Corporate governance report
Culture, ethics and values
The board leads the group ethically and effectively by providing guidance on ethical behaviour and ethical principles.
The "tone at the top" emanates from the premise that ethics is what you do when no-one is looking, and that ethical behaviour is the cornerstone of a well-governed entity. The board leads by example, and the right culture and ethical conduct cascade throughout the group.
Several processes and policies encourage and foster behaviours that support our culture, ethics and values which, in turn, support the purpose and vision of the group. Through these, Telkom holds its directors, employees and other stakeholders to account.
Telkom Business Code of Ethics (BCoE)
The Telkom BCoE requires the board and all employees to promote ethical behaviour, and ensures that everyone is clear on the expectation of individual conduct as well as interaction with fellow employees, stakeholders and the public in general. It is available online at
Directors' appointment letters obligate them to adhere to the BCoE. Employees are required to confirm this commitment annually by completing an electronic annual declaration which is captured on the SAP system.
Electronic compliance to the Telkom BCoE as captured on our SAP system, was 93 percent (FY2017: 95 percent). Furthermore, the ethics office manages ethics, including monthly induction sessions with new employees. This is aimed at ensuring every new employee is aware of the ethical culture and values that he/she must subscribe to as a Telkom employee. The ethics office provides guidance and advice on ethical dilemmas telephonically or through the ethics mailbox. Guidance around declarations for work outside scope of duties and conflict of interests has been provided.
To support the Telkom BCoE, the following supplementary policies guide employees on how to conduct themselves:
- Conflict of interest policy
- Gift and entertainment policy
- Share dealing policy
- Prevention of fraud and corruption policy
- Whistle-blowing policy
- Prohibition against sexual harassment policy
- Prohibition against discrimination policy
The ethics office reviews compliance with the Telkom BCoE and supplementary policies across the group as part of the annual policy compliance reviews. Management is held accountable for taking the necessary corrective actions.
The key focus area for FY2018 was a group ethics effectiveness review to identify any areas of improvement. The review included:
- codes of ethics and supplementary policies;
- group processes for compliance thereto;
- if an ethics function exists in each division; and
- the existence of a whistle-blowing line to report unethical behaviour.
The outcome of the review indicated that all divisions had codes of ethics, compliance processes, an ethics function or office as well as a whistle-blowing line.
Areas for improvement identified were electronic systems for compliance to be implemented in some subsidiaries and improvement of the ethics function. Going forward, we will focus on aligning ethics management and policies within the group and improving on areas where gaps were identified in the assessment.
The ethics office will continue to improve on the communication and enforcement of the internal declaration process and system for employees involved in evaluating tenders. It will also continue to focus on creating awareness through articles on ethics and ethical principles.
Another planned initiative is to re-establish the social, ethics and sustainability council. The structure was a subcommittee of the exco that dealt with ethical, governance, human resource and sustainability matters. The council was inactive due to the changes in the operating model.
Policies to guide employees
|Conflict of interest policy
|The conflict of interest policy applies to directors and employees. Directors and employees should ensure that real or perceived conflicts are adequately disclosed and managed. The interests of the company should take precedence over personal or professional interests, and our directors and employees are required to declare any conflict of interest timeously.
We have arrangements to manage conflicts of interest. Every year, board members submit a general declaration of interests. At all board, committee and exco meetings of the company and its divisions, members are requested to declare any interests that they may have on any items tabled for discussion to manage such conflicts accordingly. Employees are required to confirm whether or not they have any interests to declare. This is captured electronically on the system and records of such declarations kept.
The management for disclosures in respect of conflict of interests is extended to suppliers. We have a process to establish or monitor associations between suppliers and employees. This process is overseen by the Telkom risk management and forensic departments.
|Gift and entertainment policy
|Telkom recognises that employees may be required to accept and/or offer gifts and business courtesies as a means of gratitude or cultural diplomacy. The gift and entertainment policy provides the principles to avoid any impropriety in the acceptance, receipt and/or offering of business courtesies. Every received gift must be electronically declared on the system. If the value is up to R200 the line manager is notified and no approval is required, gifts above R200 require the employee's line manager to respond. The policy is being reviewed and will be submitted to the social and ethics committee for consideration.
|Share dealing policy
|Our share dealing policy is informed mainly by the Financial Markets Act and the JSE Listings Requirements. Every director and employee is obliged to adhere to this policy. Trading company securities is forbidden during closed and prohibited periods, or where one is in possession of price-sensitive information. Regardless of whether or not the company is in a closed or prohibited period, all directors, executive employees and certain employees in the finance function require clearance from the group company secretary's office to deal in securities.
The board agreed that the closed period for all directors and exco members starts five days prior to the actual closed period start date and ends five days after the end of such period.
The group company secretary's office notifies the company of closed and prohibited periods to prevent any pleas of ignorance.
|Prevention of fraud and corruption policy
|Telkom has a zero-tolerance policy regarding unethical behaviour, fraud and/or corrupt activities, and every employee has the duty to disclose any fraudulent or unethical conduct that they become aware of.
|Sexual harassment and discrimination policy
|It aims to ensure a productive and pleasant working environment characterised by mutual respect. Sexual harassment or discrimination is not tolerated, condoned, or allowed at any level.
|Telkom, through its procurement department and as part of monitoring conflict of interests, manages supplier risk vetting during on-boarding (the selection and purchasing process), as well as with supplier risk monitoring during the supply chain operations process to ensure all business activities with suppliers are based on ethical business practices.
Combating fraud and corruption
Fraud risk assessments are performed for each business unit and cover all types of fraud risks and violations of the Telkom BCoE. Management assists with the relevant controls to mitigate the risks. An ethics survey is conducted every two years; the previous survey was done in 2016, and the outcomes informed the development of further interventions. This is supported by Telkom's prevention of fraud and corruption policy, whistle-blowing policy and our independent crime hotline – Telkom Crime Hotline.
Telkom Crime Hotline
Telkom Crime Hotline is independently managed and available 24 hours a day. Callers may remain anonymous, and receive reference numbers so their incidents can be followed up on. Independent, fair and objective investigations are conducted on all reported and detected cases of fraud, theft, corruption and unethical conduct.
All our employees and contractors are required to report any suspected breaches of the Telkom BCoE, or fraudulent and corrupt activities. The hotline and internal reporting received 1 463 incidents and investigated 230 incidents. 70 percent of investigated complaints/reports were found to be without merit.
The majority of incidents relate to cable theft, subscription fraud, violation of the Telkom BCoE and supplementary policies including abuse of company resources, fraud and theft. These were dealt with according to our disciplinary policy and the Telkom BCoE. The actions ranged from written warnings to dismissal and arrests in cases of cable theft.
We have various initiatives to raise awareness of our whistle-blowing line and address issues as they arise.
BCX's zero-tolerance approach to
During January 2018, BCX launched a campaign to raise awareness of the anonymous tip-off mechanism (whistle-blowing) administered by an independent third party. It is a confidential service whereby anyone within the BCX value chain (employees, customers and suppliers) is able to report workplace dishonesty, unethical and inappropriate behaviour. As the tip-off is independently managed, it ensures whistle-blower confidentiality. All whistle-blowers remain anonymous unless they specifically request otherwise.
In FY2018 the BCX CEO addressed the burning issue of "the truth about corporate governance" through a group broadcast. The communication cited recent corporate scandals, their adverse impact on the economy and the market and public confidence in business. It set a clear tone of zero tolerance for unethical practices from the top.