HOW IBORI, OTHERS FRUSTRATED ECONET OUT OF NIGERIA (III) – STRIVE MASIYIWA
- By Strive Masiyiwa
Steve Masiyiwa CEO, Econet in this final and concluding part of this series, talks about the long arm of the law as it relates to schisms against the network to frustrate it out of the market and how the law caught up with James Ibori, the perpetrator.
Abraham Lincoln once observed, “Nearly all men can stand adversity, but if you want to see a man’s character give him power.”
As governor of the oil-rich Delta State in Nigeria, James Ibori had a great deal of power. What he did with some of his power was blatantly steal from the Nigerian people. Public money meant for building schools, health clinics, roads, etc. was instead diverted by slick operators to several personal overseas bank accounts across the globe.
As a public sector official, Governor Ibori had a constitutional responsibility to administer state resources to benefit the people of Delta State. Instead, he even tried to bribe the Chairman of Nigeria’s Economic and Financial Crimes Commission!
In addition to trying to solicit bribes from me, and successfully extracting them from others, another crime was to steal about 10% of the share payments that SHOULD have gone into Delta State coffers. This was a lot of loot so as usual he decided to stash it overseas
As I’ve told you before, to track the trail of destruction that is corruption… Follow the money!
Unbeknownst to him at the time, the British government had passed a similar law to the U.S. Foreign Corrupt Practices Act, known as the British Anti-Bribery Act. Although he had been under investigation since 2005, when Mr Ibori decided to divert some of the stolen funds to London, the UK bank receiving the money alerted the authorities, as they are required to on such large amounts.
Mr Ibori managed to elude justice for a while because he had immunity as a state governor. Even when his term ended, he was still protected by powerful people in President Yar’Aduah’s government. However, when President Yar’Aduah died, Mr Ibori knew he would be arrested under warrant from Britain because the London lawyer (and accomplice) Bhadresh Gohil had exposed the truth.
Mr Ibori fled to Dubai but the British traced him there and used Interpol to arrest him and bring him to the UK for trial.
In February 2012 he pleaded guilty because his associates including Mr Gohil had already pleaded guilty to money laundering, implicating him in several crimes. He eventually pleaded guilty to 10 offenses including conspiracy to launder funds from the state, money laundering and obtaining money transfer by deception and fraud. In April 2012, Mr Ibori was sentenced to 13 years.
This was a stunning victory in the fight against corruption.
We will not end corruption on this continent unless we are prepared to pay a price to end it! This means that you and I must be prepared to lose what may appear to be the deal of our lives. And let me tell you, when it is happening it is never easy; of course, it is hard.
Jesus said, “What is it for a man to gain the whole world but to lose his soul?”
If you engage in corruption, you will likely become rich, probably very rich, with all the material things in this life. Most likely you will never be caught like the hapless Ibori, and his advisors, BUT, The Master said, “YOU WILL LOSE YOUR SOUL.”
Rights, wrongs, and rule of law in Africa.
If this were a movie, I can only give you a trailer…
When we set up the company in Nigeria, all 22 shareholders had to sign an agreement governing our relationship, known as a Shareholders Agreement. This was April 2001.
The purpose of a Shareholders Agreement is to protect the shareholders’ investment in the company. It sets out the shareholders’ rights and obligations and regulates the sales of shares in the company. It also governs how a company is run and seeks to establish fair and transparent relationships between shareholders. Any company with more than one shareholder should ideally have such an agreement.
Among the most important issues for us was to ensure legal compliance with two specific provisions:
- What do shareholders do if they want to sell, transfer or dispose their shares in the company and get out?
Answer: They must first offer them to another member. They can only sell them to an outsider if the other members either decline or fail to pay within 30 days.
- How do shareholders resolve any disputes between members involving the company?
Answer: Any aggrieved party must ask for Arbitration (rather than go to court). According to our Shareholders Agreement, a three-member international commercial arbitration panel had to be appointed by The Chief Judge of the Federal High Court of Nigeria. The decision of this panel was to be final and binding on signatory parties to the Shareholder Agreement.
When the other shareholders, led by Delta State Governor James Ibori, decided to throw us out of the company, they did two things that violated the provisions in our Shareholders Agreement, as well as Nigerian law:
- They “cancelled” our shares and removed our name from the share register of the company. No one has power to do this except a court and usually only the highest court in a country, as it is tantamount to expropriation of property rights. They did it anyway and dared us to go to court. We did, and it took us exactly 10 years to reverse what they did. The judges of the courts of Nigeria were harsh in their criticism of this decision by the other shareholders. They called it “disgraceful.” It was a form of gangsterism!
- They did not offer us the right of first refusal. Instead they offered their shares to a third party (a company from the Middle East) without first offering them to us as an existing shareholder. Of course, in their minds, it was not necessary because they had first “cancelled” our shares.
There’s no legal right for other shareholders to say, “We no longer recognise you as a shareholder,” then hold private meetings and make resolutions as if you don’t exist. (Protection of shareholder rights is sacrosanct if we want to mobilise investment and see the people of our continent prosper. Otherwise the whole investment climate is thrown up in the air!)
To right these wrongs, we first had to approach the Chief Judge of the Federal Court of Nigeria. Her name was Hon. Justice Ukeje. She inexplicably refused to grant our request for nearly five years. When she retired in 2008, we petitioned her successor Hon. Justice Mustapha. He granted our request and appointed a three-member international panel of legal experts to serve on the Tribunal. Two of them, including a retired judge, were Nigerian. It took him less than three months to make the appointments, for which we have waited nearly five years!
This Commercial Arbitration Tribunal was constituted under the auspices of the UN Commission for International Trade Law. The Tribunal ordered all the shareholders to appear before them with their lawyers.
It took almost four years of hearing evidence and arguments from lawyers and financial experts. We counted that there were more than 50 lawyers involved in the case, many of them from Europe and the United Kingdom, as well as leading lawyers from Nigeria.
The Tribunal issued its ruling on 22 December 2011.
Even if justice takes time, be patient and never lose faith.
The International Tribunal appointed by the Chief Justice of the Federal High Court of Nigeria took four years to complete the process of arbitration. This included hearing from lawyers representing all the shareholders who had been involved in the original sale to Zain (the company from the Middle East), and also lawyers from Bharti Airtel (the company from India) that had bought Zain’s shares.
The Tribunal issued its ruling on 22nd December 2011. It was a great Christmas present!
Key findings in the Tribunal’s ruling:
- Econet had never ceased to be a shareholder despite the cancellation of its share certificate. We remain shareholders to this day, and those shares are now worth more than $200m.
- There was sufficient evidence that Econet had raised $1.5bn in cash to buy the shares that were sold illegally to Zain.
- The sale of shares, first to Zain of Kuwait, and then later to Airtel of India, were found to have violated Econet’s rights of first refusal under the Shareholder’s Agreement. The sale was declared “null and void” in law.
- The people who bought the shares (Zain and Bharti Airtel) were ordered to pay us hundreds of billions of Nigerian Naira in compensation, and damages for their violations.
- All shareholders who had supported the sale were ordered to pay compensation.
- The local shareholders who had stood with us throughout were absolved of any wrongdoing.
In short, after being presented years of evidence, the Tribunal agreed there been multiple breaches of the Shareholders Agreement.
Whilst most of the Nigerian local shareholders immediately paid the money due, Bharti Airtel and Zain refused to pay what they had been ordered to pay. This was despite the fact that all parties are supposed to accept an Arbitration ruling as final. Instead they took the unusual decision to go to court, in Nigeria, and try to overturn the decision of the international Tribunal:
First, they went to the High Court of Lagos State; it ruled in OUR favour. (October 2012)
Then, they went to the Nigerian Federal Court of Appeal; it also ruled in OUR favour, supporting previous rulings in OUR favour. (February 2014)
We had our hearings. We were heard. We’ve had patience and faith, and the rule of law prevailed.
Finally, they went to the Nigerian Supreme Court. We are now waiting for their ruling. I will let you know when it comes.
In a separate ruling, the Nigerian Federal High Court and its Appeals Court dismissed the allegation that Econet had not originally paid for its shares. This allegation had been widely circulated in newspapers as the reason for our departure.
They accepted evidence that Econet paid for its shares just like all the other shareholders, calling the allegation spurious and malicious. It took 10 years to get this ruling from the courts.
Like in any major conflict, all sorts of skirmishes have taken place. We had to fight other related legal battles in England, in Denmark, and in The Netherlands (including at The Hague Court of International Arbitration).
Throughout this saga in Nigeria, I had with me a few Nigerian brethren (and sisters) who stood by me. They were prepared to risk all to ensure justice prevailed. I salute them and all who stand up to protect the rule of law.
During the long period that went by, more than 10 years, I never stopped going to Nigeria despite the threats. I never stopped investing in new things in the country that interested me. I deepened my understanding of the country. I learnt to avoid many of the pitfalls of the past. I stayed true to my deepest convictions.
I enjoyed myself.
I love Nigeria.
The ensuing years have also been years of unprecedented growth and expansion of our business interests in Africa and around the world. We set up businesses as far afield as New Zealand, and invested in places as far as Latin America.
Yes, we prospered and we went from strength to strength. The path of those who stand for justice is as a “shining light, getting brighter and brighter unto the perfect day…”(Proverbs 4:18)
The end. Culled from http://www.econetwireless.com/strive_masiyiwa_blog