Telkom sues South African President, wants probe halted

    President Cyril Ramaphosa - South African Leader

    One of the leading telcos in South Africa, Telkom has filed papers at the high court in Pretoria to have President Cyril Ramaphosa’s decision to order an investigation into alleged malfeasance at the telecommunications operator declared unconstitutional and invalid.

    In a founding affidavit lodged with the court on Monday and seen by TechCentral, Telkom’s acting group executive for legal services Chris Teurlinckx, argues that the president acting unlawfully in instructing the Special Investigating Unit (SIU) to probe allegations of malfeasance dating back as far as 2006.

    In January, the president ordered the SIU to investigate:

    • Maladministration in the affairs of Telkom in relation to the sale or disposal of Multi-Links Telecommunications, a company it acquired in Nigeria in 2006 that subsequently failed, as well as the sale of iWayAfrica and Africa Online Mauritius;
    • The procurement of telegraph services (telex and telegrams); and
    • Advisory services in respect of the broadband and mobile strategy of Telkom and payment made in a manner that was not fair, equitable, transparent or cost-effective, or contrary to applicable legislation or national treasury or Telkom rules.

    Telkom has now challenged Ramaphosa’s proclamation to the SIU in a two-part application at the high court:

    • Part A seeks to interdict the SIU from continuing with its investigation pending the finalisation of part B of the application.
    • Part B seeks to declare “unconstitutional, invalid, and of no force or effect” the proclamation issued by the president.

    In his founding affidavit, Teurlinckx argues that Telkom has established a “prima facie case that the SIU’s investigation is unlawful because the president acted unconstitutionally and unlawfully when he issued the proclamation to the SIU”. Telkom, he adds in the papers, will “suffer irreparable harm should the SIU commence its investigation pending” the review of part B of its application.

    Telkom argues that the president’s proclamation is “ultra vires”. Telkom is not a “state institution, does not use public money, or control assets or public property as contemplated in the SIU Act”. Also, the allegations referred by the president to the SIU “lack the particulars which are mandatory” under the act.

    The president, Telkom says in its court filing, acted “without grounds, irrationally, arbitrarily and for the 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”.

    Ramaphosa also failed to take into consideration that some of the allegations “have been fully investigated before, and there is plainly no rational purpose to a fresh investigation”.

    Moreover, Telkom argues, the schedule to the proclamation is “overly broad and lacks particularity”. For example, the clause calling for an investigation into its mobile strategy “constitutes a fishing expedition into how Telkom has run 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.”

    Teurlinckx argues in the court papers that the news of the president’s decision to order the investigation into Telkom has already caused “billions of rand in shareholder value” to be lost. “The consequences of being the subject of such a publicised investigation for a JSE-listed entity such as Telkom are profound… The president could not have been unaware of these consequences when he decided to instruct the SIU to investigate Telkom.”

    The president, he says, failed to invite representations from Telkom prior to signing the proclamation, which the company argues he was dutybound to do under the Promotion of Administrative Justice Act.

    “Specifically, the president had to be appraised of the structure of Telkom, the consequences of any investigation on the share price and business of Telkom, the fact that previous investigations had been conducted on the self-same issues which must now be considered afresh, and the true relationship between Telkom and the state. The president’s decision to launch an investigation without a rational basis for doing so when he could have been appraised of the true state of affairs is procedurally and substantively irrational.”

    In the founding affidavit, Teurlinckx takes aim at businessman Ed Scott, who he accuses of being the “catalyst” for the SIU’s recommendation to Ramaphosa that there be an investigation into Telkom.

    “[It is] the next chapter in Dr Scott’s futile war against Telkom,” he says. “The complaint to the president must be seen in light of the long history in these matters…

    “Except for the high court action instituted in 2009, which is still pending, the rest of the complaints by Phuthuma Networks (Scott’s company) and Dr Scott against Telkom have come to naught. They have been interrogated in countless fora and have been found to be without merit. This has not deterred Dr Scott.”

    Scott’s beef with Telkom relates to a contract for telegraph services dating back at least 15 years. Phuthuma Networks took Telkom to court and various regulatory bodies over a disputed tender, published in November 2007, for the outsourcing of Telkom’s telex services, including support for ship-to-shore telex. This tender was cancelled in June 2009, Telkom claimed at the time, after it discovered the tendering process was a “mess”.

    But Scott claimed that another company that bid for the tender, Network Telex, had begun providing telex services for Telkom without the tender having been awarded. Scott claimed this was in breach of the law, as the service had to be provided by Telkom or outsourced to a third-party provider through a formal tendering process.

    More details about Ramaphosa’s proclamation to the SIU and the background to the specific areas he wants probed are available in this TechCentral article from 25 January 2022.


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