Telkom announced on 24 October 2013 that its CFO Jacques Schindehutte was suspended pending a disciplinary process. The company did not provide a reason for his suspension, which sparked many rumours as to what may be behind the suspension.
Many media reports linked Schindehutte’s R6 million Telkom share trade three weeks ago to his suspension.
Bloomberg revealed that the trade in Telkom stock by Schindehutte has been referred to South Africa’s Financial Services Board’s (FSB) Department of Market Abuse by the Johannesburg Stock Exchange.
However, Telkom CEO Sipho Maseko told analysts in a conference call yesterday that the suspension is not linked to Schindehutte’s share trade.
Telkom has confirmed this in a press statement, saying that “there is no connection whatsoever between the suspension of Schindehutte and the Insider Trading enquiry instituted by the JSE in relation to Mr Schindehutte’s trade in Telkom shares on 30 September 2013”.
Telkom further said that the suspension has no connection with and will not have an impact on the financial performance of the company.
“The suspension relates to allegations of personal misconduct levelled against Mr Schindehutte and which came to the Board’s attention through a whistleblower,” Telkom said.
The Board initiated a process which included an investigation, using the services of an external law firm. As part of the process, Mr Schindehutte was given an opportunity to respond to the allegations.
The findings of the external law firm as well as its recommendations were presented to the Board and these were carefully considered. The decision to suspend Mr Schindehutte was taken after obtaining legal advice.
Mr Schindehutte was served with a letter of suspension in which Telkom clearly sets out the allegations levelled against him and to which he is required to respond.
The disciplinary hearing will proceed as soon as possible. Stakeholders will be informed of the outcome of the disciplinary hearing once the board has had time to consider the findings.
The Board re-iterates its commitment to a fair process, conducted without favour or prejudice.
With the most prominent theory as to why Schindehutte was suspended now dismissed, speculation has emerged as to other potential reasons behind Schindehutte’s suspension.
One of the theories is that it may be related to a staff deal around a post-retirement medical aid scheme involving Liberty Life.
There is also speculation that Schindehutte’s excessive use of external consultants – instead of listening to internal staff advice – did not sit well with some people inside Telkom.