Heated drama as Vodacom, LCA trade blows in explosive court fight

0

 

Mohalenyane Phakela

THE High Court was this week turned into a battleground as lawyers representing Vodacom Lesotho and the Lesotho Communications Authority (LCA) sought to outfox each other in the two sides’ high stakes war over the LCA’s moves to stop the mobile communications giant from operating in the country.

Justice Keketso Moahloli heard arguments from both sides to finality and reserved judgement to an unspecified date, saying he first needed to consider all the submissions which made.

The legal battle stems from the 7 October 2020 decision by the LCA to revoke Vodacom’s operating licence on the grounds that it had failed to comply with the authority’s directive to pay a M40, 2 million fine.

The LCA had initially fined Vodacom M134 million for what it said were serious infractions since 2015 including “submitting audited financial statements that were unaccompanied by a certification issued by an independent external auditor”.

Vodacom was ordered to immediately pay M40, 2 million, representing 30 percent of the entire fine imposed on it. The remaining M93, 8 million (70 percent) was suspended for five years on condition that Vodacom does not commit further offences in contravention of its regulatory obligations within that period.

The fine ought to have been paid on 7 October 2020.  When it was not paid, the LCA decided to revoke Vodacom’s operating licence the following day.

This prompted Vodacom to file an urgent High Court application for an interim order nullifying the revocation. The interim order was duly granted by Justice Thamsanqa Nomngcongo paving the way for Vodacom to continue providing services pending the finalisation of its application for a final order against the LCA decision.

The chairman of the board of LCA, the LCA and Ms Matela are first to third respondents respectively.

In terms of the final reliefs sought, Vodacom wants the court to nullify the LCA’s decision to revoke its licence and to fine it M134 million.

It also wants the court to declare as unlawful, the LCA’s decision to include M-Pesa revenues as part of telecommunications revenue when calculating the regulatory fees Vodacom is expected to pay for its mobile communications licence.

In his submissions this week, Vodacom’s lawyer, Advocate Motiea Teele, accused the LCA chief executive officer (CEO), ‘Mamarame Matela, of usurping the LCA board’s powers to pursue her own personal vendetta against the telecommunications giant.

On the other hand, LCA lawyer, Adv Thabo Mpaka, blasted Vodacom for hiding behind politicians instead of dealing with the charges that the LCA had levelled against it.

Such was the intensity of the exchanges that at one stage Adv Teele had to ask Justice Moahloli to order Ms Matela to stop interjecting him as he was making his submissions.

Ms Matela would constantly whisper inaudibly to an unidentified woman seated next to her while Adv Teele was making his arguments. This went on until Justice Moahloli ordered complete silence in response to Adv Teele’s request.

In his submissions, Adv Teele argued that Ms Matela had acted without the approval of the board when she fined Vodacom and revoked its licence.

“The LCA board may delegate its powers to its chairperson or any of its members but such a person may exercise the authority with the discretion of the board,” Adv Teele argued.

“The third respondent (Ms Matela) is only a member of the LCA board. She cannot purport to act as the board when she was not given the delegation to enforce its proceedings. If she had the delegation, she could have carried out the process and still reported to the board which would exercise its mind on the issue.

“She confuses her powers of managing day to day LCA activities with enforcement powers. The law says it is the board which has such powers. The board is the authority itself and not the CEO. Why were the determinations not made by the board sitting as a whole? It is a clear indication that the third respondent acted ultra vires (beyond her powers).”

Adv Teele also questioned why Ms Matela appeared to be in a hurry to implement her decisions despite that the law prescribed that Vodacom ought to have been given 14 days to react before the LCA could enforce its decision to fine the mobile communications company.

He alleged that Ms Matela was simply pursuing her personal vendetta against Vodacom which became evident earlier this year when she wrote to Vodacom Lesotho’s parent company, Vodafone Group in London, accusing its subsidiaries in South Africa and Lesotho of funding regime change, money laundering and terrorism in this country.

In her letter to Vodafone, Ms Matela also accused Vodacom South Africa chairperson Jabu Moleketi and his Vodacom Lesotho counterpart, Matjato Moteane, of instigating a campaign to get her fired because she had become a thorn in the flesh of Vodacom Lesotho by constantly demanding that it complies with the country’s licensing regulations.

She alleges that the Vodacom bosses even offered then First Lady ‘Maesaiah Thabane a M2 million bribe to arrange for Communications, Science and Technology Minister Thesele Maseribane to be reshuffled from his post to make way for a new minister who would remove or suspend her.

She alleges this would have paved the way for the appointment of another person as LCA boss who would ensure that Vodacom Lesotho directors “remain in office to further unlawful activities in Lesotho unabated”.

The reshuffle was supposed to have occurred on 14 March 2020 during the tenure of the previous Thomas Thabane-led four parties coalition which comprised of the latter’s All Basotho Convention (ABC), former Deputy Prime Minister Monyane Moleleki’s Alliance of Democrats (AD), then and current Labour and Employment Minister Keketso Rantšo’s Reformed Congress of Lesotho (RCL) and Chief Maseribane’s Basotho National Party (BNP). It never happened though.

Mr Thabane was forced to step down by his own ABC party in May this year. He was replaced by former Finance Minister and ABC legislator Moeketsi Majoro.

In her 13 March 2020 letter to Vodafone, Ms Matela does not say whether Ms Thabane accepted the M2 million inducement to get Chief Maseribane reshuffled.

She, however, warned that had the reshuffle gone ahead the next day, she would have been left with no choice but to appeal to the international community as well as report Vodafone to the Independent Communications Authority of South Africa (ICASA) and the United Kingdom’s communications regulator, OfCom.

Given this background of her “biased”, Ms Matela ought to have recused herself instead of personally pushing for Vodacom’s ouster, Adv Teele argued this week.

“Rule 50(3) (of the LCA Regulations) contemplates that where a party seeks review, it needs to do so within 14 days and the authority (LCA) shall not implement a decision until that time has lapsed. In this case, the applicant (Vodacom) tells LCA that it intends to go to court but the third respondent (Ms Matela) ignores the authority’s own rules and moved to make a revocation – a clear indication of abuse of power.

“The LCA has been abusive to the applicant because it failed to wait for 14 days (before announcing the revocation of Vodacom’s licence). What was the hurry to impose the revocation when the applicant was still within the 14 days? The third respondent’s intention was to victimise the applicant and not solve the impasse in a court of law.

“She makes scandalous and irrelevant accusations, as far as suggesting that officers of the applicant (Vodacom) were involved in sponsoring terrorism and trying to have her removed. It is clear that she had personal grievances in accusing the applicant of treasonous acts. That disqualified her from dealing with the matter. She is accusing the applicant of anything under the sun.”

He argued that the LCA had chosen to enforce measures against Vodacom which were contrary to the powers granted to it by the Communications Act.

“These are two parties governed by the law. The LCA has been given power to investigate and even engage auditors. However, it does not have a right to seek the amendment of (LCA’s) financial statements but only seek clarity.

“Investors rely on such statements and there would be problems if they are amended. The LCA requested information from the applicant (Vodacom) which they were provided with but they said they did not believe the information. Instead of going to court, the regulator chose to enforce its own opinion,” Adv Teele argued.

On his part, Adv Mpaka argued that the LCA board had given Ms Matela the greenlight to act on its behalf. He accused Vodacom of hiding behind politicians and ignoring the serious allegations which Ms Matela levelled against it.

“It cannot be concluded that the third respondent (Ms Matela) was biased when she confronted them (Vodacom) with allegations and invited them to respond.

“The CEO has been acting under the authority of the board hence she always referenced the board in everything she said. In fact, it is the applicants (Vodacom) themselves who ran to politicians instead of acting within the law,” Adv Mpaka argued.

Adv Mpaka said that the LCA was within its rights to inquire about unclear transactions in Vodacom’s financial statements.

He also argued that Vodacom had flouted the law by engaging an audit firm in which its chairperson Mr Moteane’s sister-in-law was a partner.

“For the purposes of determining what it should charge Vodacom, the LCA relies on income statements of the licensee and this is the trial balance which will indicate the composition of Vodacom’s income.

“There was no indication of M-Pesa income on the Vodacom trial balance and when the authority asked about it, Vodacom simply picked a certain revenue which it had initially titled data and said it was M-Pesa revenue. Why should the authority rely on oral submissions when the books should speak clearly for themselves? All the authority asked was for them to classify M-Pesa revenue correctly.

“The Companies Act requires auditors to be independent. Section 15 of the Act says that no relative should be engaged as an auditor. This includes a sister-in-law even if it is not specifically stated,” Adv Mpaka argued.

He argued that the High Court should not entertain Vodacom’s application because this was purely a commercial dispute which ought to have been handled by the Commercial Division of the High Court.

He said it was not the first time Vodacom had approached the courts concerning the LCA and he did not understand why they had resorted to the High Court this time around and not its Commercial Division as they had done before. The fact of the matter is that the Commercial Court has not been operating since the death of its last judge Lisebo Chaka-Makhooane in July this year. Justice Chaka-Makhooane died of complications arising from Coronavirus (Covid-19).

Her death came barely a month after the death of fellow Judge Lebohang Molete. Their deaths left the Commercial Court without any judges. No replacements have been appointed to date and in the circumstances, Vodacom had little choice but to approach the High Court for redress.

However, Adv Mpaka argued: “it is incorrect that the High Court in its ordinary sitting has jurisdiction over this matter”.

“The Commercial Court was set up for matters involving commercial issues. If we could take any case to the High Court, then the Commercial Court would be redundant. This is not the first time they (Vodacom) are before court. Last year they properly went before the Commercial Court. What is different now because this matter is commercial in nature?

“From the beginning, it was unnecessary for applicant to have approached this court on an ex parte basis (without the respondents). In terms of Rule 50(3) of the High Court Rules, they should have approached this court for review. They waited for the eleventh hour to seek an interdict and not a review.

“I pray that this application be dismissed with costs,” Adv Mpaka argued.

However, Adv Teele replied that the High Court could not be separated from its Commercial Court and therefore their application was correctly before Justice Moahloli. He also argued that a sister-in-law was not recorded in law as a relative hence there was nothing wrong with Vodacom engaging an audit firm in which its chairperson’s sister-in-law had a stake. He also argued that M-Pesa is a financial service regulated by the Central Bank of Lesotho (CBL) and not the LCA which was only a licensing authority for telecommunications hence disclosure of M-Pesa should be done at the CBL.

Having spent much of the day listening to the two sides’ submissions from about 10 am to about 4.30pm, Justice Moahloli reserved judgement to an unspecified date to give himself time to make up his mind.

 

Leave A Reply

Your email address will not be published.