Ivor Powell
The South African Telecommunications Regulatory Authority (Satra) ignored the reports of its own technical experts committees in recommending the Cell C consortium for the country’s third cellular phone licence.
Documents in the possession of the Mail & Guardian show that Satra’s own specialist committees placed Cell C only third among the five shortlisted bidders for the lucrative cellphone licence. These judgments were in close accord with recommendations made by two sets of outside consultants employed earlier by Satra. The two external consultants – Afcent/CLC and BDO Spenser Steward – were hired by Satra at a cost of more than R3-million in taxpayers’ money.
The revelation that Satra ignored its own committees raises further doubts about the embattled regulator’s endorsement of the Saudi-backed Cell C consortium. The decision was taken after Satra chair Nape Maepa was forced to recuse himself from the adjudication process. Maepa subsequently said he had been forced to step down on the basis of a long-dormant business partnership with a businessman associated with one of the bids. Two other councillors – who, unlike Maepa, were party to the Cell C decision – have since been linked to bid consortia, but no action has been taken.
In Status Report No 30 of the Third Cellular Licencing Process, dated January 20 2000 and formally ratified by Satra’s council, project leader Thabo Makhakhe emphasises that the staff analysis committees would play a key role in informing and justifying Satra’s decision on the multibillion-rand bid. Makhakhe warns that “the intended recommendation to the minister should be clearly identified as having been inspired by these reports (Afcent/CLC, BDO Steward and Staff analysis committees).
“This approach will ensure that the decision/ recommendation of the Satra council is defensible on administrative and procedural considerations.”
But in the face of this warning, wide divergences were recorded between the recommendation of the Satra council and all three other evaluating bodies.
The confidential Satra technical analysis awarded unsuccessful bidder NextCom 61,5 out of a possible 62 points – 9,5 points ahead of Cell C – with the Scandanavian-backed consortium of Telia Telinor also edging out the eventual winner with 54.
Senior Satra sources said other internal Satra committees mandated by the authority – dealing with financial considerations, empowerment and related issues – similarly placed NextCom in the top position, a wide margin ahead of Cell C.
In its final adjudication, however, the Satra council inverted the arrangement, placing NextCom only third after Cell C and Telia Telinor. Minutes in the possession of the M&G show Cell C scored 68%, compared to Nextcom’s 54,5%, before the marks were finally adjusted to 76% and 64% respectively.
The decision has led to a storm of protest by rival bidders and a series of submissions seeking to have the recommendation overturned before Satra makes its final submission to the government.
Answering the criticism in discussions with the M&G, Satra councillors claimed the external consultants had exceeded their briefs in evaluating the relative strengths and weaknesses of bidders.
“They were asked only to provide an analysis of the respective bids,” one councillor said.
However, the M&G has had sight of documents relating to the tender process and can confirm that both outside consultants were in fact clearly briefed to provide evaluations to assist the council in its adjudications.
Meanwhile, evidence has come to light that there could be other considerations at work. The M&G has learned that at least three of the five Satra councillors who made the final decision were opposed to the appointment of both consultants in the first place.
In the case of the Afcent/CLC contract, members of the council sought – in the face of opposition from Maepa – to overturn a resolution taken in July 1997, whereby a specially constituted tender committee would be responsible for the awarding of outside contracts.
Instead of Afcent/CLC (which tendered at R3E207E781) the majority of councillors wanted Zader Financial Services. Zader, which wanted to charge a whopping R6E324E000, is controlled by businessman Enos Banda, who has emerged as a major shareholder in the Cell C consortium.
A similar intervention had to be made after the second consultancy was awarded – this time under the oversight of councillors Noluthando Gosa and Willie Currie. After agreements had already been drawn up with the chosen candidate, Peregrine, the intended contract was overturned at the insistence of Maepa, when it came to light that lawyer Krish Naidoo, of Peregrine, was also a Cell C shareholder via his company Uni Africa Investment Holdings.
The decision to recommend Cell C for the third cellular licence was announced after nearly two weeks of secret deliberations at the Heia Safari Ranch outside Pretoria – a process that became clouded when Maepa was forced to recuse himself after personal interventions by both presidential legal adviser Mojanku Gumbi and Minister of Telecommunications and Broadcasting Ivy Matsepe-Casaburri.
Having received objections and submissions from disappointed bidders, Satra has retired to revisit its decision before making its final recommendation next week. Matsepe-Casaburri will then decide to either endorse or reject Satra’s final word.
Meanwhile, a report by the National Intelligence Agency (NIA) into the probity of the bidders has been submitted to Matsepe-Casaburri. Among other things, the NIA was investigating alleged corruption on the part of former Lebanese prime minister Rafiq Hariri, the head of Saudi Oger, Cell C’s overseas backer.