State-sponsored bribery wins out
TIM COHEN Business Day
22 September, 2007
THERE was once a time when I would rather proudly tell my European friends that despite travelling around Africa a fair bit as a journalist and as a tourist, I had never been forced to pay a bribe. In fact, the only time I paid a “facilitation fee” was on a train in France — the same country where I was last robbed.
Of course, you shouldn’t tempt fate, and alas, neither is now true. It’s not really a surprise to be robbed in Johannesburg — there is one robbery every day in my suburb. And on the bribe front, a few years ago I paid a “facilitation fee” in Mozambique.
It wasn’t really a bribe; it was more an act of AK47-enforced extortion for what a collection of thugs in uniform considered an act of motoring indiscretion — in other words, doing nothing wrong other than be in the wrong place at the wrong time.
Anyway, as a result of the experience, I think I can relate to how MTN CEO Phuthuma Nhleko must feel this week — ripped. Of course, the amounts are different. Nhleko paid $60m and I paid $60. But the methodology was the same.
The issue is of course MTN’s newly purchased network in Benin, which was silenced when the telecoms regulator retrospectively raised the price of a licence fee 500% — which included $52m in backlicensing fees. The company’s “crime” was rather like mine, being in the wrong place at the wrong time. MTN inherited the Benin licence under the Spacetel brand following its $5,5bn takeover of Investcom.
It’s specific misdemeanour was not informing the authorities of the change in ownership — which was of course widely known in the industry — and the price for this was having its licence chopped. Except of course, there was no suggestion that MTN had done something so wrong that it shouldn’t continue providing services to Benin’s 6-million residents. It was just a rather elaborate, entirely predictable, incredibly tiresome game — just like the one I played with the Mozambican AK-wielding thug in uniform. There was no suggestion he would give me a written fine for my so-called traffic violation. No, no, that was not the game.
Anyway, in Benin, the game was played, and eventually they settled. MTN paid the extortion price, which was bearable since the company makes R150m before tax a year in Benin. So call it R80m in clear profit. Over 10 years that is R800m compared with the R360m it will pay out.
Of course, the Benin government knew this, which is why it set the extortion price it did. Just like my police-thug knew to ask for R600, which I was probably prepared to pay, as opposed to R800, in which case I might have stood my ground.
Still, what disturbed me about this was the intervention of President Thabo Mbeki and Benin’s President Thomas Boni Yayi in the process. Both were feted for their “negotiating skills” in achieving this agreed end. But this is a bit of a laugh since overall MTN got screwed. They paid the full extortion price and got a few years added to their licence as part of a new contract.
But since the Benin authorities have demonstrated they don’t believe in contracts, how much is that worth?
The fact is that Mbeki and Yayi have implicitly endorsed a flagrant act of state extortion and reduced MTN to being a mere function of South African foreign policy. In effect, all MTN’s licences are now up in the air, since I know what’s going to happen now; all those conservative bankers who sign off on MTN’s debts are going to question business practices in a place they call “Africa” (despite the fact that Spain tried to pull the same trick some years back).
As a continent, Africa underperforms economically decade in and decade out, and the cause is not colonialism, postcolonialism or precolonialism. It’s what its leaders do right here, right now. |
