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which would not only be in violation of various international laws but unethical. In the US, this is
termed 'pay to play'. As we observe in the US elections currently unfolding, the Democratic

candidate, Hillary Clinton, is increasingly accused of being unethical by giving preferential
meeting access to foreign donors of the Clinton Foundation whilst she served as the Secretary
of State. If this can be proven, it will constitute at best a corrupt act and hence unethical and at

worse in breach of US and international law.

RECOMMENDATION

An investigation should be conducted to confirm if indeed the payment agreed for Ernest
Holkan's law firm (Covinon and Bowling) is market-related and to establish the real motive

behind the choice of this law firm to lead our legal and negotiation strategy in Nakolia. There are
allegations we paid higher than the normal fee and it is possible that in our desperation to
secure a prompt settlement of the fine, we may have engaged in unethical acts. An outside

forensic firm of good international standing should be appointed to conduct the investigation and
report to a level sufficiently high given the sensitivity of the parties and governments implicated.

Care should be taken to not alienate the law firm but rather seek their co-operation in order not
to damage relations with them as they seem to have been critical in securing the two negotiated
settlements, that is, Option 2 and 3. We may need them to complete the negotiations with the

Nakolian Authorities especially if we were to choose Option 3 and seek to negotiate down the
free float percentage from 60% to below 50%

5. Conclusion

Lets re-iterate and summarise our key recommendations to the Board:
1. Negotiate and stagger payments but list on the Nakolian Stock Exchange having

negotiated a free float below 50% of total company shares
2. Appoint Johan Van Rensberg as new Group CEO
3 Prepare to issue an Earnings Warning to the markets

4. Investigate schedule and cost overrun problems on the SSC Project and take action
5. Subject to due Diligence results, make an offer of 1 MCOM share for 45 of CloudNet's

6. Investigate the legal advice in the matter of the provision for the Nakolia fine
7. Appoint a forensic firm to probe improper action in the appointment of law firm.

We trust the Board finds this report helpful and are happy to take any questions.

Team CharterCapital Advisory
The CharterQuest Institute

Developed by The CharterQuest Institute for 'The CFO Case Study Competition 2016'
www.charterquest.co.za | Email: thecfo@charterquest.co.za