Analysts say more senior executives at MTN may have to face the music after the resignation of its group chief executive officer Sifiso Dabengwa, writes GARETH VAN ZYL.
Dabengwa is the first executive casualty at MTN after the company announced two weeks ago that the Nigerian Communications Commission (NCC) had fined it $5.2bn for failing to switch off five million unregistered SIM cards in a timely manner.
His resignation has come amid a tumble of MTN’s share price from a recent trading peak of R192.45 on Friday October 23 at 13:30 to R157 at 10:47 on Monday November 9. MTN is Nigeria’s biggest mobile network with 62 million subscribers in that country as of September, according to a quarterly update from the company.
Meanwhile, the Johannesburg Stock Exchange is also investigating MTN for the way it made its announcement on Monday October 26 regarding the $5.2bn fine. Media reports about the fine surfaced hours before MTN made the SENS announcement on that day. The JSE said it is also looking into possible insider trading at MTN by studying the trades that happened before the announcement.
Dabengwa said in a statement on Monday November 9 that he stepped down in the interests of the company and shareholders because of the “most unfortunate prevailing circumstances occurring at MTN Nigeria”.
‘There has to be a fall guy’
“It was inevitable that heads would roll,” World Wide Worx managing director Arthur Goldstuck told Fin24 in his reaction to Dabengwa’s resignation.
This could be a sign that the CEO was ineffective at moving ahead with negotiations with the Nigerian regulator or that he was pushed by the board, said Goldstuck.
The way MTN has handled its communications regarding the Nigerian crisis also put the spotlight on how the company is managed and how it communicates, Goldstuck added.
“One of the big criticisms is that MTN hasn’t kept investors informed,” he said.
“It’s strategic decision-making is slow,” Goldstuck added.
But Goldstuck told Fin24 that Dabengwa’s resignation at the mobile network could result in a “shift in its entire thinking”.
Steven Ambrose, chief executive officer of research firm Strategy Worx, said it is no surprise that Dabengwa has quit. “When things go wrong, there has to be a fall guy. There has to be responsibility,” Ambrose told Fin24.
“I don’t think that MTN were being arrogant but I do think that they were somewhat remiss in their ability to understand what was going outside their control.
“And I think this is the first of a couple of high-profile resignations, to be honest,” Ambrose said.
He added that the CEO is like the “captain of the ship”.
“If the ship’s run aground, it’s ultimately the captain’s fault,” said Ambrose.
Ambrose also said he expected more senior heads to roll at MTN.
Meanwhile, Dobek Pater – a director and analyst at telecoms, IT and media research firm Africa Analysis – said he had expected senior executives at MTN’s Nigerian operations to step down first, rather than South African-based Dabengwa.
“I didn’t expect the CEO at group level to step down,” Pater told Fin24.
Pater described MTN’s $5.2bn fine in Nigeria as “excessive”. However, Nigeria is not cutting off MTN entirely as the NCC last week extended the mobile network’s licence to 2021, Pater explained.
“The fact that the NCC renewed the licence means that it’s not out to destroy MTN,” said Pater.
However, he also agreed that MTN needs to evaluate its communications regarding the Nigeria crisis.
“It’s still important to communicate. Definitely from the outset you want to be involved from a communications point of view,” he told Fin24.
Crouching Yeti strikes
Kaspersky Lab has uncovered infrastructure used by the Russian-speaking APT group Crouching Yeti, also known as Energetic Bear, which includes compromised servers across the world.
According to the research, numerous servers in different countries were hit since 2016, sometimes in order to gain access to other resources. Others, including those hosting Russian websites, were used as watering holes.
Crouching Yeti is a Russian-speaking advanced persistent threat (APT) group that Kaspersky Lab has been tracking since 2010. It is best known for targeting industrial sectors around the world, with a primary focus on energy facilities, for the main purpose of stealing valuable data from victim systems. One of the techniques the group has been widely using is through watering hole attacks: the attackers injected websites with a link redirecting visitors to a malicious server.
Recently Kaspersky Lab has discovered a number of servers, compromised by the group, belonging to different organisations based in Russia, the U.S., Turkey and European countries, and not limited to industrial companies. According to researchers, they were hit in 2016 and 2017 with different purposes. Thus, besides watering hole, in some cases they were used as intermediaries to conduct attacks on other resources.
In the process of analysing infected servers, researchers identified numerous websites and servers used by organisations in Russia, U.S., Europe, Asia and Latin America that the attackers had scanned with various tools, possibly to find a server that could be used to establish a foothold for hosting the attackers’ tools and to subsequently develop an attack. Some of the sites scanned may have been of interest to the attackers as candidates for waterhole. The range of websites and servers that captured the attention of the intruders is extensive. Kaspersky Lab researchers found that the attackers had scanned numerous websites of different types, including online stores and services, public organisations, NGOs, manufacturing, etc.
Also, experts found that the group used publicly available malicious tools, designed for analyzing servers, and for seeking out and collecting information. In addition, a modified sshd file with a preinstalled backdoor was discovered. This was used to replace the original file and could be authorised with a ‘master password’.
“Crouching Yeti is a notorious Russian-speaking group that has been active for many years and is still successfully targeting industrial organisations through watering hole attacks, among other techniques. Our findings show that the group compromised servers not only for establishing watering holes, but also for further scanning, and they actively used open-sourced tools that made it much harder to identify them afterwards,” said Vladimir Dashchenko, Head of Vulnerability Research Group at Kaspersky Lab ICS CERT.
“The group’s activities, such as initial data collection, the theft of authentication data, and the scanning of resources, are used to launch further attacks. The diversity of infected servers and scanned resources suggests the group may operate in the interests of the third parties,” he added.
Kaspersky Lab recommends that organisations implement a comprehensive framework against advanced threats comprising of dedicated security solutions for targeted attack detection and incident response, along with expert services and threat intelligence. As a part of Kaspersky Threat Management and Defense, our anti-targeted attack platform detects an attack at early stages by analysing suspicious network activity, while Kaspersky EDR brings improved endpoint visibility, investigation capabilities and response automation. These are enhanced with global threat intelligence and Kaspersky Lab’s expert services with specialisation in threat hunting and incident response.
More details on this recent Crouching Yeti activity can be found on the Kaspersky Lab ICS CERT website.
R5m in software fines
South African companies paid almost R5.2 million in damages for using unlicensed software in 2017 up from R3.6 million in 2016.
This is according to data from BSA | The Software Alliance, a non-profit, global trade association created to advance the goals of the software industry and its hardware partners.
The significant increase in unlicensed software payments – which includes settlements as well as the cost of acquiring new software to become compliant – is the result of more accurate leads from informers, says Darren Olivier, Partner at Adams & Adams, legal counsel for BSA. In 2017 BSA received 281 reports in South Africa alleging the use of unlicensed software products of BSA member companies – this up considerably up from 230 leads in 2016.
“BSA’s recent social media campaign also helped to create awareness among local companies about the need to comply with existing legislation in order to avoid legal action,” Olivier says.
The result has been a 13% increase in settlements paid in 2017, with the settlements total reaching almost R2.5 million.
While the average settlement paid by companies in 2017 was around R36 094, in some cases the amount owed was far greater, as is evidenced by Shereno Printers, a print and design company based in Gauteng, which ended up paying a hefty settlement amount of R260 000 last year in an out of court settlement.
The company’s case was in line with a broader trend, which saw the print and design industry as a whole rank among the top sectors plagued by unlicensed software.
Aside from settlements, companies also paid more than R2.6 million in licenses purchased to legalise their unlicensed software.
And the ramifications of software piracy extend beyond financial implications. “It also results in potential job losses and loss in tax revenue. This is not to mention the financial and reputational damage brought about by security breaches and lost data,” comments Olivier.
As unlicensed software has not been updated with the latest security features, it leaves businesses vulnerable to cyberattack, he explains.
This is a particular problem for companies operating in South Africa where economic crime has recently reached record levels, according to the Global Economic Crime Survey. Indeed, 77% of South African organisations have experienced some form of economic crime. What’s more, instances of cybercrime totalled 29% of economic crimes reported.
This in turn, raises questions around government policy and the adequacy of existing copyright legislation, which only enables the registration of copyright in films, but not in computer programs.
Olivier notes that it is likely the percentage of unlicensed software on South African computers has increased over the past year. “We received many more leads this year, which is an indicator that the amount of pirated software is greater than in previous years,” he comments.
Often unlicensed software is not so much a case of deliberate piracy as it is a result of poor software asset management (SAM).
“For this reason, the BSA encourages all businesses to ensure they have effective SAM practices in place. Companies should be able to confirm what software they are using and are licensed to use – this will help them to identify unlicensed software and can also bring about cost savings. Even the most basic SAM practices such as regular inventories and software use policies can help,” says Chair of the BSA SA Committee, Billa Coetsee.
With this in mind the BSA offers a range of SAM solutions, not only to help organisations reduce legal and security risks, but also to create business value.