| Tue 20 Sep 2005, 11:27 | | Telkom may feel pain from mysterious suspensions |
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Telkom may feel pain from mysterious suspensions
September 20, 2005
By RenTe Bonorchis
The senior suspensions at Telkom yesterday seemed to catch everyone by surprise - shareholders, analysts, fund managers, regulators and journalists.
The news was odd because the three people suspended hold very varied positions, ranging from marketing and sales to human resources to investor relations. But the prevailing theory was that all three had opposed the recent senior executive reshuffle.
Word was that the three were taking legal advice, which made one wonder if they weren`t also approaching shareholders to garner support and maybe bring the reshuffle to a shareholder vote. As yet, none of the shareholders has confirmed having any such discussions.
One comment was that the suspensions were related to the incoming chief executive`s wish to make a point about loyalty to him and his board. If this is true it seems a particularly harsh step.
For one thing, all three suspended managers have impeccable reputations. Even if they are eventually vindicated, the stigma of this suspension will always haunt them, which seems unfair if all they are doing is trying to stand up and be heard about executive changes that they don`t like.
It doesn`t say much for Telkom`s corporate governance if this is the case. Boards these days are meant to have dissenters and people who think differently.
Which brings us to the other problem with yesterday`s mysterious announcement. It doesn`t do a large listed company any good to suspend three of its top managers without giving the reasons. Who will take these people`s places while the investigations carry on?
And will the share price falter because uncertainty and the lack of top skills will spook investors?
The share turned down yesterday morning and stayed down despite the fact that its peer MTN regained lost ground in the afternoon.
There is already the impression in the market that Telkom`s prices are far too high and that its service levels are slipping. This internal battle will further harm the company`s reputation. A speedy resolution and transparency is going to be vital if Telkom wants to do the best thing for its investors. RB
Banking The now-you-see-it, now-you-don`t report on competition in South African banking, which was researched and produced at the request of the national treasury and the Reserve Bank, is once again visible to the public.
After spending a very brief period on the website of the SA Financial Sector Forum back in March last year, it was rather hastily removed.
Since then there has been no explanation as to who made it disappear or why it disappeared. But now it`s back. And the website address is finforum.co.za. Last month Business Report carried three feature articles on some of the more topical aspects of this excellent and comprehensive report.
It was subsequent to this that the full report was rereleased.
The comprehensive report focuses on competition in banking in general and retail banking in particular. It is an absolute must-read for those interested in the banking sector or even for those among us who are a little perplexed by the cost and conduct of banking services in this country.
The report describes what goes on in banking in South Africa but, rather wisely, makes no attempt to explain why the banking system has been allowed to develop in the manner that it has.
The report should be read in the context of the current investigation into the national payment system, which has been initiated by the competition commission. The national payment system is a central part of the retail banking process. In addition, the report should be read in the context of the National Credit Bill, which was recently before parliament. AC
Harmony It seems that any last opportunities Harmony`s and Gold Fields` lawyers may have had to wring any more cash out of Harmony`s ill-fated hostile bid for Gold Fields, which fizzled spectacularly on May 20, may have finally come to an end.
Harmony`s threat to sue Gold Fields` financial director, Nick Holland, and its spokesperson, Willie Jacobsz, over statements they made about Harmony`s reserves in the second week of May may have been just that - a threat.
Jacobsz said yesterday that he had heard nothing from Harmony about suing him since the May 9 letter from Cliffe Dekker arrived demanding that he and Holland retract their statements.
Holland and Jacobsz told the media that, as suspected, Harmony had overstated the number of ounces it could mine economically by 100 percent. And this `misrepresentation` had prejudiced Gold Fields` shareholders` ability to evaluate Harmony`s offer.
Harmony branded Gold Fields` analysis of its reserves statement as `scurrilous and vexatious`.
Bernard Swanepoel, Harmony`s chief executive, said yesterday that the main motivation for the legal threat had been to get Gold Fields to shut up. He said since it had shut up he suspected nothing further was likely to happen.
Harmony spent an average of R7.6 million a month on legal fees during its seven-month-long bid, so the lawyers didn`t do too badly.
Just what Gold Fields` lawyers earned is anyone`s guess, but given that the total defence costs were 60 percent higher than Harmony`s, clocking in at a breathtaking R316 million, it`s likely that Gold Fields` legal team cost it a whole lot more. NS
Offshore oil and gas South Africa is positioning itself to take advantage of this growing sector, but let`s hope the government doesn`t get bogged down by weighty reports and strings of consultants.
In 2003 the Economist Intelligence Unit said: `The energy sector in South Africa offers the single most lucrative economic opportunities of any sector.` The department has also identified this as a strategic industry needing urgent attention.
A committee, with representatives from the Western Cape government, the National Ports Authority and the private sector, was set up in 2003.
It has compiled a report, which is being analysed by the government, which plans to appoint consultants to further investigate the potential the sector holds and establish the infrastructure needed to service the industry.
It`s commendable to want to establish all the facts and determine exactly where the opportunities lie. But taking too long can mean missing the boat. SE
