The Board approved the annual ethics leadership and employee commitment statement for FY2023, focusing on the commitment to gender and age diversity. The Chairperson of the Board and the GCEO signed the statement on behalf of the Board and management to set the tone from the top and demonstrate ethical behaviour and leadership. Refer to the annual ethics pledges available online.
The Group Company Secretariat developed a joint ethics and governance strategy to further embed the relationship between ethics and governance to our stakeholders, which the Board approved. This is being implemented within the Group, and enhancements in the ethics environment will be visible in FY2024.
The Group Ethics Office focused on continuous ethics awareness initiatives, embedding a Group-wide ethical culture. We were continually promoting initiatives supporting the ethical behaviour of employees and suppliers with the support of the business unit/subsidiary Ethics Champions. We sent Group-wide communication to employees regarding the portions in the Group Ethics Handbook that relate to conflict of interest declarations and the receiving of gifts and entertainment. The respective business unit/ subsidiary Executive Committees received training around declarations of conflict of interest and share dealing.
The most notable activity was the formal designation of Ethics Champions by the various CEOs. The designation was pursued to boost ethics capacity throughout the Group. These Ethics Champions will be responsible for ethics support at the Group, business unit/subsidiary and employee levels.
The Group Ethics Office arranged training by an independent service provider to onboard our Ethics Champions in March 2023 to ensure that the roles and responsibilities are clearly understood, and there is uniformity in executing ethics‑related activities within the Group.
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Group Ethics Handbook | This document continues to guide employees to promote and encourage ethical behaviour and decision-making, enabling Telkom to live its values and standards. We will review the Group Ethics Handbook to factor in amendments to the share dealing policy and the implementation of standards regarding whistle-blowingrelated activities in FY2024. A multi-disciplinary team is developing a proposed framework to consider the new ISO 37002 standards for whistle-blowers to be protected financially, legally and reputationally. |
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Annual ethics compliance | The annual ethics compliance statistics demonstrated commitment to ethical conduct and doing what is right, especially when no one is watching. We achieved 99.36% compliance for FY2023, with the declaration of interest compliance significantly improving to 94% (FY2022: 80%). There have been and will be a range of interventions and enhancements implemented to ensure that we achieve 100% compliance. | |
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International Fraud Awareness Week | The Group Ethics Office participated in the annual International Fraud Awareness Week (13 – 19 November 2022), with the main theme of reputation. As a follow-up, various messages related to conflict of interests and related topics were published through TelkomOne, an internal employee publication. | |
Various activities were held during International Fraud Awareness Week, including:
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Process for dealing with ethical and reputational issues | We developed a process for dealing with ethical and reputational matters where, in certain instances, members of the public, employees or certain entities may report alleged misconduct by Telkom or its suppliers through the ethics reporting protocol. We amended the whistle-blowing section of the Group Ethics Handbook to deal with the matter. | |
| Over and above these activities, the Group Ethics Office continued to provide advisory and information-based activities to the Group to deal with ethical dilemmas that may emerge in the environment and ensure that management implements ethically sound resolutions to the encountered dilemmas. | |||
Telkom continuously reviews its share dealing policy to ensure alignment with regulatory changes or any other best practice principle. The policy is included in the Group Ethics Handbook but remains standalone due to its critical role in promoting transparent disclosure requirements. This policy is informed mainly by the Financial Markets Act, 19 of 2012 and the JSE Listings Requirements.
All Directors and Group Prescribed Officers must obtain clearance from the Dealing Committee before trading. A SENS announcement must be released thereafter according to the provisions of the JSE Listings Requirements.
The share dealing policy was revised in FY2023 to cater for the following matters:
Directors and employees must adhere to the policy’s provisions. We do not permit trading in the Company’s securities during prohibited periods, which comprise price-sensitive periods and closed periods (financial and cautionary closed periods). The respective closed periods are communicated to affected Directors, persons and employees under the share dealing policy.
In FY2023, we invited the forensic practitioners’ professional body, the Association of Certified Fraud Examiners South African Chapter, to conduct an external quality assurance review of the Telkom Group Forensics (TGF) unit. The evaluation of TGF indicated that it generally complies with some of the evaluation measures like independence, objectivity, proficiency, due professional care, reporting to Senior Management and the Board, utilisation of risk-based procedures, incident response, evidence control, report quality and others.
TGF executed the fraud risk management activities in terms of the ERM Strategy plan 2022–2025 and the fraud risk management plan, which centres on fraud prevention and detection. This approach is supported by the ACFE 2022 Report to the Nation (ACFE 2022:5), which found that organisations with anti-fraud controls have less fraud monetary losses, and the fraud is detected much quicker.
Fraud detection
We conducted the whistle-blowing improvement review based on the ISO 37002:2021 Whistle-blowing management systems – Guidelines.
We identified 10 gaps to ensure transparency on the Telkom Whistleblowing Programme and sufficient support for whistle-blowers as the most effective fraud detection source.
We are grateful to all stakeholders who continue to report allegations of fraud and irregular conduct via the available whistle-blowing touchpoints.
As per the fraud risk management plan, other fraud detection initiatives included proactive fraud detection reviews, fraud risk assessments and fraud data analytics exception reporting.
Fraud prevention
A key action was the communication of the fraud risk management fault-line philosophy to management. This details behaviours that management must drive to ensure we enhance the ethical climate in the Group.
These behaviours include ensuring the correct tone at the top, an open environment that enables reporting of fraud and irregular conduct, and that there is decisive action against those that act outside the values of Telkom.
To enhance fraud deterrence, we also launched the quarterly name and shame fraud and ethics awareness article, which details an actual case of what happened (without revealing the identity of those implicated), and the action taken against those involved.
During FY2023, 1 393 incidents were reported to the Telkom Hotline through telephone, email, SMS, WhatsApp, website, intranet, and through the application (app). The calls were mainly regarding incidents related to credit management, physical security, and TGF.
The hotline is independently managed and operates 24 hours a day. Other than the hotline, some incidents are reported to TGF through walkins, that is, direct internal escalation to forensics. In FY2023, 92% of our whistle-blowers revealed their identity, 3% claimed partial anonymity and only 5% claimed full anonymity. No incidents of whistle-blower victimisation were reported to TGF in FY2023.
Based on the reporting to the hotline, we initiated forensic investigations. The outcomes led to improved internal controls; corrective action against employees, third-party employees and suppliers; recovery of fraud loss; opening of criminal cases; and litigation support to legal. The graph alongside shows the percentage split of incident types that were dealt with by TGF.
Incident types %
As at the end of FY2023, the following actions emanated from the forensic assignments conducted:
Several service providers were taken through the Supplier Compliance Council based on their irregular conduct, which is inconsistent with the Supplier Code of Conduct. Criminal acts were reported to the police, and where warranted, implicated internal and external people were arrested. The cases are in various stages of the criminal justice system. Where Telkom suffered fraud losses, appropriate remedies were used to recover losses from responsible parties.