Telkom has denied that KT Corp had to pay “huge kickbacks” to its executives in connection with a proposed transaction between the two firms.
The Korea Times reported that senior officials at Telkom demanded “huge kickbacks” or bribes from KT Corp.
Quoting its sources, the paper said the rejection of KT’s offer underscored the apparent determination of the South African government not to cede control of a firm that many in the ruling African National Congress view as an arm of the government.
“As far as I know, senior officials at Telkom demanded huge kickbacks or bribes from KT. That’s probably the reason why the South African government cancelled the deal,” a source told The Korea Times via e-mail.
“KT wasn’t prepared to keep on paying kickbacks,” the source was quoted as saying.
Chief financial officer, Kim Beom-joon told the Korea Times that the approach for Telkom didn’t have a simple direct investment scheme. He stressed KT still had an interest in a partnership with the South African company as it was seeking better penetration in Africa’s corporate-related markets.
“A senior official from the Korea Communications Commission (KCC) asked the South African government to give the green-light to KT to acquire the stake in a meeting with the country’s telecommunications minister,” the newspaper said.
“KT said it has no plans to raise its offer but left the door open to restart acquisition talks if ‘several problems’ are solved,” the paper wrote.
The article seems to have been removed from the Korea Times website, but BusinessTech has taken a screenshot of the article: KT’s bid to buy South African fixed line operator hits a snag
KT statement published on Korea Times website
Korea IT Times published a “Draft Statement by KT Corporation” on its website on Friday 13 July, following the report regarding the alleged Telkom kickbacks denying the allegations:
“KT wishes to respond to the serious and unfounded allegations published in the Korea Times on 11 July in regards to alleged kickbacks paid to Telkom executives in South Africa in connection with the proposed transaction between Telkom and KT. No Telkom executive has ever asked for or been offered a kick-back or bribe by KT.
“KT would not have pursued a transaction if there was any hint of corruption whatsoever. KT has the utmost respect for the senior executives of Telkom. KT is eagerly awaiting further developments following on from the South African government’s cabinet decision of 30 May where it was stated that the strategic options for Telkom would be further explored.
KT remains convinced that the transaction will be attractive to all Telkom’s shareholders and employees as well as the SA government, SA consumers and public and remains ready to engage further with the SA government on this matter.”
Telkom also denied the allegations. “Both Korea Telecoms and Telkom are listed, public companies that adhere to the highest standards of corporate governance and financial control. The assertions by this source are not credible, reckless, regrettable and defamatory,” Telkom told BusinessTech.
Also on Friday 13 July, Telkom withdrew its cautionary announcement, effectively ending any hope of a deal with KT Corp.
On 8 May 2012, Telkom announced that it had reached an in-principle agreement with KT regarding the terms of a venture that would see KT acquiring a strategic equity shareholding of 20% in Telkom by way of a specific issue of shares for cash at a cut price of R25.60 per new Telkom ordinary share.
However, the group advised shareholders on Friday (1 June) that the potential strategic venture with Korea Telecom Corporation would not go ahead.
This article was first published on BusinessTech