Vodacom dials #1 in Moz

Vodacom has made Mozambican President Armando Guebuza a shareholder of its subsidiary operating that country’s second cellphone network.

While Vodacom avoided referring to Guebuza when it announced the deal three weeks ago, the Mozambican media soon outed him, sparking debate about the first citizen’s conflicts of interest.

Compounding suspicion that it was a direct attempt to buy political favour, a Mozambican newspaper has claimed that Vodacom Group CEO Alan Knott-Craig pleaded with Guebuza last year for more sympathetic treatment by the state.

When Vodacom first won its Mozambican licence in 2002 it also chose connected partners, some of them close to then-president Joaquim Chissano.

The company this week acknowledged Guebuza’s participation as well as the political connectivity of its original partners, but claimed this was ‘the norm”. It said it was ‘confident” its Mozambican partners ‘support the principles of good governance”.

Guebuza, sometimes called ‘the businessman-president”, has extensive private interests. These include a substantial stake — an exact percentage could not be established — in Intelec Holding, a ranking company with diverse investments.

Guebuza’s co-shareholders in Intelec include Salimo Abdula, who chairs the country’s confederation of business associations.

When Vodacom announced on March 8 that Intelec had become a 5% shareholder in Vodacom Mozambique, its press release referred to Abdula only. It said Vodacom Mozambique would ‘benefit from the additional support and oversight that can be provided by a Mozambican holding company and particularly Mr Salimo Abdula, Intelec’s chairman, a leading businessman and current chairman of the [business confederation].”

Responding to Mail & Guardian questions this week, the Vodacom Group confirmed it was aware of Guebuza’s stake in Intelec, which it said was ‘lawful and well known in Mozambique and predates his becoming president of the country”. It said he did not participate in Intelec’s direction or management.

Vodacom Mozambique’s only other local shareholder is Emotel, its original partner, which holds 2%. Emotel’s shareholders in turn include close associates of the Chissano family, as well as SPI, an investment vehicle of the ruling Frelimo party. Emotel is headed by Hermenegildo Gamito, a prominent Frelimo parliamentarian.

Maputo newspaper Savana claimed earlier this month that Emotel’s inclusion in 2002 resulted from ‘the practice of involving the [political] nomenclature, purportedly to guard against possible disappointments”.

But when Guebuza succeeded Chissano in 2005, a new business elite ascended, ‘reducing significantly the influence that figures close to Joaquim Chissano had in the past”.

Savana claimed that a visit by Knott-Craig to Mozambique last July had to be seen in that context — it was considered ‘an attempt to find alternatives to guarantee political protection and business expansion in Mozambique.

‘Apparently, the solution presented itself through the reconstitution of [Vodacom Mozambique], which made possible the entry of Intelec Holding of Armando Guebuza.”

Savana claimed that during the July visit Knott-Craig met Guebuza personally and raised what Vodacom saw as favouritism displayed by the state towards mCel, the state-owned operator and Vodacom competitor. Among other things, state institutions supposedly failed to use Vodacom’s services.

Vodacom confirmed that Knott-Craig had met with Guebuza. It did not comment on the alleged subject matter other than to say that Knott-Craig ‘meets with governments of countries in which we operate, as a courtesy and to discuss Vodacom’s investments”.

Online publication Canal de Moçambique said problems arising from Intelec’s inclusion as a shareholder included that Guebuza, as head of state, appointed the minister of transport and communications as well as the head of the communications regulatory authority, both of whom make decisions that have an impact on Vodacom. It asked: ‘Is there no conflict [of interest], moral or ethical?”

Vodacom this week attempted to justify its choice of partners, saying: ‘In Africa, and particularly in the continent’s post-war and emerging economies and democracies, some degree of direct or indirect participation — by governments, parastatal bodies, public investment institutions, political parties, trade unions, empowerment groupings and government officials is the norm —

‘The most important step that governments and investors can take to manage these country and company governance risks is to ensure that any such participation is lawful, transparent, and managed in accordance with local and other applicable laws and standards.

‘Vodacom Group is confident that all of Vodacom Mozambique’s shareholders are aware of and support the principles of good governance, and are aware of their heightened obligation to conduct the company’s business in a manner that is above reproach.”