Blue Label Defaulters Make Amends in South Africa
The directors of Blue Label Telecoms and their wives, who were censured by the JSE for not authorising nor reporting their share trading timeously, said last week they gave the money made on those trades to charity.
The money made by the directors in question, Sean Kaplan and Selwyn Diamond of subsidiary The Prepaid Company, and their wives, amounted to R800,000 after costs. Mark Levy, joint CE of Blue Label, said it was spent on two ambulances and an orphanage for 17 babies who were born with HIV/AIDS. Blue Label, which listed in November, threw in an extra R600,000 to make it happen.
Brett Levy, the other joint CE of the company which focuses on providing prepaid services, said: "You couldn't believe the hurt they (Kaplan and Diamond) felt in letting the team down," but said that the crisis had spun out a couple of positives for the company.
"Sometimes you need a klap and to slow things down a bit," he said. He said it was easy to be loyal when the going was good, but that real inspiration came when the chips were down.
The story first emerged in March . It became clear that Diamond, his wife, Kaplan's wife and another Prepaid director, Graham Prosser, all traded shares in contravention of the JSE's listings requirements. These require that a director receives authorisation from the company to trade and that those trades are reported to the JSE within two days.
The JSE conducted an investigation while Blue Label set up a committee of nonexecutive directors to examine the matter internally. Blue Label concluded that the directors had not deliberately acted in contravention of the JSE's rules and the JSE appeared to concur.
A fine and some form of private censure were meted out. Diamond faced the most severe censure -- he was fined R100,000, but R60,000 of the fine was suspended over 12 months. The Levy brothers said last week the R40,000 fine would come out of Diamond's pocket .