David,

 

These are good questions, and several remain to be unravelled. There are many

dimensions to this issue. One party clearly has a public relations scoop over the

other as certain reporters who masquerade as 'correspondent' gleefully write about

one entity in a one sided manner that borders on glorification.

 

If KNFC's arguments are accurate, it begs the question of how a minority shareholder

made a decision on behalf of an entire company without the knowledge of the other

shareholders so as to 'withdraw' the case.

 

I doubt that KNFC want to pocket the difference, just the other day none other than

Vice President Awori promised to deliver the licence to KNFC/EWK on Ushirika day

while addressing members of the Co-operative movement.

 

This was reported in sections of the media (note the lop sided coverage) and KNFC

was quoted as stating they were prepared to go it alone (per KT and Capital FM).

 

You are right on the mark, it is imperative to use lawyers to avoid these types

of controversies or where token board members (now former) of a company are

compromised and terrorize an entire movement. KNFC were brought on board by a

well meaning Kenyan who was then an executive at the foreign entity, he was apparently

inspired by how Empowerment programs were working in South Africa. KNFC

has the capacity to raise the capital. KNFC has been derailed several times by

powerful outside forces who continuously meddle in its attempts to progress. This

licence is fully capable of being wholly owned by Kenyans and Kenyans alone if

need be through a combination of grass root equity through the cooperative

movement, private equity,debt financing and a build, operate and transfer arrangement.

What KNFC needs is an advisory firm with experience preferably with transactions in

South Africa's empowerment models.
 

As to the retention of the funds, it will be interesting to see how the Government

handles this debacle. As it is, if the tender rules were to have been followed to the

letter the licence ought to have been cancelled over 2 years ago according to the

tender rules and the Kenya Communication Regulations.

 

 

(iii) if the Applicant, after having notified the Commission of
its acceptance of the licence, fails to pay the licence fee
fully within 60 (sixty) days after such notice;

 

 

However, the licence was not awarded as the fee was not raised by the October 17 deadline. But neither did the Communication Commission of Kenya (CCK) invite fresh tenders or award the licence to the second highest bidder as required by the Kenya Communications Act. Instead, it decided to give the Kenya National Federation of Co-operatives another 30 days – beginning October 18 – to raise its share of the amount required. Econet has already paid its share of $15 million of the licence fee.

 

 

 

Mike Theuri

 

On 7/25/07, David Kiania | Asentric Consulting Ltd <kianiadee@gmail.com> wrote:

Herein lies poignant lessons for anyone looking to partner for whatever
reason. First avoid Farmers and amorphous bodies their interests are as
diverse as their membership. KNFC nees to tell us since EWK will be
settling the legal costs of the suits that they have terminated, what %
of the legal bills will they foot. Secondly can they or can't they raise
their portion of license fee which was a point of contention ab initial.
From what I gather, they are broke and are not in a position to so of
the US$ 27m license fee, Econet International has already paid $12M
being the majority shareholder can KNFC raise $15M or are they seeking
to auction their shareholding and have and pocket the surplus. Me thinks
they want to cash out and pocket something.

Last but not least, the outcome will also be influenced by their
shareholders' agreement on liquidation and ownership transfer. Herein
lies the other lesson, during incorporation get a good lawyer, not a pal
because they will cost you nothing. From my experience get a lawyer (in
their personal capacity) with one of the big firms (K&S, HHM, etc) they
have great incorporation templates and are thorough not to mention they
know how to get things done right.

I have a feeling that EW Kenya may carry the day, after all the govt
needs to fund the Kshs 400 billion budget deficit  and are in not
position to refund the $12M already paid, it's an election year :) Watch
what happens carefully .

Kiania D.



Mike Theuri wrote:
> It's a new twist for Econet Wireless as it prepares to roll out its
> services
> Written By:Emmanuel Toili   , Posted: Tue, Jul 24, 2007
>
> It's a new twist for the third mobile service provider Econet Wireless
> International after the Kenya National Federation of Co-operatives
> limited-
> KNFC
> threatened to take a court injunction to stop the rolling out of the
> mobile
> services.
>
> Interim Chairman Stanley Muchiri said the Federation had neither
> withdrawn
> two
> court cases that prevented Econet Wireless International from
> providing the
> mobile services.
>
> The government and Econet Wireless International had last week signed a
> settlement agreement and agreed to settle the contentious issues out of
> court.
>
> KNFC who are allegedly the majority shareholders of Econet Wireless
> Consortium,
> want the Communications Commission of Kenya - CCK, to issue them a
> license
> as a
> partner.
>
> http://www.kbc.co.ke/story.asp?ID=43974
>
> ------------------------------------------------------------------------
>
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