Soldier come

Soldier come, Vodacom, Soldier go, Vodago: A Nigerian Corporate Mess

Prince Charles Dickson

Just like one of its brand Vodago, Vodacom has decided to go after a taste of our corporate waters, Soldier come, soldier go barracks still remain.

Since the marriage between Econet Wireless Nigeria and Econet Wireless International collapsed, we have been forced to sit, and watch as the drama unfolds. As I write, there are several court actions between both parties.

However as all fool's day dawned (April 1st 2004) Vodacom finally put pen to paper to the deal as managers of the telecom outfit, with speed corporate colors changed, change of name was effected. For Vodacom it was, Nigeria here we are, and MTN we'll show you guys, and for Nigerians more competition and drop in price. For Vodacom it was like a victory at last, smarting from their lack of good business sense, in not bidding for the digital mobile license on the first count.

For a take over that was beset with plenty setbacks, the South African Company seemed to have conquered at last.

Confusion burst May 27, 2004 with (children's day) announcement from Vodacom pulling out of Nigeria, as at today the board of directors of Vee Networks Limited (formerly known as Econet Wireless Nigeria) has changed again to Vmobile all these in a spate of one year.

Although Vodacom would still be technically involved for the next couple of months so as not to sink the already much rocked boat. Most of their staff that were seconded to Nigeria have strangely decided to stay put as Vmobile staff, including the now confirmed Chief Executive Officer formerly in charge of Vodacom Congo. As the board said in a recent statement, it will suspend further comments on the Vodacom issue and concentrate its effort on building a strong network.

Easier said than done, not with the words of Group Chief Executive Officer of Vodacom, Mr. Alan Knott-Craig".our withdrawal had to do with good corporate governance and trust." He further stated that during the few weeks Vodacom managed the Nigerian Company, it was apparent that some unknown persons within or close to Vee Networks, were compromising its ability to exercise proper control over it.

The bone that refused to be swallowed "brokerage fees" paid by Vee Networks to Oceanic Securities Limited, Bromley Asset Management Limited and Empee Ventures Limited who served as agents for Lagos, Delta and Akwa Ibom States who own shares. Interestingly Knott-Craig affirmed that Vodacom found no corruption in Vee Networks. So what went wrong. I have reproduced the full text of Vodacom's withdrawal statement below.

"In today's world CORPORATE GOVERNANCE cannot be compromised for profits. And Vodacom is no exception.

"The recent events involving Vodacom in Nigeria have to do with GOOD GOVERNANCE AND TRUST, AND NOTHING ELSE.clearly losing the Nigerian opportunity at this point is a great loss to Vodacom, but we had to take a stand to ensure that we maintained sound CORPORATE GOVERNANCE.

"When EWN was established some years ago it clearly needed to raise capital. It is my understanding that it raised some of these funds through the services of brokers. These brokers were rewarded with brokerage fees, which I am told are legal, equal to 5% of the equity they raised. These fees had been partially paid when Vodacom was invited to consider participating in EWN. After a thorough due diligence carried out by reputable international experts in this field, no evidence was found of improper actions "Vodacom, on that basis, decided to proceed with a Management Agreement to manage EWN (which then changed its name to Vee Networks), subject to a number of conditions, which included the requirement that the balance of these brokerage fees were not paid by EWN before the Management Agreement was signed, SINCE THAT WOULD CONSTITUTE A MATERIAL CHANGE OF THE FACTS AS WE KNEW THEM.

"AS IT LATER TRANSPIRED, THESE BROKERAGE FEES WERE PAID BY EWN SHORTLY BEFORE THE MANAGEMENT AGREEMENT WAS SIGNED. WHEN THIS WAS DISCOVERED. VODACOM DEMANDED THAT THESE FEES BE RETURNED TO THE COMPANY AND THEY WERE SUBSEQUENTLY RETURNED. BUT THE LEVEL OF CONFIDENCE HAD BEEN AFFECTED AND WAS TO ULTIMATELY LEAD TO OUR WITHDRAWAL.

"IN MANAGING VEE NETWORKS, IT ALSO VERY SOON BECAME APPARENT THAT THERE WERE UNKNOWN PERSONS WITHIN (OR CLOSE TO) THE COMPANY, WHO WERE COMPROMISING OUR ABILITY TO PROPERLY EXERCISE CONTROL OVER THE COMPANY.

I should say that THE MAJORITY OF PERSONS ASSOCIATED WITH EWN WERE EXTREMELY ENERGETIC, CAPABLE AND CORPORATED WITH US AT EVERY INSTANCE.

"BUT THE DAMAGE HAD BEEN DONE, and I subsequently recommended to the Vodacom Board THAT WE WITHDRAW FROM NIGERIA. IT WAS MY VIEW THAT CONTINUING IN THAT ENVIRONMENT WOULD UNNECESSARILY EXPOSE OUR COMPANY AND OUR SHAREHOLDERS TO A LEVEL OF RISK, WHICH I CONSIDERED INAPPROPRIATE. My recommendation was unanimously adopted.

"ACCORDINGLY I MET WITH SENIOR VEE NETWORKS BOARD MEMBERS AND WE MUTUALLY AGREED TO TERMINATE THE MANAGEMENT AGREEMENT.

"I would also like to make it clear that the Vodacom executives entrusted with concluding this transactions, within guidelines set down by the Vodacom Group Board, had worked extremely hard in very difficult circumstances over many months to conclude a tough transaction. The failure to conclusively determine that the brokerage fees had not been paid before signing the Management Agreement was however regrettable." The emphasis is mine.such a beauty of speech. What one would naturally expect in any high stake boardroom politics. There is more to this withdrawal than meets the eye. The issue of good corporate governance and trust is definitely strange in Nigerian terminology, however, in this case the questions begging for answers baffles the mind so to say. Why was there a seeming hurry and hush-hush about paying the brokers.

From checks could it not be true that the real issue was the outrageous amounts, which one believes must have stupefied the South Africans. The logic here is simple; you live in an apartment. Your landlord says, "Don't play music" and you then go ahead playing music and afterwards you are on your knees pleading sorry.

Now it seems there is a general view that obviously some people did not want Vodacom for reasons that cannot readily be asserted. Oba Otudeko played a role as Chairman of the Board, it was believed that he feared a tearing down of his powers as Chairman and that he could be also possibly be asked to stepped down, for a man who directs and indirectly controls over 40% in equity. But the damage had been done and so Vodacom is going, infact has gone and the Vee Networks Board now Vmobile just agreed like that to mutually terminate the Agreement. Quite amusing.

As the days have rolled bye, some more reasons are forthcoming, say for example this dumb one: that it had become apparent that Vodacom could not compete favourably with MTN, on the same Nigerian turf.lies, lies. That Vodacom will still be back come 2006 when the next Digital Mobile License will be bided for in Nigeria and all along that Vodacom was not really interested in investing in an already existing network. For Vodacom its been mixed bags, they have experienced a 3% drop in the mobile market in Africa, and on the other hand won a license for third generation phone services.

Vmobile as it is now called has maintained that in all its dealings it stands for good corporate governance and there are no evidence of bribery and/or corruption. Already the Board is exploring a working relationship with Vodaphone, the world's largest mobile phone company, big dreams you may say not with the relationship between Vodacom and Vodaphone.

On a final and most important note is the postured silence of the Nigerian Communications Commission (NCC) which is a regulatory organ to really get to the root of the entire palaver. The Vodacom statement is in the international media, does it occur to anyone in government the further dent our image is receiving.

Vodacom, Vodago, Vee Networks, Vmobile, V whatever that does not count now but there are long and short term benefit/loss analysis for corporate governance in Nigeria because nobody has been bold enough to ask or tell us the facts behind another colossal corporate failure.