Vodacom faces a R7,5bn lawsuit
March 31, 2008
By Thabiso Mochiko
Johannesburg - Trouble is brewing over Vodacom's black economic empowerment (BEE) deal, with one consortium threatening a lawsuit against the company and with a shortlisted frontrunner facing rejection from one of its consortium members.
The Tiger Consortium, one of the failed bidders, said at the weekend that it was in the process of filing a R7.5 billion lawsuit against Vodacom.
The R7.5 billion is equal to the value of Vodacom's 7.5 percent up for sale to empowerment partners when the deal was announced two years ago.
Tiger Consortium, formed in late 2004 by black Vodacom employees, the Vodacom Black Business Partners Forum and other broad-based groups, claims that Vodacom's recent announcement that it will issue shares to its business partners through public participation was duplicating its structure.
This announcement also indicated that Tiger, which was last March shortlisted with several other bidders from an initial 60 bidders, had not made it to the final list. The Vodacom Black Business Partners Forum has 5 000 members who own Vodacom's 35 000 community service telephones (CSTs) and Vodashop and Vodacom4U franchises.
Tiger's spokesperson, Jacobus van Schalkwyk, said last week that Tiger's members were "angry" because Vodacom formed parallel proposals which had already been proposed by Tiger.
"Vodacom cannot reject Tiger's proposal but use its components," said Van Schalkwyk, adding that Tiger was not angry about not being shortlisted again.
Van Schalkwyk said Tiger's lawyers were ready to proceed with the lawsuit in the UK, where Vodacom's parent, Vodafone, is based, and also in the US, at the UN Human Rights Courts.
Tiger's members would vote on the class action lawsuit resolution at their annual general meeting next month.
Other resolutions included moving their CST businesses to Cell C and MTN, he said.
The Communication Workers' Union, which includes Vodacom employees, last week threatened to strike if Vodacom did not provide details of its proposed employee structure.
Vodacom's spokesperson, Dot Field, would not comment, but confirmed: "RMB [Rand Merchant Bank] was appointed to structure the BEE transaction, including staff participation."
The delay in finalising the three-year empowerment deal has attracted controversy, with Amandla Omoya, one of the frontrunners, likely to split as Mowana Five Mile (M5M) threatens to pull out of the consortium. M5M was reported to be concerned about the economic dilution of the deal.
One of Amandla Omoya's partners, Sipho Pityana, said yesterday that it would submit documents demonstrating its financial capacity.
"M5M has been given time to sort themselves out," he said. "But Amandla Omoya is proceeding with the bid
Field said if M5M withdrew it would not affect the BEE process. M5M's Nkenke Kekana was not available for comment at the time of going to print.
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