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Telkom managers in fraud investigation

Johannesburg - Telecommunications group Telkom says it is investigating possible fraud committed by senior managers at the company.

The Mail & Guardian newspaper reported on Friday that three senior managers at Telkom were thought to have colluded with security contractors which provided systems to prevent the theft of copper cables. Such theft is an ongoing occurrence which analysts say is costing the company millions every month.

Anton Klopper, group executive for legal services at Telkom, told Fin24.com that further details could not be provided until the ongoing investigation was completed.

"As Telkom viewed the allegations contained in the memorandum in a serious light, the company immediately conducted an internal audit which commenced in December 2009, and management is currently implementing the recommendations of this report," he said.

"This includes the appointment of an independent forensic company to conduct an investigation. The independent forensic investigation, that commenced in March this year, is currently under way," said Klopper.

The report recommended specific investigations of three Telkom managers.

According to the Mail & Guardian, the report apparently describes the managers as some of the company's "most trusted and senior officials".

Said Klopper: "Telkom will be informed by the outcome of the independent foreign investigation if any action should be taken against any of the individuals mentioned. If the allegations are indeed proved to be true, appropriate action will be taken."

The report apparently questioned why payments to security companies that monitor Telkom's cable network increased by up to 125% from 2008 to 2009. The Mail & Guardian reported that Telkom now pays R18m a month to these security companies.

The article focuses on two security companies in particular - Royal Security and Radio Surveillance Security Services (RSSS).

The latter apparently charges Telkom for 593 alarm systems for which there is reportedly no supporting documentation. RSSS also apparently receives R4m per month for additional systems which are allegedly listed as redundant, or "not even at places where they are supposed to be".

Underhanded deals with security providers aside, copper cable theft is a serious issue facing the fixed-line operator.

Fin24.com readers have reported ongoing theft in particular areas where Telkom apparently can not keep up with thieves.

A Centurion businessman told Fin24.com that his ADSL line had been cut off following cable theft and that Telkom had informed him that it would not be replacing the infrastructure.

"They said that my ADSL subscription was being discontinued because of ongoing [copper] wire theft - and that was that," he said.

"This leaves me without connectivity for my small business, although Telkom did say that they would contact me about a wireless solution. We are currently working with 3G connections," he said.

Fibre-optic cables are fast replacing copper for domestic connectivity and analysts say that there is no market for stolen fibre. But Telkom must maintain copper cables in areas that have not been upgraded for fibre-optics yet.

- Fin24.com

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