South Africa's Vodacom - jointly owned by local Telkom and the UK's Vodafone - is reported to be facing a potential R7.5 billion (US$926 million) lawsuit over the planned divestment of shares to Black Economic Empowerment (BEE) groups.
The Tiger Consortium, which was rejected in its application is filing the lawsuit - which equates to the entire 7.5% stake being offered to BEE groups - according to a report in the Business Report newspaper.
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.
The Tiger Consortium claims that Vodacom rejected its application but then chose to use its proposals when setting up a counter offer for the BEE allocations.
Tiger's spokesperson, Jacobus van Schalkwyk, told the newspaper that Tiger's members were "angry" because Vodacom formed parallel proposals which had already been proposed by Tiger. "Vodacom cannot reject Tiger's proposal but use its components," said Van Schalkwyk, adding that Tiger was not angry about not being shortlisted again.
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.
The company has however come under criticism and political pressure for the delays in completing the BEE allocation - which is puts down to the complex nature of the transaction which it says is designed to avoid some of the problems with previous BEE transactions, which tended to concentrate the divested assets in the hands of a politically connected minority.
On the web: Business Report
Posted to the site on 31st March 2008
Posted to: www.cellular-news.com/story/30191.php