Vodacom settles with DRC fixer

2013-05-26 10:00

Financials released last week show a confidential payout to Namemco Energy

Mobile telecoms giant Vodacom has settled its long-running dispute with a political fixer in the Democratic Republic of Congo (DRC).

This after the operator last year dismissed the multimillion-rand claim as “having zero legal justification”.

Vodacom provided scant details of the settlement, claiming confidentiality.

It noted the settlement in its yearly results, released last week, in a brief note under the heading “Other significant matters”.

The operator states “the claim brought by Namemco Energy (Pty) Limited against VIL (Vodacom International Limited) was settled during the year”.

Moto Mabanga, the political fixer who had initially sued Vodacom for R396?million relating to work he claimed to have done for them in the DRC, was awarded a $21?million (R159?million at the time of the court ruling) payout by a court in the DRC in March last year.

The original disputed amount of $40.8?million relates to a “success fee” that Mabanga claimed was negotiated between himself and Vodacom for ironing out problems during the company’s entry into the DRC.

Vodacom refused to pay him and the court subsequently ordered that its stake in Vodacom DRC be seized and sold via auction. This threatened what has become Vodacom’s most rapidly growing business segment in the severely underserved DRC mobile market.

In its last financial year, Vodacom grew its subscriber base in the DRC by 36.6%, to more than seven million.

The forced sale of Vodacom’s DRC business was subsequently suspended, resulting in accusations that Vodacom used political and diplomatic pressure in its battle with Mabanga.

A lawyer representing Mabanga sent a letter to the general inspectorate of judicial council services in Kinshasa as well as the UK’s ambassador in the DRC, in April last year.

In it, he accused Vodacom of trying to place itself above the laws of the nation. His letter followed another one sent by Vodacom to the same inspectorate that was copied to the South African and British ambassadors in the DRC.

Mabanga’s lawyers stated in their letter that the body did not have the jurisdiction to prevent the execution of the judgment. They also stated that they did not understand why VIL involved the British ambassador to begin with.

At the time, Vodacom spokesperson Richard Boorman said: “There is zero legal justification for Mr Mabanga’s contractual claim and we challenge him to provide one shred of evidence to support it.”

In October last year, Vodacom chief executive Shameel Aziz-Joosub reportedly said his company was still busy with the court case, but that he does not anticipate Vodacom paying the amount, which was equivalent to about R174?million at the time.

The group had a strong case, Aziz-Joosub said.

It is unclear what transpired between October and this week that made Vodacom settle. And now the operator has gone to ground, refusing to answer

any questions on the matter, claiming that the settlement is confidential.

Responding to questions from City Press this week, Boorman said: “I can confirm we have reached a settlement agreement, ending all legal action related to the potential seizure of shares in Vodacom DRC. The terms of the settlement are confidential.”

City Press had asked Vodacom whether it was appropriate to hide a settlement, which potentially ran into hundreds of millions of rands, from shareholders, through confidentiality. City Press also queried when the matter was settled, what the settlement terms were and whether the settlement has been fully paid out.

Vodacom refused to answer these questions.

Attempts to get hold of Mabanga in the DRC were unsuccessful.

The dispute between Mabanga and Vodacom stemmed from consulting work the former did for the operator in the DRC between May 6 and July 31 2007 and again between September?12 2007 and August 31 2008.

According to the consultancy agreements between Vodacom and Namemco Energy, Mabanga was tasked with advising Vodacom on economic, sociopolitical and security conditions in the DRC.

This included providing advice and assistance on “government relations issues” in the DRC; advising and assisting in the relationship between Vodacom and its DRC partner, Congolese Wireless Network; ensuring that Vodacom DRC staff were safe and not harassed or obstructed from doing their jobs; identifying parties interested in buying the Congolese Wireless Network’s 49% shareholding in Vodacom Congo; and securing visas for Vodacom staff to enter the DRC.

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