Another MTN boss suspended

Madzonga authorised 78 ‘questionable’ payments to lawyer

MOBILE operator MTN has suspended one of its top executives, Robert Madzonga, partly because he authorised R12.3-million in shady payments to a lawyer he knew.

This adds to MTN’s list of scandals over the past two years.

Last year, MTN was accused of paying hefty bribes in Iran to steal a cellular licence from rival Turkcell.

Last month, the group’s finance chief, Nazir Patel, resigned under a cloud after allegedly breaking procedures in how he diverted money out of Iran.

Madzonga’s suspension won’t help the company’s efforts to restore its reputation.

MTN declined to give specifics on Friday about Madzonga’s suspen- sion. “We are not in a position to divulge the nature of these internal matters, nor do we want to be drawn into any media speculation about what is essentially an internal matter,” said a spokesman.

When contacted, however, Madzonga confirmed that the charges he faced related to payments he authorised. Business Times was told that the charges have not been properly formulated, although there are two broad charges relating to Madzonga’s dealings with two law firms, Nozuko Nxusani Inc and Mashiane, Moodley and Monama Inc.

The Nozuko Nxusani matter dated back to an August 2011 report by PwC, which found that Madzonga signed off 78 questionable invoices worth close to R12.3-million. Madzonga said he “knew Ms Nxusani from university”, and had introduced her to MTN in 2001.

But PwC described some of the invoices as “unrealistic”, such as one for December 3 2010 when Nxusani billed MTN for working a 40-hour day, and another for September 30, when she billed for working a 37hour day. She was also paid at rates of up to R168 358 an hour — far higher than most lawyers charge.

PwC auditor Lionel van Tonder says that even though Madzonga approved the invoices for lawyer Nozuko Nxusani, he found “no evidence” that she ever did any work for MTN. “This was further strengthened by the various employees [who said] they have never dealt with Nozuko Nxusani,” said the PwC report.

On six occasions, Madzonga even approved Nxusani’s invoices before officially getting them: on November 6 2010, for example, he signed off on a payment of R383 603 to Nxusani, despite only being billed by her on November 29.

At the time, Madzonga was given a written warning for his role in the matter, which he did not challenge, according to a labour court ruling in May this year. However, it seems that new charges relating to this case were formulated against Madzonga after he lodged a grievance against a senior manager at MTN.

Madzonga served a summons on that senior manager on Friday.

Madzonga’s grievance relates to yet another scandal in which MTN has found itself embroiled in the last year — the ICT Indaba, which MTN sponsored for R15-million after a request by former communications minister Dina Pule. A forensic report prepared by law firm Werksmans for MTN showed that Pule’s boyfriend, Phosane Mngqibisa, was paid R6million for his work on the ICT Indaba, despite questions over what he did exactly to earn such a payment.

A source close to MTN said that the manager suggested Madzonga may have received a cut of the sponsorship cash paid by MTN. Business Times has, however, seen no evidence that Madzonga received any of the ICT Indaba money.

This new scandal comes in a week in which MTN reported that global subscriber numbers had topped 200 million for the first time, and pre-tax earnings rose 6.4% to R27.7-billion.