President Cyril Ramaphosa wrong to authorise SIU to probe us – Telkom

Telecoms firm denies it's state owned

President Cyril Ramaphosa
President Cyril Ramaphosa
Image: Esa Alexander

President Cyril Ramaphosa acted irrationally, unconstitutionally, arbitrarily and unlawfully when he called for a probe into JSE-listed Telkom.

The fixed line and mobile communication firm made these allegations in court papers filed this week at the North Gauteng High Court in Pretoria. Telkom is opposing the president's proclamation authorising the Special Investigating Unit (SIU) to probe it.

The company seeks an interim relief in a court battle that also involves the SIU, minister of communications and digital technologies Khumbudzo Ntshavheni and businessman Dr Edward George Scott as respondents.

Telkom says the proclamation was issued after Scott, the director of Phuthuma Networks, lodged complaints against Telkom in 2014.

Scott had alleged that Telkom appointed Bain & Co to provide services in the absence of proper procurement processes. Scott also accused Telkom of squandering billions of rands with the purchase and sale of Multi-Links Telecommunications Limited, among other things.

The government owns a 40.5% stake in Telkom and the company has described the state as an ordinary shareholder and not a majority one.

The company's acting group executive of legal services, Christiaan Teurlinckx, said in court papers filed on Monday that it cannot be investigated by the SIU because Telkom is not a state-owned institution. 

"The president can only instruct the SIU, and may only refer a matter to the SIU, if he deems it necessary to do so on the grounds of an allegation contemplated in section 2(2) of the SIU Act." 

"Telkom is not a state institution, it does not use public money or control state assets or public property – as contemplated in the SIU Act," said Teurlinckx.

"Telkom further submits that the president acted without grounds, irrationally, arbitrarily and for purposes not authorised by the SIU Act by authorising an investigation into vague allegations, formulated and cast in the widest possible terms, covering a period of some 15 years. He also failed to take into consideration that some of these allegations have been fully investigated before, and there is plainly no rational purpose to a fresh investigation."

Teurlinckx further said the proclamation Ramaphosa issued constituted a fishing expedition into how Telkom ran its mobile broadband business for the past 15 years.

"This is not the purpose for which the power to authorise an investigation is to be used. Given the fact that the statute does not appear to set limits to the authority of the president to instruct an investigation, it is necessary to read the section narrowly to avoid abuses and to ensure that the president acts rationally and within the bounds of the constitution," he said.

Telkom said Ramaphosa's public announcement of the investigation has wiped out significant value for the company.

"Billions of rand in shareholder value has been lost. The president could not have been unaware of these consequences when he decided to instruct the SIU to investigate Telkom.

"Under the Paja [Promotion of Administrative Justice Act] the president was bound to invite representation from Telkom and to consider them. He failed to do so. Even if he was not bound to invite representation in terms of Paja, the president was bound to act in a procedurally rational manner in terms of ... the constitution."

Teurlinckx said Telkom was referred to as an state-owned company in its name purely as a function to comply with the provision of the Companies Act. "But it is not a state-owned company in the material sense. He also denied that Telkom was a public entity.

He said the SIU probe would result in key Telkom personnel being redirected away from their important roles to attend to the investigation.

"The SIU will also access documents and files of Telkom which are not publicly available in circumstance where the validity of this access is being challenged by Telkom. Telkom would be required to pay the SIU approximately R7.2m in respect of the investigation, which it cannot recover," he said.

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