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Vodacom fined M134 million

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MASERU-VODACOM Lesotho has been fined a staggering M134 million for allegedly violating licensing regulations.
The Lesotho Communications Authority (LCA) imposed the fine on Monday, citing a battery of transgressions it said Vodacom violated since 2016.

The fine, whose quantum is unprecedented in Lesotho, will send chills in a telecommunications sector already grappling with the adverse effects of the Covid-19 pandemic.
It is a massive blow that could affect Vodacom’s profitability for the next few years.

The penalty is nearly 10 percent of the company’s M1.38 billion revenue in the last financial year. That is not small change even for a behemoth worth nearly M3.5 billion.
It instantly wipes off about a quarter of the telecommunication giant’s M619 million profit before tax.

In a September 28 letter ‘Mamarame Matela, the LCA’s chief executive, instructed Vodacom Lesotho to immediately pay M40.2 million or 30 percent of the fine.
Matela however said the other M93.8 million (70 percent) of the fine is suspended for five years on condition that Vodacom “does not commit any further contraventions of its regulatory obligations during the said period”.

Although this comes across as leniency, it amounts to leaving an axe hanging over Vodacom because Matela implies that the company is just a single violation away from losing its operating licence.

“In the event that Vodacom fails to comply, the Authority shall proceed to revoke the unified license,” said Matela in the letter to Philip Amoateng, Vodacom’s managing director.
The suspension of 70 percent of the fine on condition that Vodacom doesn’t violate regulations for the next five years also puts the company in a tight spot.

This is because telecommunications is a tightly regulated sector in which companies can easily fall foul of the law. It is nearly impossible for any company to go for five years without a violation, no matter how minor it is.
In Vodacom’s case the LCA’s condition is not specific on the magnitude of the violation that might be considered enough to make the company pay the M92.8 million. The company thus has to walk a tight and treacherous line to avoid either losing its licence, pay the whole fine or both.

thepost can reveal that while Vodacom’s management was discussing a response to the letter, the LCA was pushing for the M40.2 million to be paid by lunchtime yesterday.
The fine is a culmination of the intense battles between Vodacom and the LCA over a year.

Along the way there has been an unconfirmed allegation that some politicians want to push out Vodacom and bring a new mobile network operator linked to their cronies.
The LCA has however insisted that its only motive is to ensure compliance.
The government has denied this allegation, dismissing it as malicious mischief. Still that accusation has persisted and is now likely to be spurred on by the latest decision.

In her nine-page letter, Matela accused Vodacom of flagrantly violating regulations since 2015 and then denying wrongdoing when the LCA raised the allegations.

She said instead of showing remorse Vodacom either rejected the allegations or refused to comply with the regulator’s directive.
Although Matela mentioned several transgressions, she seems to have been particularly infuriated by what she saw as repeated and deliberate flouting of corporate governance rules by the country’s biggest mobile network company.

The LCA took issue with the fact that Vodacom’s chairman is related to a partner in the company’s external audit firm. The allegation is that a partner at the audit firm is sister-in-law to the chairman of Vodacom. This, to the LCA, meant the audit firm was not independent enough and its assessment of the company’s financials was likely compromised.

“The decision to appoint a relative of the Chairman is a material violation of principles governing combined assurance functions designed to build trust in the accuracy of financial reporting by the licensee (Vodacom),” Matela said.

She claimed that between 2015 and 2019 Vodacom contravened its licence conditions by “submitting audited financial statements that were unaccompanied by a certification issued by an independent external auditor.”

This, she added, is a serious breach of the licence because the certification was signed by the chairman’s sister-in-law.
In February this year the LCA asked Vodacom to explain why its licence could not be revoked because of this alleged violation.

Matela said Vodacom responded in March, insisting that it had not “contravened the condition, despite compelling factual admissions to the contrary”.
The denial “indicated that the contraventions were intentional”, she said.
To support her allegations that the violation was intentional, Matela said the Vodacom board of directors foresaw this during meetings held in September or November 2015.

“They applied their minds and elected to put up a façade of contrived processes aimed at managing the conflict of interest by excluding the Chairman of the Board from proceedings.”
“They deliberately contravened statutory prohibitions and licence conditions under the laws of Lesotho.”

The LCA also accused Vodacom of refusing to amend the format of its trial balance to comply with the rules.
In 2019 the LCA and Vodacom disagreed over how the revenue from the company’s Mpesa mobile money business should be treated in the financial statements.

Although that had been a sore issue for months, matters came to a head when Vodacom wanted to pay its annual fees to the LCA. The annual fee is four percent of the mobile network company’s net operating income and is based on the annual audited financial statements mobile networks companies submit to the regulator.

The LCA based the fee on the net operating income generated from the core telecommunications (voice and data) service business and Mpesa, its money transfer service.
Vodacom disputed the figure, saying it was based on wrong calculations.

Their reasoning was that income from Mpesa services should be discounted because it was not earned from core network operations. The company said Mpesa was a financial product, not a telecommunications one. The correct calculation, the company argued, should be based only on what the company earned from voice and data services.

The LCA however insisted that additional services like Mpesa formed part of the company’s income because they are driven by its network operations.
As the wrangling continued Vodacom missed the deadline to pay the fees. And when it eventually did, the regulator slapped it with an M8.2 million penalty for non-compliance. Vodacom Lesotho sued to challenge the penalty. It however later dropped the case and paid the fine but Matela’s letter lists this alleged violation as if it’s part of the current charges.

She further accused Vodacom of being dishonest in its financial and contractual obligations to provide telecommunications services to the unserved and underserved areas in Lesotho.
She alleged that Vodacom refused to implement the directive to stop out-of-bundle charges. Matela said Vodacom “was insincere about not being aware of the scope of the directive”.

She said the company launched media campaigns to discredit the Authority.
Matela further alleged that the company also “applied political pressure on the Authority to withdraw the enforcement proceedings”.
What seemed to have sealed Vodacom’s fate is what Matela saw as “aggravating factors” that included noncompliance, lack of remorse, dishonesty and unethical behaviour.

She said Vodacom denied all the charges and refused to comply despite the LCA’s compelling evidence against it. She alleged that in August, after being slapped with the initial M8.2 million fine, Vodacom arranged a “surprise meeting” with Communications Minister Thesele ‘Maseribane “to coerce the authority to retract the penalty”.

“When that intervention failed, Vodacom took the Authority to court to have the penalty reversed. Vodacom later withdrew the court case and paid the penalty.”
In February representatives of Vodacom’s majority shareholders met the regulator to discuss the alleged violations and the notice to revoke the licence. Matela alleged that one of the representatives left the meeting to attend another with the Prime Minister (Thomas Thabane).

This, she said, was meant to “escalate the matter and exert further political pressure on the Authority to avoid dealing with noncompliance issues”.

Shakeman Mugari

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Police hunt former minister

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THE police have launched a hunt for former police minister, Lepota Sekola, who is suspected of involvement in stock theft.
Police want to arrest Sekola in connection with two cattle carcasses that were found at his grandfather’s funeral in Borokhoaneng three weeks ago.

During the initial interview, Sekola had insisted that the cows belonged to his late grandfather who had kept them in South Africa for better pastures.

The police didn’t arrest him at that time because investigations were still in the early stages. Further investigations have however led the police to believe that the animals were stolen from South Africa.

But when they were ready for the arrest, Sekola could not be found at his home or on his phone.

Police say Sekola will be charged with unlawful possession and illegal importation of two cows from South Africa.

The National Stock Theft Coordinator, Senior Superintendent Mapesela Klaass, told thepost last night that they “have completed investigations but he (Sekola) is nowhere to be seen”.

“We cannot get him on his mobile phones,” S/Supt Klaass said, adding that the police have been “visiting his home but he is not there”.

“His family members are aware that we are looking for him,” he said.

S/Supt Klaass said they are continuing with their search and as soon as they find him, they are going to drag him to the courts.

He said the police suspect the cows were brought from South Africa to be slaughtered for Sekola’s grandfather’s funeral.

Police sources told thepost that one of the cows had new branding while another had nothing. Both had holes on the ears that signalled that they used to have ear tags.

Majara Molupe

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Magistrate saves WILSA boss

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A Maseru magistrate, Nthabiseng Moopisa, this week stayed the criminal prosecution of Advocate ’Mamosa Mohlabula who is accused of tax evasion, money laundering and corruption.

In her application Advocate Mohlabula, who is the director of Women and Law in Southern Africa (WILSA), said the Director of Public Prosecution (DPP) should not charge her pending finalisation of her tax evasion case.

Advocate Mohlabula is out on bail after she was formally charged with tax evasion in July last year.

She told Magistrate Moopisa that the DPP, Advocate Hlalefang Motinyane, was wrong to have agreed with the Director General of the Directorate on Corruption and Economic Offences (DCEO) to bring charges against her.

“In my viewpoint, the DCEO cannot be heard to charge me in relation to matters already seized with this Honourable Court,” she said in an affidavit.

She also said there is a pending civil case in the High Court in which the DCEO’s abuse of power is referenced, saying the precise way the case is handled will depend “on the way an alleged offence comes to the light”.

“Before that pending case is finalised, DCEO has no jurisdiction to detail me to court over isolated phenomenon of tax evasion and or over grievances of former employees of WILSA,” she said.
Advocate Mohlabula was charged together with the WILSA’s chief accounting officer.

She argued that it was WILSA that was being investigated, not individuals, further saying that was “a significant safeguard that the DCEO was impartial from an objective viewpoint”.

“To exclude any legitimate doubt in this respect the DCEO returned the items it seized from WILSA,” she said.

“This was a realistic and practical step towards administering justice and to avoid premature embarrassment to the management of WILSA.”

She said the Board of Trustees of WILSA were sent briefing notes which in certain respects reflected that the DCEO returned the properties of WILSA without warning them that they were suspects.

“In any event, we proceeded to fashion our arguments before the High Court. There was, and could be, no evidence to back up the decision of the DCEO to apply for the search warrant,” she said.

Advocate Mohlabula said before they took the matter to the High Court, she cooperated with the DCEO and it conducted an inquiry into the alleged crimes.

“Now that the matter is pending before the High Court, there is no more reason for the DCEO to remand me before the pending cases are finalised,” she said.

Staff Reporter

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Mphaka barred from ABC deputy’s race

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THE All Basotho Convention (ABC) has barred former Government Secretary Moahloli Mphaka and three others from contesting for the deputy leader’s position at an elective conference set for this week.
The three are Kefeletsoe Mojela, Katleho Molelle, and Lekhetho Mosito.

Mosito was an MP who was appointed Defence Minister for a day and removed the following day during Dr Moeketsi Majoro’s premiership.
The elective conference is set to be held at the Leqele High School hall this weekend.

A circular from the ABC said the three did not qualify to enter the race because they had not held any positions in the party’s committees.

The decision to bar the three is reminiscent of the same tactics that saw former leader Thomas Thabane block Professor Nqosa Mahao from contesting for the party’s deputy leader’s position.
Professor Mahao subsequently walked away and formed the Basotho Action Party (BAP).

A weakened ABC has never recovered from that split.

Mphaka and his colleagues were vying for the deputy leader’s position until they were stopped in their tracks by the circular which was issued out on Monday this week.
Dr Pinkie Manamolela is the current deputy leader.

She was plucked from the women’s league to replace Dr Majoro who had resigned from the national executive committee after losing the leadership race to Nkaku Kabi in 2022.

There is a high chance that the four could drag the ABC to court to assert their right to contest. The legal wrangles will likely destabilise the party that is still smarting from a thorough thrashing in general elections held in October 2022.

Mphaka this week told thepost that he will challenge the decision to block him in the courts of law.
“They are crazy people,” Mphaka said.

“I will not allow this to happen,” he said.

“I have already instructed my lawyers to launch an urgent application in the High Court to challenge the decision before Friday this week.”

He complained that it was not clear why the party had decided to kick him out of the race after he spent a lot of time and resources campaigning.

Mphaka said the national executive committee “usually allows members to contest for positions without considering whether they were ever in the constituency committees or not”.

The contenders in the race are former Water Minister Samonyane Ntsekele, ex-Police MP Lehlohonolo Moramotse, former Minister in the Prime Minister’s Office Leshoboro Mohlajoa, and Maseru Star Taxi Association member Sekhonyana Mosenene.

A member of the national executive committee told thepost that “many of us support Mphaka and Kefeletsoe at all costs”.

“We were dismayed when we saw the circular removing the duo from the race,” he said.

He said many ABC members were rallying behind Mphaka because “he has been campaigning even before everyone could start”.

“They know he has lots of followers.”

He said it is unfair that Mosenene has been allowed to run but he has never held any position in any constituency except that he represented his taxi association in the ABC national executive committee.
“Why has he been allowed to contest yet he is just like Mphaka and Kefeletsoe?”

He complained that Sekhonyana, while representing taxi operators in the committee, was eventually made the deputy party spokesman despite not being in any constituency committee after ’Matebatso Doti resigned from the position.

“Mphaka was chosen by the party to lead the 2022 elections campaign teams and develop a party manifesto,” he said.

“He was allowed to do all that without being involved in any party structures.”

The party’s spokesman Montoeli Masoetsa declined to comment.

Dr Manamolela told thepost that “the decision was not made by the party’s national executive committee”.

“I do not want to talk much …but it is not true that the party’s NEC decided to remove Mphaka and Kefeletsoe”.

Kabi could not be reached for comment.

Nkheli Liphoto

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