Social Injustice! Although their cups are already full to the brim with limitless opportunities, they have insatiable appetite to grab and possess more and have more financial stamina. This is the social evil that is likely to become dangerous to the economy of Malawi if it is left unchecked.
Board members of Telecommunication Network of Malawi (TNM) one of the mobile service providers in the country have been implicated in the K321 million scam which has only succeeded in denting their holier than thou reputation in business domain than making life better for small and promising investors in telecommunication sector what has been locally known as TNM share allocation fixing saga.
According to documents sourced by this blogger, a Malawian entrepreneur based in South Africa, Joshua Mbele of Ulalo Capital Investments Limited was led into financial trap by TNM Directors during the time TNM was being listed that lead to the investment suffering heavy financial losses forcing them to pay almost double as much; incurring huge losses in the process.
The company paid MK321 Million for the shares instead of paying MK170m as previously negotiated and agreed. This development had far reaching consequences not only for Ulalo and its financial funders but for Malawi as a risky destination for capital investments scaring potential investors. According to local investors this is a threat for the country to attracting serious investors.
Ulalo Capital Investments Limited (UCL) in a joint investment with SAEDF in Ulalo Telecoms Limited (UTL) lost their money in the share allocation scam when Ulalo, on assurance from Dr. Matthews Chikaonda, Board Chairperson, obtained a further loan from their funder Southern Africa Enterprise Development Fund (SAEDF) to increase their shareholding to 4.99% from their existing 3%.
According to the documents in my possession, in August 2008, UCL wrote to the Chairman of Board indicating their intention to increase their (UTL) stake from 3% to 5%. They got positive confirmation. Acting on instructions from Sean O’Neill, who acted as broker in the deal, Ulalo was advised that for the company to reach the target of 5% it had to hold 500 million shares in the TNM which subsequently meant UTL buying an additional 238 million shares. The broker had advised UTL to pay MK416m at 175 tambala for the additional shares. The price was later revised to K2.00 as per IPO Prospectus.
On 17th October 2008, Mr. Mbele in his capacity as Chief Executive Officer of UTL handed over MK459m together with the [share] subscription documents to O’Neill’s office. The other directors of Ulalo Telecoms Limited are Malcolm Pryor (Chairman), Chancellor Kaferapanjira, Patrice Nkhono, Washington Kaimvi and Rafique Symonnette.
But a Mr. Sean took a U-turn indicating that Ulalo Capital Investments Limited may not get all the shares. However, In November, UTL got only 80million shares and MK290 million as refund.
However Mbele wrote TNM board seeking clarification. The TNM Board responding through Pius Mulipa blamed the Malawi government interference, saying government was restricting unknown investors like UTL for fear of sponsoring opposition political operatives. With Malawi Kwacha stuck at Standard Bank, UTL ended up buying shares from Livingstone Holdings, a whose chairman is Mr. Hitesh Anadkat who also doubles as vice board chairperson for TNM. Mr. Anadkat was privy to the Ulalo/TNM dealings from the start and the predicament of Ulalo.
With such a transaction gone badly, the Ulalo funders wanted their capital injection back. Through a Civil Cause No. 38 of 2009 at the Commercial Court, Mbele and Ulalo directors lost the investment to SAEDF in discharge of the loan and interest. Hon. Justice John Katsala made the settlement order.
In March, this year, UCL director wrote to the Governor of the Reserve Bank of Malawi to formally lodge a complaint so that they dig to the bottom of it. After extensive interviews and presentation of documentation, Reserve Bank came to a similar conclusion that possible crime was committed under the relevant acts. According to the documents RBM has submitted its preliminary report on the findings to OPC and also sought explanation from TNM.
According to economic experts if the country is to make economic gains, some critical decisions have to be made; small Malawians entrepreneurs must be given equal opportunity unlike situations where foreign investors are seemingly favored while other small Malawian groups that have equally expressed interest and had cash to participant are restricted or outright denied the opportunity to invest in some sectors.