Vodacom describes Ace Magashule corruption allegations as ‘baseless’

Vodacom has rejected allegations published in a media report on Thursday that it “gifted lucrative partnership deals” to companies linked to former Free State premier Ace Magashule in return for major government contracts, describing them as “false and baseless”.

The Daily Maverick’s Scorpio investigations unit reported that a “closely guarded internal Vodacom investigation” had flagged a “questionable partnership deal” between the company and a Free State businessman who has links to Magashule. The report said the deals could land current and former Vodacom executives, including group CEO Shameel Joosub, in “hot water”.

According to the report, after a meeting between Joosub and Magashule in Cape Town, the Vodacom CEO wrote to the former premier – who is now secretary-general of the ANC – vowing that it would “divert nearly R600-million to emerging companies in the Free State and the Northern Cape”. It said Vodacom then partnered with Marangrang IT, a company said to have “strong links to Magashule and the ANC, while Vodacom won the Free State’s voice and data tender”.

The report said a similar partnership deal was struck with Supana Technologies, also linked to Magashule, after the company won a multibillion-rand national government tender to provide cellular services.

“Thanks to their association with Vodacom, Marangrang IT and Supana Technologies are said to have earned at least R20-million in commissions and other revenues as a direct result of the contracts Vodacom secured from the Free State provincial government,” the report added.

The Daily Maverick said some of Vodacom’s BEE partners in the Free State have claimed they were “side-lined” by the company “to make way for Marangrang IT and Supana Technologies”.

“Documents and source accounts suggest Magashule may have strong-armed Vodacom into engaging with local partners linked to the then-premier, and that the cellphone giant was happy to oblige in exchange for contracts from the provincial government,” the report added.

‘Disappointed and surprised’

But Vodacom on Thursday hit out at the article, denying it secured the award of provincial or national government contracts in an untoward manner. The company said it “rejects the allegations as false and baseless”.

“We were both disappointed and surprised that despite Vodacom providing the journalist with facts – such as the timing of certain meetings — these have been incorrectly represented,” it said in a statement.

“In the normal course of business, Vodacom executives will attend meetings as part of our stakeholder engagement programme. This programme incorporates the premiers of South Africa’s nine provinces and included Ace Magashule, during his tenure as premier of Free State province from 2009 to 2018,” it added.

“In 2014, Vodacom and other companies were called to a forum that included Free State MECs, directors-general and CIOs regarding a claim that companies had been slow to transform in the province. During this meeting, Vodacom outlined past, current and future initiatives aimed at driving transformation not just in the province but also at a national level.

“As a common courtesy, Vodacom sent a letter to the premier’s office following this meeting in which we documented past, current and future initiatives that were discussed in the meeting. This includes confirmation that Vodacom planned to increase its investment in network infrastructure in the Free State region to R569-million. It is patently false that Vodacom was planning to ‘nearly double its expenditure on goods and services from local companies in Magashule’s backyard’ as the article claims. It is clear in the letter that network infrastructure equipment is imported as there are no local manufacturers,” it said.

It added that, in appointing suppliers and selecting business partners, the company “considers a variety of factors including scope of requirements; skills required; historical performances; health and safety compliance; commercial proposition, availability of alternative suppliers/products; and broad-based black economic empowerment credentials”.

“In line with Vodacom’s strict procurement policy and procedures, the group CEO does not get involved in the appointment of suppliers. It is therefore grossly incorrect to claim that Joosub was in any way involved in appointing suppliers named in the article. To be clear, Joosub has never discussed any suppliers with Magashule; neither has Magashule pushed Vodacom to use certain suppliers.

“It is common knowledge that in October 2017, the Competition Commission announced an investigation into the RT15-2016 tender award (the national government transversal tender), which is yet to be finalised. Vodacom has cooperated fully with this investigation. We are confident that the tender was deservedly awarded to us in a fiercely contested, and yet fair and transparent, bidding process. The RT15-2016 tender process was initiated and led by national treasury through its procurement office with the award based on various elements including cost savings, quality of service, security, coverage, support and billing, quality of network, and technology innovation.”

‘Nothing untoward’

“As a company committed to doing business ethically, Vodacom will regularly conduct due diligences, as a matter of course, on our numerous business processes and contractual terms. Following a thorough internal investigation, which included specialist external parties, the due diligence done on the RT15-2016 tender process found nothing untoward.”

The Daily Maverick report stated that one of the deals has has been reported to the Commission of Inquiry into State Capture. In response, Vodacom said it has “provided information to the Zondo Commission at the behest of the commission”.

“Vodacom does not want to interfere with the commission’s work; neither do we believe that it is appropriate to comment on this aspect while the commission’s inquiry is in progress.”  — (c) 2020 NewsCentral Media