Godfrey Marawanyika/Conrad Dube
ECONET Wireless Group has been allowed to institute fresh arbitration proceedings against two shareholders in Nigeria’s Vee Mobile who flouted procedures agreed to by the comp
Econet owns 5 % in Nigeria’s third-largest mobile network, which has over three million subscribers. The telecommunications group said in a statement that it had been granted leave by Nigeria’s chief judge of the Federal High Court, Justice Rosemary Ukeje, to launch two additional arbitration applications against Delta State and First Bank, two of the 22 shareholders in Vee Mobile.
In the first of the applications, Econet will take Delta State to arbitration for acquiring additional shares without advising other shareholders as is required by the shareholders’ agreement.
The acquisition by Delta of shares belonging to Bromley and OO Networks only emerged during an investigation by the Nigerian Economic Financial Crimes Commission (EFCC) into the affairs of Vee Mobile.
The EFCC launched investigations to ascertain whether there were any irregularities in the running of the company, particularly after Econet invoked a clause in the shareholder agreement seeking to nullify an offer made to a third party investor by other shareholders to acquire additional shares in Vee Mobile in violation of a pre-emptive rights that gave Econet first right of refusal.
The EFCC found that contrary to the view of all other shareholders in the company, Delta actually has 25% in the company, and not 10% as recorded in the company register.
This is because Delta quietly bought the shares, and had the former owners act as fronts on their behalf.
If it is found that Delta did not follow the procedures required in the shareholders agreement then the sale would be nullified and the shares offered to all other shareholders.
In a separate application for arbitration, Econet is challenging a decision by First Bank to withdraw its sale of shares after offering them to Econet and other shareholders.
Econet group head for media relations, Sure Kamhunga, confirmed to businessdigest that preparations were already underway to seek arbitration over the two issues but declined to go into further details since the matter was now sub-judice.
According to Econet, First Bank offered all its shares for sale in September this year and Econet was amongst the shareholders who offered to buy all the shares.
Following payment by Econet for shares, First Bank withdrew the sale.
Econet argues that the share sale could not be withdrawn after acceptance of the offer and wants the arbitrators to rule.
Econet is already involved in another separate arbitration over a shareholder dispute going on with other shareholders, which started more than two years ago, regarding the offer of a majority stake to South Africa-based Vodacom, which has tabled an offer to acquire 51% of Vee Mobile.