‘We got it wrong’ — Icasa
The Independent Communications Authority of South Africa has made a midnight confession that it blundered spectacularly in trying to block the R88.4-billion Vodacom listing — and the mistake could cost taxpayers up to R5-million.
The broadcasting and telecommunications regulator made the frank admission during a presentation to parliament’s portfolio committee on communications on Thursday night, in a meeting that finished minutes before midnight.
The meeting was scheduled to reveal Icasa’s strategic plan and budget for the next financial year but ended up being an inquiry into the disputed listing — revealing all the drama and intrigue behind efforts to stop it at the 11th hour.
It also emerged that greater parliamentary oversight will now be exercised over the oft-criticised regulator.
The listing followed Telkom’s sale of 15% of Vodacom to UK telecommunications giant Vodafone for R22.5-billion.
Icasa shocked the market when it went back on an earlier decision to approve the deal late on Friday, May 15.
The rand weakened by 3% immediately after the announcement. The listing, scheduled for the Monday, was the biggest stock exchange listing thus far this year.
During the initial, open hearing, Icasa chairman Paris Mashile said he and his 25- strong team present “got it wrong”.
He said they were “filled with contrition, remorse and regret” over joining Cosatu’s application to stop the listing.
He said the decision was “problematic” and “not properly handled”, adding: “We fell off our horses. Next time around we would not have done it the same way.”
Mashile said he had been “approached by other people” about going to court.
Later, a closed session was convened to discuss the events of that weekend, when a high court judgment was made against Icasa and Cosatu on the Sunday night, with the former being ordered to foot the bill for the urgent interdict.
In a series of startling admissions by Icasa, it emerged that:
# CEO Karabo Motlana was “sitting in his office” and was not informed of the decision taken by six of Icasa’s eight councillors to go to court to halt the listing;
# Mashile was out of the country at the time, but had been approached by Cosatu general-secretary Zwelinzima Vavi and Jacob Zuma’s lawyer Julie Mohamed, who was the instructing attorney for the union, for information and to join the application; and
# Three legal opinions — including those of Cosatu’s lawyers — were obtained by councillors before they took the legal route and contradicted an earlier decision to endorse the deal.
Motlana said he was “in the building” when the decision was taken by the councillors. He was only informed of the move by his head of legal affairs.
“In the ordinary course that council instructs external legal advice it must come to the office of the CEO … as the accounting officer,” he said.
Mashile said the exercise could cost Icasa up to R5-million in legal fees. Icasa’s own costs were in the region of R250000.
Members of the portfolio committee labelled the failed court bid “fruitless expenditure” and insisted that “someone must be held accountable for the debacle”.
Committee chairperson Ismail Vadi said he would approach the Treasury for clarity on “exactly who should pay legal costs”.
He questioned Icasa’s independence, saying it had joined a “civil society grouping” like Cosatu despite the then president Kgalema Motlanthe having signed off on the deal.
“Since when does an independent regulator join action with a civil society grouping against the very government you are serving?” he asked.
His fellow committee members also blasted Icasa, with ANC MP Eric Kholwane insisting that “they must provide answers”.
Icasa councillor Robert Nkuna, one of the six who made the decision, said: “We have reflected on the matter. It was wrong. A decision was made and it will never happen again.”
On the cost, Nkuna said “invoices will be coming through… and we don’t know how much it will come through”.
In March, the deal was approved by Telkom shareholders, who include government, before being approved by the Competition Commission. Icasa also gave the nod, saying it did not need to make a ruling.
But a week before the listing Cosatu filed an application for Icasa to rescind its decision and hold public hearings. Nothing was heard from Icasa until that Friday when it announced that it planned to hold public hearings in mid-June.
Icasa councilor Marcia Socikwa, who filed a supporting affidavit in the application, said public hearings “would be rendered futile and superfluous” if the listing went ahead.
Vadi also lambasted the regulator on other issues, questioning overseas trips by its executive, work attendance and irregular appearances before parliament. It was subsequently decided that the board must present quarterly reports to the committee.
Said Vadi: “We’d like to know how we are going to manage this relationship over the next five years.”
The Icasa board promised to give Vadi a “schedule of all (overseas) trips undertaken and proposed trips for the present year”.
Mashile admitted, when questioned by members over the oversight role that Icasa plays, that the organisation is sometimes out of its league in an ICT sector awash with many billions of rands.
“Without a doubt the operators are like Goliath… when we take them on it’s akin to that of a heavyweight boxer fighting with a flyweight boxer.”
ICASA, Cosatu and Vodacom – give your views
Business Times
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