Resisting political corruption- the story of Econet- Part Six


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Econet now presented a 100 page letter to the Government Tender Board (GTB), which was made up of senior civil servants and came under the Ministry of Finance, outlining its objections to the award of the license to Telecel.

One point of contention was that whereas the tender document had specified the GSM technology, Telecel had submitted a proposal for the incompatible CDMA technology. Another was that Telecel had misled the GTB by stating that it was the largest cellular operator in Africa; Econet challenged this claim, pointing out that South Africa’s MTN and Vodacom were the continent’s two largest operators.

Upon receiving the letter, the Chairman of the GTB instructed Telecel to stop all action arising from the license award until the complaints of Econet and the other bidders had been addressed. He then asked the Minister of Information Mujuru not to confirm Telecel as the winner of the tender process, and gave her three weeks to respond to Econet’s complaint point by point.

This decision by the GTB was received with disbelief in government circles. A week after the three week deadline established by the GTB had expired, Mujuru refused to respond – “There is no point in providing you with a point-by-point response to the appeal. The Tender Board has no power to suspend the license as the Chairman purports to have done.”

There were also allegations of a conflict of interest against Minister Mujuru: in addition to her husband being a business associate of James Makamba, a leading member of the Telecel team, it was also reported that she had been listed as Makamba’s referee in the tender document that Telecel had submitted.

The Zimbabwe Independent reported on April 4, 1997 that a member of the Cellular Technical Committee, which had been appointed by the Minister of Information, had resigned over irregularities in the evaluation of the bids, and that other members would soon follow suit.

“It appears the minister, in her haste to ensure all went according to plan, has in the process estranged herself from the technical committee, the tender board, and even the attorney general’s office.”

The Government of Zimbabwe Attorney General had on an earlier occasion refused to pursue the government’s case in court stating that it had no merit, thus forcing the Minister of Information to hire private lawyers to fight her case against Econet.

On April 11 (Friday), 1997, police stormed into Econet’s offices to investigate whether the company had illegally installed telecommunications equipment, and whether it had advertised in the press inviting the public to purchase its shares. They were looking for Masiyiwa but could not find him at the office. His employees asked them to get in touch with the law firm Kantor & Immerman.

Masiyiwa’s lawyers reached an agreement with the police that he would report to the police station on the following Monday. His declaration was taken on Monday, but no charges were pressed.

The lawyers representing the government tried to force Econet into liquidation. According to Rudnick, “They tried to – because Econet didn’t have any money, there were a few companies that it owed money to, and they went and approached those firms, those companies, and said: Econet hasn’t paid you. Will you cede the debt to us? We’ll pay you, you cede the debt to us and we’re going to apply for the liquidation of Econet, and what an easy way to get rid of this whole problem”

When this happened, Chanakira was asked to step in and pay off those creditors. One day, when Masiyiwa’s company had run out of money again, another friend suddenly walked into Masiyiwa’s office and said that he had just had a huge windfall on one of his contracts, and he felt in his spirit that he had to give that money to Econet.

One day, soon after the press had announced that Telecel had been awarded the second license, an American missionary walked into Masiyiwa’s office, and demanded an Econet phone line.

Masiyiwa informed him that they could not give him one. The missionary then insisted on paying immediately for a line, which would be given to him after Econet got a license. In return for having prepaid for a line, he demanded certain privileges as a subscriber. They worked out a price of Zim$10,000 for the line.

The missionary then asked them to draw up a list of all their friends (mostly members of Church groups), who were all approached with the scheme. Even the Catholic Commission for Justice and Peace contributed funds. All those who had prepaid were offered special numbers, which meant that they would not have to pay for certain services.

The Zimbabwe Independent dated April 11-17, 1997 also carried an article by the Secretary General of the Christian Communicators Association of Zimbabwe, which stated “We have, as Christian journalists, media workers and artistes followed Strive Masiyiwa’s battle to operate what he has already set up, an efficient, privately-owned network.” ….

“While acknowledging the right of the government to award contracts to organizations or companies of its choice, and while respecting the government tender board’s adjudication processes, we feel that there needs to be an element of transparency to retain the public’s faith in the state’s decision-making process.” …..

“Masiyiwa has constantly been at the receiving end of government decisions, which seem to have been made to blatantly frustrate the genuine initiative of this indigenous businessman.” …..

“We therefore see the tender board decision to award a second cellular network to a certain clique with strong political connections as confirmation that there exists an element of partiality. The government is not above the law and must follow the Supreme Court ruling which has underscored Masiyiwa’s right to operate a cellular network”

A large number of people wrote letters to the editorial offices of national newspapers expressing support for Masiyiwa, and stating that they would only subscribe to Econet’s cellular service.

Masiyiwa could not walk a few blocks in downtown Harare without being stopped several times – people used to shake his hand and encourage him to continue fighting.

The international media also covered the Econet story – a Danish television crew made a documentary about Econet.  When it was shown on television, it provoked a question in the Danish parliament, and led to the Danish ambassador in Harare being asked to place on record Denmark’s disapproval at the way Masiyiwa had been treated.

About 4,000 students of the University of Zimbabwe held a demonstration in Harare in mid-April in protest against the rampant corruption in the public tender system. Further demonstrations were scheduled nationwide with participation from the Zimbabwe Human Rights Association (Zimrights), the Zimbabwe National Students’ Union, and other civic organizations.

The Chairman of Zimrights, Mr. Reginald Matchaba Hove, said in an interview – “We call on government to stop harassing this indigenous entrepreneur, Strive Masiyiwa, who was only trying to take advantage of the opening up of the economy to create new jobs, new services, and new wealth. We strongly condemn his continued persecution.”

Towards the end of April 1997, in a new development that added pressure to the government, the GTB submitted to the High Court a full record of its deliberations during the evaluation of the cellular bids. It was revealed that the GTB had reached a compromise decision and had originally recommended that both Telecel and Econet should be jointly licensed under a 50/50 shareholding, and that the Secretary of the Office of the President, Charles Utete, had given instructions to the GTB to exclude Econet. Utete denied this accusation.

High Court Justice Gillespie gave the Minister of Information Mujuru until May 31, 1997 to respond to Econet’s affidavit to have the award of the license to Telecel cancelled. On May 24, Mujuru made a statement admitting that the tender process leading to the award of the second license to Telecel was flawed, and that she would not contest the High Court order setting it aside. She clarified, however, that she was in favor of a re-evaluation of the bids, and was opposed to the second license being automatically awarded to Econet.

She added – “The failure of the tender at the point of the tender board’s participation in the exercise is attributable to the infiltration and manipulation of the board by the applicant’s (Masiyiwa’s) own officers.”

Mujuru’s woes grew when she was reportedly reprimanded by Mugabe for making a disrespectful statement towards Vice-President Nkomo – she had said that he was an old man who no longer understood or remembered things. Pro-Nkomo groups pressured Mugabe to dismiss Mujuru.

Mugabe was reported to have told the central committee meeting of the ZANU- PF that the party was being weighed down by “loose discipline, loose thinking, and loose talk.” Mujuru then wrote to Nkomo apologizing for her remarks.

Econet received a pleasant surprise in its preparation for the court hearing to challenge the award of the license to Telecel. One of Econet’s lawyers checked the marks that had been awarded to Econet and to Telecel for the different criteria laid down in the tender specifications, and found that the GTB had made a mistake in adding up the marks to arrive at the final total. If the addition had been done properly, then Econet should have won by a narrow margin.

This discovery made a huge difference to the court hearing, because a legal opinion from the judge was no longer necessary; the challenge to the Telecel award could be substantiated on factual issues alone.

 

By S. Ramakrishna Velamuri.  Rama is Professor of Entrepreneurship at the China Europe International Business School in Shanghai, China

To be continued tomorrow

Part One

Part Two

Part Three

Part Four

Part Five

(117 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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