Magyar Telekom's CEO Straub resigns

Telco

Elek Straub, Chairman - Chief Executive Officer of Hungary's leading telecoms group Magyar Telekom Nyrt, is to resign on Tuesday over a major scandal at the group's Montenegrin unit, index.hu has reported.

According to the portal index.hu, Straub will be replaced by Christopher Mattheisen, the company's former deputy CEO. The company, a unit of Germany's Deutsche Telekom AG, has been unable to close its 2005 books and decide on dividend payment after its auditor, PriceWaterhouseCoopers expressed concern over consultancy contracts worth a combined Ft 1.98 billion at its Montenegrin unit. The investigation has cost the company Ft 3.1 billion to end-September and State Financial Supervisory Authority (PSzÁF) also fined it Ft 6 million in May and another Ft 6 million in July. Magyar Telekom will hold an extraordinary general meeting on December 21 where it is also set to tackle the 2005 dividend and the appointment of board members.

The agenda of the EGM is due out on Wednesday. Magyar Telekom announced in late March that it would not hold its AGM at the end of April for failure to close its 2005 books, which the US Security and Exchange Commission (SEC) should have received by June 30. PWC launched an investigation against Telekom Montenegro early this year, looking into a consultancy contract worth Ft 700 million, which they claimed was signed irregularly. According to press reports, the money paid for market research projects was channeled to offshore companies. Moreover, even the contract was signed with an offshore company. It was suspected that the job carried out was overpaid and that lobby activities and tax evasion might also be in the background. In August, MTel called for an EGM for October and Straub said he did not expect the investigation to end by the time of the meeting. Straub told the EGM, where it was revealed that two further problematic contracts worth Ft 1.2 billion were found, that he could not predict when the probes into the matters would be closed. (portfolio.hu)

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