Vodacom reiterates reasons for withdrawal

Johannesburg, 03 Jun 2004

Vodacom says its trust in Nigerian Vee Networks was broken when Vee Networks (previously Econet Wireless Nigeria, or EWN) paid brokerage fees in contravention of an agreement. Vee Networks disputes this.

Vodacom CEO Alan Knott-Craig says Vodacom agreed to proceed with the management agreement of Vee Networks subject to a number of conditions, including the requirement that the balance of brokerage fees were not paid by EWN.

In a statement released last night, Knott-Craig stressed that Vodacom`s withdrawal from Nigeria involved a breakdown in good corporate governance and trust, and nothing else.

He went on to say it was his understanding that EWN needed to raise capital and this was to be done through the services of brokers.

"These brokers were rewarded with brokerage fees, which I am told are legal, equal to 5% of the equity they raised. These fees had been partially paid when Vodacom was invited to consider participating in EWN. After a due diligence report, Vodacom decided to proceed with a management agreement to manage EWN, subject to a number of conditions, which included the requirement that the balance of these brokerage fees was not paid by EWN before the agreement was signed," he says.

Knott-Craig says when Vodacom discovered the fees had been paid by EWN, it demanded that these fees be returned to the company, which subsequently was done.

However, in response to Knott-Craig`s statement, Vee Networks released its own statement saying that it had received no written objection of the payments to the brokerages from Vodacom.

"It is important to state that at every meeting held with Vodacom during the negotiation stages, it was emphatically stated that the balance of the brokerage fees to Bromley Limited, Oceanic Securities and Empee Ventures would be paid.

"Other than verbally, at no point did Vodacom demand non-payment of the fees, despite requests by Vee Networks for a written confirmation of their opposition to the payment," the statement says.

The statement adds that in all Vee Networks` dealings, it stands for good corporate governance and that no payment had been made without following due process.

The Vee Networks statement echoed Knott-Craig`s regret at the damage done in the process and once again stressed that Vodacom`s exit from Nigeria followed a mutual agreement between the two organisations, and was not due to any corruption on Vee Networks` part.