In a
series of post on corruption which Mr Strive Masiyiwa, who double as also one of my mentors shared on his Facebook wall
recently, the Chairman of telecommunications company, Econet and
Zimbabwe's richest man, Strive Maiyiwa, described how former Delta state
governor James Ibori, who is serving jail term in the UK, allegedly
demanded a $4.5 million bribe from him to set up and successful operate
his business in Nigeria, promising to send him and his company parking
from Nigeria if he failed to give the bribe.
Masiyiwa
in his post said Lagos and Delta state governments were co-investors
when he brought the company into Nigeria. He said after he and other
investors succeeded in bringing in the company into Nigeria, he was
asked to pay a bribe totaling $9 million to top politicians. He also
accused top politicians from Kenya, Zimbabwe, Liberia of being extremely
corrupt and also demanding for bribe. He made so many accusations, your
head will literally spin. Read his expository post after the cut..
Part 1
I
had the privilege of making Nigeria’s first GSM phone call back in 2001
when I called the regulator to say, “We’re live!” Who would’ve believed
then that Nigeria today would have more than 167 million mobile
phones?!
It
all started out as a very exciting new chapter for enterprise in
Africa. Shortly after President Obasanjo was elected, the new government
announced an incredibly transparent international auction process for
three national mobile phone licenses.
To
participate in the bid, you not only had to raise money, but there had
to be a member of the bidding consortium who was an experienced GSM
operator. Econet Wireless met the requirements because of its experience
in Zimbabwe and Botswana. Our Nigerian partners, which included state
governments, local banks and high net worth individuals, were financial
investors. The largest shareholder had only 10%. That was the written
agreement.
I
managed to assemble a consortium of 22 investors to put up the money
needed to bid. Our shareholders were all Nigerian, mostly institutional
investors including leading banks and two state governments, Lagos State
and Delta State. The license cost us $285m and was the most expensive
license ever issued in Africa at the time. This was 2001.
We
considered the investment not only about putting together a network,
but also about building a nation. We knew it had the potential to
transform Nigeria’s entire business and social architecture.
Most
of our investors had between 1-10% shareholding. Econet Wireless
Nigeria had only 5% of the shares, but that was fine because it was 5%
ownership of a very big pie.
As
the "technical partner and operator," Econet was the company with the
expertise to build and operate such a business. Our financial investors
recognised this, and also allowed us to receive 3% of the turnover as
our fees. This was standard practice in the industry.
We
were one of the winning bidders and they gave us just six months to set
up business and get our network operating. We were under a lot of
pressure but our network was live two days before the others! Customers
were pouring in. We were number one in the market with an estimated 57%
market share.
___Then
came the fateful day when I was told that our company must pay a total
of $9m in bribes to senior politicians (in state government) who had
facilitated the raising of the money to pay for the license.
I
refused to authorise the illegal payments. Meeting after meeting was
held to try to get me to agree, but I would not. The money would not be
paid as long as Econet was the operator and I had signing authority.
James
Ibori, the Governor of Delta State, was demanding $4,5m be paid to him
in his personal capacity. He was one of the most powerful men in the
country and had a reputation for violence. When he heard that I was
refusing to approve payment he issued an ultimatum:
___"Pay or I will chase you and your people out of the country."
I refused.
The
shareholders met and voted Econet Wireless Nigeria out of management.
They cancelled our management contract. James Ibori and his colleagues
personally attended the meeting to remove us. After the meeting one of
them (a prominent local businessman even today) came up to me and said:
"Unfortunately for you, God does not have a vote."
I had to withdraw all my staff and their families: 200 people in all. We left Nigeria.
Most of our people had to be retrenched. The loss of the contract almost drove us to bankruptcy as a group.
They
invited a big international operator to replace us as technical partner
and operator. They changed the name of the company from Econet to
V-Mobile.
Within days of their arrival, the managers of the new operator signed off the payments demanded as bribes.
Then what happened?
A
few noble Nigerians had both the integrity and courage to carefully
collect all the documentation on the movement of the money, and pass it
all on to me.
___There’s a saying worth remembering in uncovering the trail of destruction that is corruption: “Follow the money”…
I bided my time... then I wrote a letter to the United States Department of Justice!
It was 2003.
Part 2
Nigeria
has an agency known as the Economic and Financial Crimes Commission
(EFCC). After we had to leave the country, a few noble people at the
company tipped off not only me but the EFCC about the payment of the
bribes, which had by this time risen from $9m to $13,5m.
I
had never actually heard about this agency myself until I got a call
from the Nigerian Embassy in South Africa to say they wanted to come and
see me to interview me as a witness.
A
team of very senior EFCC officers came to see us in South Africa. They
were solid and professional in their enquiry. It was clear they wanted
to do something about it.
However,
when these officers returned home to Nigeria, they got into very
serious trouble. Their investigations into the irregular payments had
been brought to the attention of James Ibori (Governor of Delta State)…
Soon
thereafter, the most senior officer leading the investigation was
demoted and sent to a remote part of the country as an ordinary
policeman!
Agencies
like EFCC in Nigeria sometimes have brave and gallant law enforcement
officers. Unfortunately, as I observed, they’re often let down by their
political bosses, and sometimes even by the courts. This can change if
activism from the citizenry emerges to support their work.
___We
should not only support official efforts to stop corruption but also
help these agencies and organisations in their investigations. If you
have relevant information about illegal activities, passing it on could
make all the difference between impunity and imprisonment.
In
my letter to the US Justice Department, I detailed the full history of
the demands for a bribe. I had dates, times, records. I then reminded
them that since the big international operator had a listing on the New
York Stock Exchange, they were duty-bound to launch an enquiry. Why did I
go to them?
The
United States government has a law called the Foreign Corrupt Practices
Act. The United Kingdom has a similar one called the British
Anti-Bribery Act. Whatever you do, make sure you never fall foul of
those laws because, if they ever use them to come after you, you’re a
"gonner" my friends.
A
few weeks later, US officials wrote back advising me that an enquiry
had been launched. They contacted the big international company seeking
answers to my allegations. My contacts at the company called to tell me,
"All hell has broken loose at the company."
The
parent company of the South African-based multinational sent external
auditors and lawyers from London to Nigeria. They immediately dismissed
all the senior executives sent to Nigeria to run the company, and they
left in a hurry!
Although
they fled the scene of the crime and returned to their country -- after
admitting even to both the US Justice Department and the EFCC that the
money had been paid out – the stolen funds were never returned to the
Nigerian people, even to this day.
Meanwhile,
the departure of the other mobile operator did not mean we could return
to Nigeria. The shareholders found another operator, this time from the
Middle East.
They
sold this new operator the control of the company even though Econet
Wireless Nigeria had the "right of first refusal" over any sale. They
simply ignored that provision in our agreement. This was illegal, both
according to our shareholders agreement and Nigerian Company Law. It was
left for us to take up the fight in another forum, the Nigerian courts.
Part 3
The
state government of Akwa Ibom held 15% of the equity in Econet Wireless
Nigeria. This state was not one of the original investors but joined us
later.
After
five years, the governor of the state of Akwa Ibom decided to sell its
stake. It had more than doubled in value in dollar terms, which meant it
had been a good investment.
The
state governor, an elderly gentleman called Victor Attah, sent a
message through a friend that he wanted to see me in London to find out
if I was interested in exercising Econet’s right to buy its shares. I
agreed to meet him in London.
"I want to sell the shares to build an airport before I leave office," the governor explained.
The governor was accompanied to the meeting by a British lawyer who sat quietly taking notes. His name was Bhadresh Gohil.
With
a wave of his hand, the governor said, "Mr Gohil is our legal advisor
here in London. I have instructed him to handle all our negotiations
with you."
The meeting did not last more than 30 minutes, as the governor was on his way to catch a flight to the U.S.
We agreed with Mr Gohil that we would meet with my own advisors a few days later to start the process.
A
few days later, I went to his office with a professional banker who
advised me on such transactions. We met in the lawyer's plush London
offices. He was confident and smooth-spoken as he explained how much we
were expected to pay. Then he explained that our money was to go to a
"Special Purpose Vehicle" (SPV) before it was transferred to Nigeria. It
was a sophisticated structure and he showed me a drawing of how it
would work. I wrote it all down very carefully into my notebook.
___Such corporate entities as SPVs can definitely have legitimate purposes, but this one did not!
As
I quizzed him about why such an unusual structure was necessary, Mr
Gohil changed tact and tried to entice me with an offer I could not
refuse (or so he hoped): "I'm also the advisor to the governor of Delta
State, Mr James Ibori, and if you agree to pay for these shares using
this structure, we will offer you shares belonging to all the state
governments. In total, you can have more than 30% additional shares. It
will be enough to take control of the company. My clients just want out,
and they are willing to give you what you have always wanted."
I
listened to him, quietly taking notes in my small notebook. I did not
give away anything, but inside I was very angry. From the design of the
structure, I knew immediately that it was meant to siphon off money
before it reached the state governments. It was clear there was a
conspiracy to steal a lot of money.
___Having
already pocketed $13.5m, now the government officials could easily
pocket probably another $100m through the sale process that they had
developed with the help of Mr Gohil and other clever advisors in London!
When
I left the meeting I immediately contacted the mutual friend who'd set
up the governor's meeting. The friend was so embarrassed as I explained
the corrupt structure clearly designed to steal money from the state
governments. He promised to raise the issue with Governor Victor Attah. A
few days later he came back and said Governor Attah had claimed
ignorance about the proposal put to me by Mr Gohil. He said he would
speak to Mr Gohil and tell him it had to be done properly without the
structures.
We
never heard from them again. Mr Gohil simply vanished. A few months
later we were told that the shares had been offered to a company from
the Middle East who subsequently bought them. I was not privy to how
they did it except that they had violated my right to buy the shares...
That is another chapter in the saga, but not for now.
Fast-forward
three years, long after the sale. Our lawyers in London called me one
day and asked if I could come urgently to a meeting with the Proceeds of
Corruption Unit of the London Metropolitan Police: "You are not in any
trouble, but I think you will find what they have to say very
interesting!"
This
special unit was launched by the British to investigate corruption by
foreign government officials who try to launder stolen money to the U.S.
and the UK.
The officers asked me to explain everything I knew about the sale of V-Mobile shares to Celtel (later Zain).
I
explained the history of the entire transaction and the shareholders
disputes that had led to our departure. After awhile, they asked me to
focus on specific events, and, in particular, my meetings in London with
the governor of Akwa Ibom, and also the meetings with Mr Gohil. It
became clear to me that they had a lot of information!
"What can you tell us about this structure, using a Special Purpose Vehicle?"
I
explained my understanding of it. Later on, I gave them my diary in
which I had recorded the details of my meeting that day with Mr Gohil.
Below my drawing of the structure, I had written in bold letters:
"This is corrupt!!!"
Not
long after my meeting with the Proceeds of Corruption Unit, Mr Gohil
was arrested together with one of his partners and several others. I
later learned that when the Middle Eastern company bought the shares,
some of the proceeds had been diverted using the Gohil structure. Some
of the money was sent to a bank in London. This large amount of money
was enough to alert the British authorities that money was being
laundered through their banking system.
Their
investigations led them to Gohil and his associates. They raided his
offices and found stashes of documents, including details of the
structures. Now they were looking for witnesses to help prosecute them
for corruption and money laundering.
The
British authorities tried without success to get other parties,
including the governor of Akwa Ibom, to come out and clear their names
but they refused. Officials of President Umaru Musa Yar'Aduah's
government successfully thwarted all extradition requests.
I
was asked to be a witness in the trial of those who had been arrested
in London. I willingly accepted. Next I will tell you about my role as a
'Witness to the Crown" on behalf of the people of Nigeria whose money
had been stolen. It would be the first time that someone big went to
jail (in a foreign country) for stealing money from Africans.
