The Optis Telecommunication bid was today thrown into disarray after allegations that it had stolen intellectual property from its competitor.
Optis is in competition with the largely British Goldleaf Trading consortium for a 51% stake in the second national operator (SNO) earmarked for foreign players, with a bid that has been roundly criticised for its incoherence.
The two bids are being publicly examined by the Independent Communications Authority of SA (ICASA) in public hearings due to end today.
The Goldleaf consortium claims that much of the Optis bid plagiarises the work of Goldleaf`s Joseph Okpaku.
After Optis demanded proof of the allegation, Okpaku pointed to several sections of the bid document containing work over which he claims copyright. This includes the entire description of Optis` mission statement and an entire table of contents, complete with errors Okpaku said were contained in an early draft of his work.
Goldleaf also says meta-information contained on an electronic version of the bid identifies Okpaku as the author.
Okpaku said the plagiarism explains puzzling references to Mozambique in the Optis bid, as he had been involved in a bid for a cellular licence in Mozambique. That licence was finally awarded to Vodacom.
The Optis delegates, including high-level representation from shareholder Shanghai Telecom, were obviously caught unawares by the allegations.
Optis initially denied knowledge of the issue. When pressed, it said its major shareholders, the Friedland family, had compiled the bid with independent consultants. It offered to address the matter in writing once it had questioned the consultants, who were not present at the hearing.
Warren Friedland, the 18-year-old who owns the largest stake in Optis, said the family was not familiar with the telecommunications market. "We were forced to use consultants," he said.
Optis refused to name the consultants.
"We are definitely not admitting to anything at this point in time," said a legal representative of the group.
The allegations could mean the end of Optis` aspirations, as the selection process does not allow for bids to be replaced or updated.
Goldleaf also grilled Optis on its lack of market research and due diligence on the assets of Esi-Tel and Transtel, which are to hold a combined 30% of the SNO.
"Optis did not deem it necessary to do a due diligence as the estimate of their [Esi-Tel and Transtel`s assets] was between R3 billion and R5 billion," said Ian Levitt, a shareholder and legal director of Optis.
As the hearing moved into the afternoon, Optis continued to face a barrage of questions from Esi-Tel and Transtel, calling into question the ownership, management and financial strength of the consortium.
Optis said it to date had no unencumbered cash to bring to the SNO, despite plans to spend a total of $875.1 million in the first four years of its operation.
ICASA is to continue the questioning this afternoon.
Further written questions from ICASA are to be answered by Optis and Goldleaf within two weeks, and are to be made public.
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