Stefaans Brmmer and Mungo Soggot
Did two well-connected black empowerment firms fraudulently conspire to mislead MTN in a bid for shares?
This counts among the dirtier claims that may surface when both companies go to court in an internecine battle over the cellphone company shares, said to be worth more than R200-million.
The offices of Makana, the investment arm of the Ex-Political Prisoners’ Committee representing former Robben Islanders, and Safika, a prominent empowerment company, are on the same street in Woodmead, Johannesburg.
Their physical proximity is complemented by what many would see as political proximity: Makana Investments is led by former African National Congress political prisoners Soto Ndukwana and Peter-Paul Ngwenya (who is also a director of M&G Media). Its controlling trust is chaired by former prisoner and premier Tokyo Sexwale.
Safika was co-founded by co-prisoner and former presidential adviser Moss Ngoasheng and empowerment heavyweight Vuli Cuba, and has more recently taken on board Saki Macozoma, another former prisoner who has climbed the business ladder to dizzying heights.
About three years ago Safika Investment Holdings and Makana Trust joined forces to bid for part of the 15% in MTN that became available to empowerment groups when United States telecoms giant SBC offloaded its interest. Safika brought greater experience to the venture, while Makana brought its more broad-based structure, always a plus in an empowerment race.
MTN Holdings, later succeeded by M-Cell, awarded a first tranche of about 1% of its shares to the Safika-Makana joint venture, then called Safika Wireless, during the second half of 1998. Another one-and-a-half percent was awarded the following year.
But soon the comrades turned on each other. The central issue is Makana’s decision to join the bid for the third cellphone licence; a potentially more lucrative endeavour than playing MTN shares. The catch was that MTN/M-Cell had specifically told the empowerment groups wanting its shares that there was a choice: bid for our shares or pursue a stake in the third cellular operator, but you cannot do both.
The result was a letter, dated February 1 1999, from Makana to Safika, confirming that Makana Investments intended to bid for the third cell licence and informing Safika that Makana was renouncing its interest in Safika Wireless, that is its half of the MTN shares.
A second letter, this time from Safika to Makana and dated February 15, confirmed that should Makana be unsuccessful in its third cell bid, it would be reinstated with Safika shares to the value of the MTN shares it had relinquished.
By February last year the fur was flying. Makana, which in the end failed even to pursue the third cell bid, wanted the shares or their value back. Safika said it owed Makana nothing. Makana instituted a civil claim demanding 50% of the share pool it estimated was worth up to
R250-million.
In April this year Safika made a settlement proposal worth up to
R12,5-million, only a tenth what Makana wanted. The war of words
escalated and accusations that were flung about included claims of lies, even fraud.
This week Makana “strategically” withdrew its original suit and prepared an urgent interdict to stop Safika disposing any of the MTN shares when special-purpose vehicles holding the shares are dissolved next month. Makana insiders said it intended to follow up with a new, more targeted suit to recover “their” half.
The fight has been dirty to date, but the version that the Mail & Guardian understands may be presented to court beats it all: that Makana never really gave up its shares, even temporarily, and that the February 1 1999 letter “relinquishing” Makana’s interest was a deliberately pre-dated misrepresentation written solely for the benefit of MTN/M-Cell.
A version of events prepared by a Makana insider says: “The final meeting where Makana Investments was agreed upon as the safe vehicle for a third cell bid was on 6 June 1999. The two letters that were purporting to be giving up shares in Safika Wireless, but also restoring Makana Investments to its original position … were written on the same day and hour.
“They were backdated to be able to respond to any MTN enquiry, as Safika Investment Holdings was suggesting that it would be strange for Makana Investments to express an interest in the third cell four weeks before presentations. All of this was done in the name of ensuring, firstly, that Makana Trust [as opposed to Makana Investments, which never owned the stake in the first place] retains its stake in Safika Wireless and, secondly, MTN would not take any punitive action against all of Safika Wireless …
“One can see that this was a collaborative exercise among comrades. It was about how two structures with a struggle background were trying to beat the system and gain for those that were outside the economic system.”
Safika representative David Barrit this week quoted Cuba as saying that this latest claim was “an absolute pack of lies”. Barrit said the company refused to comment further. “Safika’s position is that there have been so many wild allegations that we are not prepared to wage a media war. We are completely comfortable for the [court process] to take its course.”