LCA tightens screws

LCA tightens screws

MASERU-THE Lesotho Communications Authority (LCA) is tightening screws on the telecommunications sector, amid revelations that it wants to scrutinise and approve all senior appointments at mobile network companies.

LCA boss ’Mamarame Matela has told the companies they should get the authority’s approval before appointing anyone to their boards or senior management.
In a November 10 letter, Matela tells the companies that the authority will approve the appointment of directors, chief executive, managing director, chief technology officer and chief financial officer.

The LCA will also approve heads of compliance, legal, human resources, internal audit and information technology. Even heads of marketing and public relations can only be appointed with the regulator’s consent.
The LCA also wants to vet employees already holding those positions.
Matela says all existing officers will have to submit applications for approval.

That application, Matela says, will include a comprehensive CV indicating relevant qualifications and experience in their current roles. Proof of registration with professional bodies has to be attached.
They will also have to complete what Matela calls a “Fit and Proper Assessment form” twice a year.

“All new appointments of officers shall be subject to the prior written approval of the Authority upon application of such approval, provided that the officer meets the fit and proper assessment by the authority,” says Matela.

Ideally, such a form evaluates the fitness and propriety of management members or officers to be in their positions. The assessment is based on experience, reputation, conflicts of interest, independence of mind, time commitment, and collective suitability.
Central Banks across the world use this assessment on all senior employees of financial institutions. The idea is to safeguard the integrity of the financial sector, enhance individual accountability and protect depositors.
Although the LCA is yet to issue guidelines on the assessment it is highly likely to use the same criteria as central banks.

What is however unclear, and perhaps somewhat contentious, is what happens if an office holder fails the LCA’s assessment.
It is likely that applying the assessment in retrospect might have adverse effects on someone already holding a position.
Mobile network companies fret that the LCA might be encroaching into what they see as operational matters that should be within the purview of the shareholders, directors and senior management.

Applied in the form Matela suggests, the regulations might mean companies cannot hire employees of their own choice. And even those holding positions might be removed at the LCA’s behest.
For the incumbents the fear is that such a directive might have implications on their employment contracts.

“The question we are asking ourselves is whether you dismiss, reassign or demote someone the authority considers to have failed the LCA’s assessment,” says a senior manager with a local mobile company who demanded anonymity “for fear of stepping on the authority’s toes”.
He says the LCA’s directive covers a lot of positions “to the extent that almost everyone in senior management will have to be approved”.
“There might be some rationale for the authority to approve some appointments but I strongly doubt it should extend to such a huge number of positions,” he said.

Another manager says the LCA is giving itself “far-reaching power to veto almost any senior appointment”.
“That makes the authority more powerful than the shareholders and directors,” he says, adding that the “trouble is that there might be serious questions about the fairness of the process”.

“Who will decide who is fit and proper and on what basis? How independent is the assessment? The trouble is in the implementation of the directive. I foresee problems.”
Other managers who spoke to thepost this week wondered if the LCA’s directive is legal. Matela is relying on two sections of the Communications Act 2012, all of which give the authority broader powers to make regulations or chop and change existing ones.

Matela cites Section 4 (1) which says the authority has power “to fulfill any other duties necessary for the implementation of the Act”.
She also points to Section 5(1)(c) which gives the authority power to establish its own procedures, rules, codes, directives, decisions and guidelines.

Section 5(y) is much wider in that it gives the regulator authority to “take any other action” “necessary and proper to perform its duties”.
The only caveat is that those actions must be in line with the law.
Matela is also relying on Section 5(2) which gives the LCA far-reaching powers to do “anything for the implementation of the Act” and “anything related to the development of the communications sector”.
In simple terms the regulator has a much broader legal framework in which to manoeuvre when it comes to maintaining a tight grip on the mobile network operators.

The directive comes hard on the heels of the vicious battle between the authority and Vodacom Lesotho. The battle is still in the High Court where Vodacom is challenging the LCA’s decision to fine it and cancel its licence.
The directive appears to be the LAC’s and Matela’s attempt to control the calibre of people who work in the companies. It is possible that the directive could have been informed by the authority’s dispute with Vodacom.

Earlier this year Matela questioned the integrity of some Vodacom board members, describing them as reckless and unethical.
This was after the board resisted her directive to fire an internal audit firm whose senior partner was related to its board chairman.
Matela also accused some board members of trying to use political influence to get her fired and change the government.

Vodacom has vehemently denied these allegations, pointing out that Matela’s use of such “unprofessional” language and “damaging” accusations show that she is hell-bent on punishing the company.
Matela also told a cabinet meeting that the regulator was having “issues” with the licence holders. She repeated the same allegations at a press conference. The LCA board has also said as much.

Staff Reporter

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