A Presidential Proclamation gave the Special Investigation Unit (SIU) the ability to look into questionable arrangements made by Telkom, but the Pretoria High Court reversed that decision.
Telkom is a company in which the government owns a share; thus, in January 2022, President Cyril Ramaphosa issued a proclamation authorising the Special Investigative Unit (SIU) to look into possible wrongdoing within the company.
According to Ramaphosa, Telkom’s sale of its failed Nigerian venture Multilinks in 2011 and its sale of iWayAfrica and Africa Online Mauritius in 2013 should be investigated by the Special Investigations Unit (SIU).
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According to comments made by the late Minister of Communications Roy Padayachee in July 2011, Telkom lost R7 billion as a result of its March 2007 acquisition of Multi-Links.
In July of last year, Telkom took the matter to the Pretoria High Court, arguing that the investigation was unlawful and should be nullified.
Despite the fact that “SOC,” an acronym for the state-owned corporation, appears in Telkom SA SOC Limited’s full legal name, the company has contended that the President exceeded his authority because Telkom is not a state entity under the SIU Act. Despite the fact that “SOC” appears in Telkom’s legal name, this is the case.
A year later, the High Court in Pretoria declared the proclamation null and void with no force or effect because it was issued in violation of the law. In addition, it gave Telkom responsibility for the expenses. Telkom has indicated that it has conducted the necessary investigations into the issues outlined in the proclamation and has taken the necessary corrective steps, which may include filing relevant legal procedures.
According to Telkom, it has always been dedicated to following good corporate governance practices, and that dedication will not waver anytime soon.
Telkom is in a bind
The timing of the news is particularly difficult for the corporation because it coincides with the release of the fiscal year’s financial results, which left much to be desired.
The consolidated income statement showed that the company’s profits fell from R2.6 billion in FY22 to R346 million in FY23. This is a drop of 67.6 percent.
However, the company also noted that some of the reported financials were pro forma because they relied on estimates of the company’s future performance and other fictitious data.
It was noted that R13.071 billion in impairment impact and R3.47 billion in tax impact were included in the FY23 pro forma adjustments. This prevented further expenses of R1.065 billion, a tax impact of R288 million, and a write-up of invested capital of R10.479 billion for BCX and Gyro.