Telkom sues Blue Label for US$528m

Telkom is suing a former executive for US$6m as part of a US$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.

By Thabiso Mochiko

18 Jun 2013

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 US$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 US$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 US$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.

According to Telkom, Multi-Links was also claiming several million dollars for damages.

Telkom said the summons issued against the former executive in April was based on two claims.

The first was a claim for US$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 US$5m arising from the defendant's conduct while at Multi-Links‚ in "authorising a telecommunications operator to earmark and make a payment of US$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 case.

Source: I-Net Bridge

For more than two decades, I-Net Bridge has been one of South Africa’s preferred electronic providers of innovative solutions, data of the highest calibre, reliable platforms and excellent supporting systems. Our products include workstations, web applications and data feeds packaged with in-depth news and powerful analytical tools empowering clients to make meaningful decisions.

We pride ourselves on our wide variety of in-house skills, encompassing multiple platforms and applications. These skills enable us to not only function as a first class facility, but also design, implement and support all our client needs at a level that confirms I-Net Bridge a leader in its field.

Go to: http://www.inet.co.za