Vodacom CEO Pieter Uys last year offered to sell the cellular group’s 51% stake in its Democratic Republic of Congo (DRC) subsidiary and disinvest from the troubled central African country. But Uys (pictured) changed his mind at the last moment.
That’s one of several sensational claims made by Alieu Conteh, the head of Congolese Wireless Network (CWN), which holds the other 49% of Vodacom DRC. Conteh was speaking to TechCentral by telephone on Wednesday from Los Angeles in the US.
He says Uys’s last-minute withdrawal of his offer is symptomatic of the way Vodacom has treated CWN over the eight years the two parties have been in partnership together in the DRC.
CWN is in the process of filing papers against Vodacom in a Kinshasa court, and has accused the JSE-listed group of fraud, swindling, usury and other offences. Vodacom, in turn, has accused CWN of engaging in “malicious litigation”.
In the CWN court papers, a copy of which TechCentral has in its possession, the company demands that Vodacom cough up more than US$200m to compensate for monies it alleges the cellular group has “illegally” extracted from the DRC business.
It wants some of this money paid to Vodacom DRC and the rest paid directly to CWN in the form of damages.
TechCentral broke the news of the breakdown in relations between the two parties on Tuesday (see “Trouble for Vodacom as DRC venture comes unstuck”) and published the details of CWN’s legal claims on Wednesday (see “Congo partner accuses Vodacom of fraud”).
Now, Conteh says he has instructed CWN’s lawyers to file the papers with the Kinshasa courts. He says the company is taking the matter on review as he believes the company has exhausted all other options.
He says he is disappointed that Uys backtracked on the offer to sell Vodacom’s 51% in the DRC business as he feels that doing so would have resolved the issue.
Conteh says Uys made the offer to him at a breakfast meeting in August. He says he, Conteh, jumped at the idea, immediately seeking out other operators he felt would be interested in buying Vodacom’s stake.
“Pieter Uys said, ‘Let’s sell the company.’ I said, ‘Pieter, are you serious?’ He said, ‘Yes.’
“That evening, I called the CEO of MTN, [Phuthuma] Nhleko, and I discussed the matter with him, and Mr Nhleko said, ‘Can I call Pieter?’, and I said, ‘Yes, Pieter has agreed to sell the company.’
“We called France Telecom and other operators, too,” Conteh says.
“The next thing I know, Vodacom has sent [CWN] an SMS saying something like, ‘We love Congo, and we’re not going to leave Congo.’”
Conteh claims that Uys also reneged on an offer to take the dispute between Vodacom and CWN to arbitration in Brussels, Belgium.
“There is no genuine leadership at Vodacom, no-one taking direction. We want to see [Vodacom DRC] succeed. But Vodacom has a hidden agenda.”
Asked to comment on Conteh’s allegations, Vodacom spokesman Richard Boorman admits in a written response to TechCentral that the group has “examined options around the ownership structure of Vodacom Congo”.
However, any solution “has to make commercial sense for Vodacom Group and its shareholders. Thus far we have not been able to find such a solution.”
A negotiated settlement between the parties now seems virtually impossible, with attitudes hardening.
Says Boorman: “CWN’s apparent inability to fund its obligations and its attempt to circumvent these obligations through malicious litigation are clearly negative for both Vodacom Congo and the DRC.”
For his part, Conteh says CWN is unable to fund its obligations because Vodacom is “extracting between $35m and $40m a year” from Vodacom DRC.
“Vodacom Congo is almost bankrupt because Vodacom is taking millions of dollars in fees out of the country,” he says.
“What Vodacom is not telling the press is that we have been trying for [eight years]to negotiate with them to solve the issue. We have been abused by Vodacom for all these years.” — Duncan McLeod, TechCentral