The decision to award the third cellular licence to Cell C was supported by only three councillors
Ivor Powell
A week after the government’s announcement that South Africa’s third cellular telephone licence is to be given to the Saudi-backed Cell C consortium, the award seems as shaky and compromised as ever.
A cluster of new irregularities emerged this week which could fuel the legal fires of unsuccessful bidders challenging the award.
The Mail & Guardian has learned that the latest recommendation to award the multibillion-rand licence to the Cell C consortium was supported by only three of the five South African Telecommunications Regulatory Authority (Satra) councillors involved in the process – a development that undermines the legitimacy of this latest recommendation.
Sources close to the selection process said Satra’s latest endorsement of Cell C was pushed through after a Cabinet meeting on Wednesday last week rejected Minister of Posts, Telecommunications and Broadcasting Ivy Matsepe-Casaburri’s request for a further delay in announcing the winner and instructed her to finalise the matter by the end of the month. After announcing the selection of Cell C last Friday, Matsepe- Casaburri extended the period before finally awarding the licence until next Tuesday. This is in accordance with an earlier interdict secured by Nextcom which specifies that five working days be allowed after the announcement of the preferred bidder for review by unsuccessful bidders.
Government sources said the Cabi-net itself had been divided on the cellular issue, with Minister of Trade and Industry Alec Irwin and Minister of Finance Trevor Manuel both expressing reservations about the appropriateness of the Cell C award.
Meanwhile, Satra sources said two councillors – Labius Lesibu and Tsidi Mayimela – could not be persuaded to endorse the recommendation. This is in direct contradiction to the assurance by Matsepe-Casaburri that the Satra recommendation was carried unanimously. In its communications with unsuccessful bidders, the Satra council also indicated the decision had been unanimous.
However, it is understood that in the wake of controversy that blew up when the Satra council first announced its intention to recommend the Saudi-backed consortium for the licence in February this year, the two councillors have been reluctant to associate themselves with the position of the other three sitting councillors.
Deepening the mystery, the M&G is in possession of an attendance register which shows that Mayimela and Lesibu were present at only two of 17 Satra council meetings called to discuss the third cell issue after Satra initially recommended Cell C for the licence in February. At the majority of meetings where the issue was discussed, only the three councillors supporting the Cell C bid – Eddie Funde, Noluthando Gosa and Willie Currie – signed the register.
These meetings saw, among other things, the commissioning of two consultants’ reports on issues pertaining to the cellular licence, one by international consultancy Grant Thornton Kessel Feinstein and the other by Nkonki Sizwe Ntsaluba. The Nkonki Sizwe Ntsaluba report alone – the product of three days of commissioned work – cost R400 000.
The M&G has learned that a resolution passed by the Satra council in September 1999 specified that a decision on the third cellular licence, while it need not be unanimous, would legitimately represent the view of Satra only if it was supported by four signatures.
However, when the Satra recommendation was finally confirmed and passed on to the Ministry of Communications on June 29, it was accompanied by only a single signature, that of acting chair Funde.
Funde’s signature was not on Satra’s official letterhead but under the letterhead of its newly formed successor, the Independent Communications Authority of South Africa (Icasa). Funde, however, is not a member of the Icasa council, and is therefore not empowered to append his signature to Icasa documents.
Controversy around the third cellular licence has centred especially on two issues. One is the forced recusal of Satra chair Nape Maepa (who is known to have not favoured Cell C’s claims to the licence) from the final adjudication of five rival bids, a situation which left the supporters of Cell C in the majority. Maepa was forced to stand down on the basis of a remote and subsequently discredited connection with a shareholder in the Africa Speaks bid. The exclusion of Maepa – if a court decides it was unjustified – could invalidate any recommendation by the Satra council.
The Maepa issue was given a new and seemingly sinister twist last month after Matsepe-Casaburri, who had been party to the forced recusal of Maepa from the February adjudications in the first place, announced that he had been cleared of any impropriety and no conflict of interest had been discovered.
Reacting to this announcement, Maepa proceeded to inform both Satra and the presidency that he was planning to resume duties in respect of the cellular licence process. However, after being told by Funde that council was awaiting the decision of the presi-dent, Maepa was finally informed by presidential legal advisor Mojanku Gumbi on June 29 that his recusal was to remain in force as his participation could create legal problems.
The other major question over the process arises out of the fact that the Satra council has effectively chosen to ignore the findings of specialist reports the council itself commissioned to advise it on the relative strengths and weaknesses of the rival bidders for the licence. The overwhelming consensus among these consultancies was in favour of the Nextcom consortium.
Satra’s own rules specify that the council should be guided by expert advice or explain why it has chosen to differ. Yet of the expert reports, only the latest, by Nkonki Sizwe Ntsaluba, supports the Cell C bid. And even in this case the support is at best conditional. The consultants express, among other reservations, a concern that Cell C will be dependent on huge sums of additional funding from its principals, Saudi Oger, if it is to survive an initial period of insolvency.
The Grant Thornton Kessel Feinstein report, which was highly critical of the Cell C bid, was rejected by the Satra council last month on the basis of links with bidders that have subsequently been questioned and could lead to legal action by the consultants. The report estimated that Cell C would start up R212-million in the red and could owe R766-million by 2003.
Nextcom is expected to lodge papers before the end of the week to interdict the Cell C decision and call for a judicial review of the process.
Telia Telenor is considering legal action as well.