Vodacom's elite network
Vodacom’s connectivity—the cellphone group’s habit of choosing politicians and their friends as business partners—extends to two more of its operations on the continent.
The Mail & Guardian reported a fortnight ago that Mozambican President Armando Guebuza had become a shareholder in Vodacom Mozambique. Earlier Mozambican investors are led by a prominent ruling party MP and include a ruling party business vehicle and individuals associated with Guebuza’s predecessor, Joaquim Chissano.
Vodacom defended its choice of partners, saying that in Africa it was ‘the norm” to have participation by ‘governments, parastatal bodies, public investment institutions, political parties, trade unions, empowerment groupings and government officials”.
Judith February of the Institute for Democracy in South Africa this week said it was important that local companies developed good corporate values locally and then stuck to them when they did business abroad. ‘As South African companies, what kind of standards are we trying to set?”
Vodacom also has operations in Lesotho, Tanzania and the Democratic Republic of Congo (DRC).
In Lesotho, Vodacom’s 11,7% partner, the Sekha-Metsi Investment Consortium, was selected by the government.
But in Tanzania and the DRC, Vodacom made its own choices.
Vodacom Tanzania was licensed in December 1999, with its local partners Planetel Communications and Caspian Construction holding 36% and 10% respectively. Planetel’s stake has since decreased to 16%, while Caspian’s has increased to 19%.
Caspian’s shareholder representative on the Vodacom Tanzania board is businessman-politician Rostam Aziz, a close associate of President Jakaya Kikwete. At the time Vodacom entered Tanzania, neither man was quite as powerful as now—Kikwete was foreign minister and Aziz had yet to occupy a formal position in national politics.
But they proved a good bet: In 2005 Kikwete, supported and funded by Aziz as his campaign manager, succeeded Benjamin Mkapa as president, and Aziz was elected to Parliament. Last year, when Kikwete also took over the chair of the ruling party, Chama Cha Mapinduzi (CCM), from Mkapa, Aziz became the party’s treasurer.
Vodacom Tanzania had, however, spread its political bets. The CCM’s Pius Msekwa was both Vodacom Tanzania’s non-executive chair and Speaker of Parliament between 2003 and 2005. When Vodacom hosted a ‘VIP gala dinner” to bid farewell to outgoing president Mkapa in December 2005, Msekwa attended, presumably in both capacities.
Vodacom Group said in a statement this week that Aziz’s participation in Vodacom Tanzania was ‘lawful”, but added that ‘governance risks have to be carefully managed, particularly if they increase over time as a business partner, shareholder representative or director takes on an increasingly active role in politics”.
About Msekwa, it said that the appointment of Vodacom Tanzania’s chair was the prerogative of Vodacom’s Tanzanian partners, but conceded: ‘It is correct to note that having a Speaker of Parliament as a chairman presents a significant degree of governance risk, and Vodacom would very likely counsel or decide against such an appointment in future.”
Vodacom set up shop in the DRC late in 2001, when Vodacom International went into a 51%-49% partnership with Congolese Wireless Network (CWN), which had obtained a network licence in 1999 from the government of then-president Laurent Kabila.
Although CWN is headed by businessman Alieu Conteh, its partners, say two sources acquainted with Vodacom’s dealings in the DRC, include Didier Kazadi Nyembwe, who in 2001 and 2002 headed the DRC’s national intelligence agency.
Kazadi was one of Laurent Kabila’s closest associates—he reportedly helped raise his children, including Joseph Kabila, the current president.
It appears likely that Kazadi’s relationship with Laurent Kabila helped CWN land the licence in the first place.
Reuters reported after Vodacom Congo started operations: ‘The late Laurent Kabila handed out licences widely as political favours when he was DRC President, say analysts. [Then Vodacom International MD Andrew] Mthembu had to spend six months checking that Vodacom Congo had a national licence, that there would be no interference in its spectrum and that this would not be challenged by other operators.”
No sooner had Vodacom and CWN joined up, however, than Kazadi got into trouble. A United Nations-appointed panel examining the illegal exploitation of the DRC’s natural resources named him in October 2002 as a member of the ‘elite networks” profiteering from his country’s civil war.
After the release of this report Joseph Kabila, who succeeded his father after he was assassinated in January 2001, relieved Kazadi of his duties at the intelligence agency. But, behind the scenes, Kazadi remained an influential figure.
Vodacom Group said in its statement this week that to the best of its knowledge Kazadi ‘is a business associate, but not a shareholder, of CWN”. It referred queries to CWN.
CWN’s Conteh did not return calls.