Business9.08.2016

MTN paid R6.36 million per day for “professional services”

By Staff Writer

MTN’s latest financial results revealed that the company spent R1.324 billion on a “range of professional services relating to the negotiations that led to a reduction of the Nigerian regulatory fine”.

The fine, which was a result of MTN not disconnecting unregistered SIM cards, was reduced by R34 billion.

“The board has exercised its judgement and approved the quantum of the professional fees incurred, taking into account global benchmarks and the value delivered culminating in the final settlement of the Nigerian fine,” said MTN.

MTN executive chairman Phuthuma Nhleko told the Sunday Times that “the eight-month negotiations required a wide range of legal advisers from South Africa, Nigeria, and the US”.

“You have to look at it in context and what it really means in terms of the outcomes,” said Nhleko.

One of the big hitters on MTN’s negotiations team was Eric Holder, the US attorney-general from 2009 to 2015.

Dominic Cull of Ellipsis Regulatory Solutions supported Nhleko’s view, stating that considering “the enormity of the fine and the conditions under which it was reduced, the amount spent on professional services was not unreasonable”.

Not everyone is convinced

In Business Day TV’s The Week That Was, hosts Simon Brown and Giulietta Talevi bemoaned the lack of clarity on what MTN spent R1.324 billion on, as the amount translated into R6.36 million per day.

“MTN has successfully redefined corporate legal budgets everywhere,” joked Brown, adding that they “get the gong this year for waffly, benign management mambo jumbo speak”.

“Professional services fees – your guess is as good as ours as to what the hell those entail,” said Brown.

Sasfin Securities’ David Shapiro joked that the payment is why you should work for a corporate.

“They can just spend money with impunity, they can do whatever they want to do and it does not hurt anybody [staff or shareholders],” he said.

“It does not hurt your salary. It does not hurt your bonus. Shareholders reckon this is the greatest thing – you have got to buy MTN now,” said Shapiro.

Shapiro highlighted that the lack of clarity from MTN, like how they paid the fees, related to corporate governance issues at the company.