MTN Group and Nokia could be fined up to 10 per cent of their annual turnover if found to have breached South African laws covering ownership structures.
The companies are being investigated by the Broad-Based Black Economic Empowerment (B-BBEE) Commission, which works for the “effective participation of black people in the economy”. The commission is probing whether MTN and Nokia violated an act: “relating to the B-BBEE ownership structures and non-compliance with the Codes of Good Practice,” it said in a statement.
In the event “there are adverse findings against them” MTN and Nokia would have 30 days to respond “before the B-BBEE Commission makes the findings final.”
As far as MTN Group is concerned, the commission wants to: “determine whether the MTN Zakhele and the MTN Zakhele Futhi B-BBEE schemes meet the requirements for black ownership elements and comply with the B-BBEE Act.”
MTN launched its Zakhele Futhi black empowerment share scheme in South Africa in September 2016, offering qualifying members of the South African public the opportunity to apply for up to 123,416,819 shares in the investment vehicle.
The programme was designed to replace MTN Zakhele, a similar investment vehicle meant to be unwound in November 2016.
In the case of Nokia, the commission said it wants to: “determine whether the B-BBEE ownership transaction involving the employee trust and Sekunjalo Investment Limited through specific entities (resulting in 26 per cent black ownership), and the subsequent change in black ownership (resulting in 31.28 per cent black ownership) by Sekunjalo Investment Limited, comply with the B-BBEE Act”.
The commission is investigating a total of 17 companies and said “it is allowed to initiate an investigation on its own initiative and this often happens as a result of a tip-off.”
If found to have violated the act, the companies could be fined, while individuals involved could face imprisonment for up to ten years.
Companies may also be excluded from doing business with the government for up to ten years, and the contracts they have with any state-owned entity or government department can be cancelled.
The B-BBEE Commission is also allowed to consider alternative dispute resolution, though it did not say what this could be.