Column

Editor, Itedge, Segun Oruame.

Of Vee and Vice

Vee Network is born. Few weeks back it was Vodacom
Nigeria and a little farther back, it was Econet
Wireless Nigeria (EWN). Just what can happen to a
company in six weeks is all too glaring to see in the
EWN tale.

It is one odyssey, too long and too much in so short a
time for a company that is so young. How did EWN, then
Vodacom Nigeria and now Vee Network find itself in
this mess? No matter how hard, the company and its
image makers try to play down the pains; it is a
corporate tragedy that would take some time to be
surmounted.

EWN held all the promises of a truly inspiring
company; African in make which only helped to earn it
quick acceptability in the market. There was no other
company that roused so much feelings of pan-
Africanism than Econet.

There was no other company
that was quickly identified with as an African example
of successful entrepreneurship than Econet in the
post-GSM auction months. What with all those zeal,
business astuteness and untiring entrepreneurship
displayed by the Econet team that won the $280 million
digital mobile licence in 2001.

But the dream died last year. It, as a matter of fact,
died earlier. When its board got enmeshed in a
ding-dong crisis of funding, determining and raising
equity stakes, trouble did not sneak in on the telco,
it rushed in. And to borrow from the inimitable prose
of Chinua Achebe, trouble decided to come with its own
stool and since then it has been well seated inside
the boardroom of Nigeria’s once most-loved mobile
telco.
It is a long way from EWN to Vee Network and it would
be no less long or tortuous way to get to a new name –
part of the disengament agreement between Vodacom SA
and the Nigerian telco is that, according to Russel
Southwood in Balancing Act, an online news portal:
“Vee Network would be allowed to trade with the Vee
Network brand name for only three months ending
September 1, 2004 or until the Nigerian company finds
another partner or change names but within the
three-month period. It was also agreed that Vodacom in
all its correspondences and statements about the
pullout from Nigeria will desist from alleging that it
was because of corruption as Vee Network insisted the
brokerage payments were not bribes.”
If that is so, then it would be too many name-changes
in only one year. But then, what else can happen to a
company in six weeks? Vodacom has tied its pullout on
good corporate governance and a breach of trust; more
explicitly put: “Vee's decision in March to approve
payments totalling just less than three million US
dollar to three brokerage companies. Vee directors
held directorships in two of the companies,” in
Southwood’s words.
The former management of EWN had approached three
brokerage companies to raise equity funding for it
(EWN) on the agreement that 10 per cent of what ever
is raised would go to the companies as brokerage fees.
Five per cent had already been paid before Vodacom was
invited to do due diligence. But the brokerage fees
had already constituted a subject of litigation in
court between the former technical partner of EWN,
Econet Wireless International (EWI), which had queried
the transaction and gone ahead to institute a court
action against EWN.
At 10 per cent, and well above the conventional one to
two per cent, founder of EWI, Strive Massiyiwa was
convinced that there was something fishy in the deal.
In doing its due diligence, Vodacom claimed it found
no case of corruption in the matter but had the
understanding of EWI that the remaining five per cent
fees would not be paid “before the management
agreement was signed since that would constitute a
material change of the facts as we knew them,” to
quote Vodacom's Chief Executive Alan Knott-Craig.
The details are already well expressed publicly but
another reference to Southwood would suffice: “On
March 22, just over a week before the management
agreement with Vodacom started, Oba Otudeko, Vee's
chairman, approved the payments, according to a letter
seen by the Financial Times of London. "We had a clear
understanding, but Vee chose to pay without telling
us," a livid Knott-Craig would tell the world in
London adding “When we discovered they had signed the
management deal after making those payments, it was
the trigger for us to leave Nigeria. We shall not be
going back there for the foreseeable future.”
Vodacom has indeed left and what is now left is for
Vee to face its future and as its Public Relations
Manager, Emeka Opara put it “to build a world class
communication network.” But there are challenges Vee
must address as it strives to do this. There was a
time its problem was purely funding in the heavy
cash-eating telecom industry. Now, it must contend
with a credibility problem that would hunt it for some
time.
Hard as Vee and Vodacom may try to downplay the issue
of corruption, the specter is hanging over Vee’s
board. It would take sometime to accept that negation
of good corporate governance for which Vodacom pulled
out is not exactly synonymous with corruption. It
would take sometimes not to believe that Massiyiwa was
right after all about smelling rotten fish in the
brokerage brouhaha.
It is a burden Vee must carry for sometime. But it can
overcome this, clean up its own mess and win market
support which it is entitled to anyway. The secret is
to imbibe good corporate governance with transparency.
Its failure to exude this global standard, in the eyes
of Vodacom, does not make Vodacom a saint just as it
does not make other telcos and indeed all corporate
players in Nigeria saints. The lesson simply is that
as Nigerian market players form linkages with global
players, they MUST live up to the ethics upheld
diligently in the global arena. And there is only one
standard: trust.

 

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