Telkom files $528m suit over Multi-Links

TELKOM is suing a former executive for $6m as part of a $528.07m lawsuit for damages arising out of the "super dealer agreement" between Blue Label subsidiary African Prepaid Services and Telkom’s former Nigerian subsidiary, Multi-Links.

Telkom has filed suit against Blue Label Telecoms, the former executive and four other respondents,
Blue Label was contracted to distribute Multi-Links’ products in Nigeria. Telkom cancelled the contract to reduce costs in its struggling Multi-Links business, which it bought for $410m in 2007.

By 2011 Telkom had lost R10bn due to the unit’s the weak performance by Multi-Links, and it sold the unit that year to Helios Towers Africa for $10m.

The damages claim is based on what Telkom says was a breach of a duty of care and misrepresentations made by Blue Label at the time the agreement was concluded with Multi-Links in 2008.

The $6m claim against the former senior executive of Telkom was based on "a breach of his fiduciary duty owed to Telkom and Multi-Links", it said.

Multi-Links was also claiming several million dollars for damages suffered, Telkom said.
Telkom said the summons issued against the former executive in April was based on two claims.

The first was a claim for $1m, which Telkom was "compelled to pay to a third party as a consequence of the defendant acting outside his authority by signing a financial guarantee binding Telkom jointly and severally for the obligations of Multi-Links".

The second was for $5m arising from the defendant’s conduct while at Multi-Links, in "authorising a telecommunications operator to earmark and make a payment of $5m to a third party, instead of Telkom".

The payment was due to Telkom under a traffic termination agreement, Telkom said.

Telkom said the former executive was defending the matter.
- BDLIVE