Sponsorship of cycle club puts spoke in MTN’s wheels
MTN will “extend” a tender awarded to a company to manage its call centres after the cellular giant picked up a potential conflict of interest involving its South African boss, Zunaid Bulbulia, and company executive Eddie Moyce.
The issue revolves around a company called Inter-Active Technologies, which is headquartered down the road from MTN’s head office in Roodepoort on the West Rand and which scored a contract to manage MTN’s call centre.
MTN’s call centre is headed by cycling enthusiast Moyce, who also chairs the New Horizons Cycling Club, where Bulbulia is a member.
However, in February, Inter-Active began sponsoring the club’s professional cycling team, one of seven on the local cycling circuit.
In light of the fact that Inter-Active has a contract to manage MTN’s call centre, the sponsorship of the telecoms executives’ cycling club could have created a conflict of interest.
MTN’s head of corporate affairs, Paul Norman, said the company “picked this up" thanks to new governance systems it had implemented.
Norman said MTN’s tender committee, which was reviewing the call centre contract, then decided to "look wider ... and extend the process".
But Norman stressed that “there is no suspicion” over any of the previous contracts awarded, or over any of MTN’s officials.
Inter-Active has supplied MTN since 2005, and started sponsoring the cycling club in 2008.
Brendan van Staaden, Inter-Active Technologies CEO, said his company was “extremely proud" of sponsoring the cycling club.
“This initiative has absolutely nothing to do with furthering or enhancing relationships with any staff members at MTN,” he said.
Van Staaden said over the years, Inter-Active’s business with MTN had declined and it now only ran one contact centre for the operator.
Van Staaden said he was not aware of the concerns before Business Times contacted him. However, he did not believe the sponsorship of the cycling club posed a problem.
Geoff Everingham, one of the authors of the King governance code, said the whole thing sounded innocent, especially as the cycling club was a not-for-profit organisation and there was no evident sign of personal benefit for the MTN executives.
“If Inter-Active is sponsoring the cycling club, and has some relationship with MTN, I think that is fine — provided the MTN relationship is at arm’s length and MTN is not passing on some form of benefit to Interactive . . . for its involvement in sponsoring the cycling club,” he said.
But Institute of Directors’ Ansie Ramalho said the sponsorship could create the perception that Inter-Active wanted to make sure the re- lationship with MTN was “welloiled”.
“Even with fairly innocent intentions, it is usually better to separate business and personal relationships,” she said.
MTN has endured a raft of scandals in recent years, which has led to a number of people being suspended or axed.
Robert Madzonga, its head of sponsorships in South Africa, has been suspended since last August to allow for investigations into suspicious payments to law firms and his alleged involvement in the sponsorship of the ICT Indaba that sank former communications minister Dina Pule.
His suspension came less than a month after MTN announced its chief financial officer, Nazir Patel, had resigned under a cloud over how money was diverted out of the operator’s business in Iran.
The group’s retail general manager Eleanor Potter also left following an investigation into tender irregularities of R120-million.
During the Potter investigation another senior member, marketing GM Mike Farion, was under scrutiny for allegedly extorting TV sets, home theatres and play stations from Samsung.
This capped a torrid few years for the company, highlighted by a $4.2billion lawsuit lodged by rival Turkcell last year in which it claimed MTN paid bribes to win a mobile licence in Iran.