Vodacom Wins Shareholder Divestment Legal Action

An attempted legal action against South Africa based Vodacom by a Black Economic Empowerment (BEE) group has been dismissed with costs by the  Johannesburg High Court. The Tiger Consortium had tried to sue Vodacom for a potential R7.5 billion (US$926 million) over the planned divestment of shares to BEE groups.

The Tiger Consortium was rejected in its application to be part of Vodacom's BEE program - although it alleged that Vodacom has based its divestment plan on the Tiger Consortium's own submissions. Vodacom had previously said that the consortium was one of sixty potential BEE partners and was dismissed in the adjudication process to seek out partners who could add value to the company.

Black Economic Empowerment (BEE) is a program launched by the South African government to redress the inequalities of Apartheid by giving previously disadvantaged groups (black Africans, Coloureds and Indians who are SA citizens) economic opportunities previously not available to them. After the end of Apartheid in 1994 and with the advent of majority rule, control of big business in both the public and private sectors still rested primarily in the hands of white individuals. According to Statistics South Africa, Whites comprise just under 10% of the population, meaning that most of the country's economy was controlled by a very small minority. BEE is intended to transform the economy to be representative of the demographic make-up of the country.

In a recent statement, Vodacom said that participants will include Vodacom's South African staff (25%), the black South African public and VSA business partners referred to as Public participants, and strategic shareholders - including established broad-based BEE groupings.

Posted to the site on 9th June 2008