[Kictanet] Fw: [DigAfrica] How broke company won tender

Wed Sep 21 17:04:42 EAT 2005

What's worse is that it took so long to come out! Where have we been 
looking? Or not?
FE
At 04:06 PM 9/21/2005 +0300, you wrote:

>----- Original Message -----
>From: <alice at apc.org>
>To: "KIPlist" <kiplist-cl at lyris.idrc.ca>
>Sent: Wednesday, September 21, 2005 3:51 PM
>Subject: Fw: [DigAfrica] How broke company won tender
>
>
> > This is scandalous! more so as consumers continue to suffer the
> > consequences of a
> > duopoly....
> > 
> ------------------------------------------------------------------------------
> >
> >
> > How broke company won tender
> >
> > By Gordon Opiyo
> >
> > Details of how companies that were in the red won the country's
> > third mobile license have been exposed.
> >
> > Initial investigations by the Kenya Anti-Corruption Commission into
> > the award of the license in 2003 show that two of the major
> > shareholders in consortium were had financial difficulties at the
> > time of the award.
> >
> > The investigations could expose what could be one of the
> > country's
> > biggest public tendering scandals.
> >
> > At the same time, court documents from the South African High Court
> > have shed more light into intricacies that led to the controversial
> > award.
> >
> > Audited accounts of Econet Wireless International made available
> > to `The Sunday Standard' show that the company's
> > financial state was
> > so bad in 2003 that they could not qualify for an overdraft from any
> > international bank.
> >
> > Sources at the Kenya Anti-Corruption Commission say investigators
> > were startled at the state of accounts of the two main shareholders.
> >
> > The winning consortium consisted of Kenya National Federation of Co-
> > operatives 81 per cent, Econet Wireless International 10 per cent,
> > Rapsel and Corporate Africa each with 4.5 per cent.
> >
> > The Communications Commission of Kenya required members of the
> > consortium to have a minimum turn over of $100 million (Sh7.5
> > billion).
> >
> > "Econet's and Kenya National Federation of Co-operatives'
> > records
> > could not pass any basic stage even in low capital expenditure
> > projects," says a senior investigator at the anti- graft body.
> >
> > The turn over of Econet Wireless International in that year was $8
> > million that of Econet Satellite Services was $9 million, while
> > Econet Wireless New Zealand, was in deficit. Thus the total turnover
> > of companies that qualified for the Econet bid was less than $20
> > million.
> >
> > With the other partners not being financially stable, the consortium
> > fell short of the minimum financial requirements by well over $80
> > million.
> >
> > Accounts audited by the London-based Deloitte & Touche LLP paint a
> > gloomy picture of the state of affairs at Econet Wireless
> > International.
> >
> > In one of the reports, auditors declare that Econet Wireless Limited,
> > Company Registration No. 4149948, in the year ended June 30, 2003,
> > urgently needed a cash injection.
> >
> > The auditors say: "Each of the Group's (Econet's) Investment
> > requires
> > additional financing in the short term in order to develop their
> > businesses which could then support the carrying values of these
> > investments in the group's balance sheet.
> >
> > The ability of these investment businesses to raise further financing
> > is not known with any reasonable degree of certainty at this time. "
> >
> > The auditors also declare the Econet group could not acquire
> > overdraft facilities at the time it acquired Kenya's third GSM
> > license.
> >
> > The auditors declare: "The financial statements have been prepared on
> > the going concern basis, however, the company is in the process of
> > obtaining further funds to finance ongoing day to day operations and
> > to finance future capital expenditure."
> >
> > The report continues: " In this respect the directors are aware that
> > they do not have overdraft facilities and there is an immediate and
> > ongoing need to raise cash to fund day to day operations of the
> > company and group and to finance the construction of the New Zealand
> > Telecommunications network." On June 28, Co-operatives Development
> > minister Njeru Ndwiga shocked the nation when he announced that the
> > group that had acquired the 81 per cent stake in the third mobile
> > company was bankrupt.
> >
> > Ndwiga announced KNFC was indebted to the tune of Sh40 million
> > against an asset base of Sh25 million.
> >
> > Ndwiga said the cash-strapped organisation was unable to honuor basic
> > financial obligations such as its Sh1.3 million monthly wage bill,
> > repayment of a Sh10 million loan from the Cooperative Bank, Sh5.6
> > million in statutory deductions and Sh800, 000 in legal fees.
> >
> > The minister said that the printing press worth Sh20 million was
> > vandalised. Ndwiga's revelation came months after The Sunday
> > Standard
> > exclusively reported that the company was unable to honour its
> > obligations in the mobile phone company.
> >
> > As a result, the minister banned all officials of KNFC from holding
> > any position within the co-operative sector.
> >
> > The other shareholder, Manga Mugwe of Rapsel Limited had a dispute
> > with Kenya Commercial Bank over a loan.
> >
> > More details of the financial state of Econet Wireless International
> > came into the public domain in June this year at the South African
> > High Court. Econet had taken its former finance director, Mwaura
> > Njiri, to court; accusing him of using confidential information he
> > got during his tenure to hurt the company.
> >
> > In the case number 05/12059 that was heard at the Witwatersrand Local
> > Division, Mwaura defended himself against the allegations. In a sworn
> > affidavit explaining how funds for the license fee were raised,
> > Mwaura says, "The first applicant's (Econet Wireless
> > International
> > Limited) balance sheet at that time was so bad that it (Econet) was
> > unable to obtain funds from any bank.
> >
> > The First applicant in fact had been unable to raise the required
> > amount of $27 million ."
> >
> > Mwaura, during whose tenure Econet bid for the license says the
> > company managed to get funding as a result of his personal
> > commitment.
> >
> > As Econet drags its feet on its roll out plan, the two existing
> > mobile companies continue making huge profits as the public pays
> > heavily for their services.
> >
> > source : http://www.eastandard.net/hm_news/news.php?articleid=29062
> >
> >
> >
> >
> > Dig Africa site welcomes you to join us at
> > http://www.yahoogroups.com/group/Digafrica
> >
> > Also if you are interested to join a Swahili/English discussion group
> > click
> > http://www.yahoogroups.com/group/kiswahili
> >
> >
> >
> >
> >
> > 
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