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Vodacom faces litigation in Congo

January 8, 2010 • Mobile and Telecoms, Top Stories

Pieter Uys, Vodacom Chief Executive

Vodacom International is accused of usury, breach of trust, fraud and forgery in its dealings with Vodacom Congo, the later seeking a repayment of US$180 million on the overpayments made to the international operator.

Congolese Wireless Network (CWN), the 49% joint venture partner in Vodacom Congo with Vodacom, accused the Mauritius-based Vodacom International, the subsidiary through which Vodacom holds the interest in Vodacom Congo, of abusing its position as a senior joint venture partner and leadership of the Cogolese board to short the company of capital and avoid paying corporate taxes in DRC.
“To be compelled to resort to the law in resolving a business dispute is never desirable if an alternative can be found, but we feel we have been abused and exploited by Vodacom, and they have refused to take our grievances seriously. All we are seeking is justice for Vodacom Congo and for its shareholders”, argued Alieu Conteh, Chairman of both Vodacom Congo and CWN.

The lawsuit states that, despite continuous growth over the past eight years since the deal has been enforced, the Congolese company never made a profit and even injected additional loan capital to fund its expansion.

The loans, provided by Vodacom International through Standard Bank of South Africa, resulted in overpayments by Vodacom Congo of up to US$180 million. No copies of documentation was provided to CWN or Vodacom Congo, which now claims the deal is in fact a revolving credit facility placing the company as dependent on the international operator.

The country’s largest mobile phone network with 4,3 million subscribers, Vodacom Congo explained that, if it hadn’t been for the costs, the company would have achieved profitability by now. CWN wants to recover the amount or to resolve the issue as soon as possible, but Vodacom International’s procrastination will most probably see most companies in court in Kinshasa in January or February.

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