to the Telkom head office in Pretoria. On Friday, September said Nzeku had been opposed to his (September’s) restructuring plans.
“His role had become extremely divisive and counter-productive to the progressive functioning of Telkom going forward,” a Telkom statement said.
“There are also tangible indications that recent actions by Nzeku have resulted in reputational damage amounting to defamation of the company and its leadership.”
Nzeku is at the centre of most of the allegations against September contained in a dossier which is in possession of Business Times.
When approached for comment, Nzeku said he was unaware of his dismissal at Telkom and only learnt about it from journalists asking for his comment.
“Nobody has informed me that my services have been terminated,” said Nzeku. “I am hearing it for the first time from the media.”
He confirmed he had compiled the dossier detailing corporate governance issues against September, and said he hoped the board would deal with them when it met.
The dossier alleges mismanagement and breach of procurement allegations against September since he officially took charge of the JSE-listed parastatal in November 2007.
The dossier further refers to the restructuring of the telecommunications giant “without board approval”.
It also raises questions about civil suits for damages by tenderers, in particular a recent court action initiated against Telkom by Maredi Telecommunications and Broadcasting. Early this year Maredi filed an urgent application in the Pretoria High Court in a bid to stop Telkom awarding a multimillion-rand tender to Ericsson South Africa and Telsaf Data. In a memorandum addressed to the board dated January 30, Nzeku accused September of going out of his way to protect Marius Mostert, group executive of national infrastructure provisioning, despite Mostert having been implicated by an internal audit on May 15 2008 in having influenced the outcome of various multimillion-rand tenders at Telkom.
Nzeku claims that with him out of Telkom, September would be able to conceal various violations from the board.
“Without being hyperbolic, the recent breakdown in the relationship between the CEO and myself was precipitated by the numerous infractions of company policies and conduct that may constitute a criminal offence, of which I have over time highlighted, which I have over time found offensive and thus objectionable,” Nzeku wrote in a letter to the board.
On Friday, Telkom spokesman Pynee Chetty denied the board would grill September about corporate governance issues, saying the meeting had been scheduled to deal with a Telkom circular relating to the sale and unbundling of Telkom’s shares in Vodacom as well as its subsidiaries.
Said Chetty: “The board supports the CEO, and his fitness to lead is clearly indicated by his leadership of the company into a new strategic direction as well as the re-structuring of the company in alignment with the new strategic vision in order to enable Telkom to remain relevant and competitive.”
In relation to allegations that Mostert enjoyed the protection of the Telkom CEO, Chetty said a recent report by Telkom’s internal audit had cleared Mostert of any wrongdoing.
Board members lawyer Jackie Huntley, Public Investment Corporation CEO Brian Molefe and businesswoman Keitumetse Matthews would not comment on the dossier and Tuesday’s meeting.
They referred all questions to Telkom management. “We are not mandated to talk to the press,” said Huntley.
Board chairman Shirley Lue Arnold was unavailable for comment.
From the Nzeku memo to the Telkom board
–At an Exco meeting on July 14 2008, September instructed that the company had to meet financial targets in order for the bonus pay-out to happen. "The CEO gave instructions for the reduction of quality of services to achieve the financial targets."
–An meeting on October 30 resolved that services should be degraded to save costs so the company could meet its EBIDTDA target.
–It was a dereliction of duty on the part of the CEO to have disregarded a warning by the internal audit about a point-to-point microwave system. Approval and award of this tender would probably expose Telkom to financial and reputational risk.
–The permissive culture of short-term bias in the quality and nature of management decisions to meet short-term rewards.
–Consistently deteriorating quality of decision-making illustrated by the Procurement Review Council and Exco.
–Permissive culture of waste and poor performance, with material cost implication, on Black Economic Empowerment. Telkom BEE rating has deteriorated from top rank to a humiliatingly low position.
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