Tycoons Tanil Somaiya & Rostam
Aziz implicated in the scam
Vodacom Tanzania MD Rene Meza
receives $5 million bribe to keep silent
Tax worth over 121.5 billion/- evaded
in the deal
PCCB, TCRA, TRA caught napping in
massive fraud bigger than EPA and
Escrow combined
A staggering $350 million (over 675
billion shillings) was stolen from
Tanzanians in a massive scandal
involving the sale of pirated electronic
recharge vouchers from Vodacom
Tanzania to customers.
The scam, which is bigger than the
Bank of Tanzanias infamous external
payment arrears (EPA) and IPTL Tegeta
escrow account scandals combined,
involves Tanil Somaiya, a business
tycoon behind several dubious deals in
Tanzania, including the military radar
transaction with Britains BAE Systems.
The production of the electronic
recharge vouchers followed the signing
of a contract between Vodacom
Tanzania and Tanils Shivacom Group
in 2007/08. This means that Shivacom
acted both as a Vodacom super dealer
and printer and supplier of electronic
recharge vouchers, an obvious conflict
of interest.
In the elaborate scandal, Tanils
company, Shivacom Group, printed
millions of pirated 500 shillings
electronic recharge vouchers (Jero
Jero) between 2008 and 2012 and
colluded with other companies owned
by Fred Lowassa (Alphatel) and TIB
Development Bank Managing Director
Peter Noni (Planetel) to distribute the
vouchers across Tanzania.
Fred Lowassa is the director of
Alphatel, a Vodacom super dealer, while
Noni, a former senior Bank of Tanzania
(BoT) official, also owns another
Vodacom super dealer, Planetel.
Together, Shivacom colluded with
Alphatel and Planetel to carry out the
massive fraud involving the production,
distribution and sale of pirate electronic
recharge vouchers worth over 675
billion shillings without Vodacoms
knowledge until the scam was
unearthed in 2012.
There was also rampant tax evasion in
the scandal with Value Added Tax
(VAT) worth more than 121 billion
shillings evaded by Shivacom and its
conspirators, which is a serious
criminal offence.
Senior officials at Tanzania government
regulatory and watchdog agencies such
as the Tanzania Revenue Authority
(TRA), the Tanzania Communications
Regulatory Authority (TCRA) and the
Prevention and Combating of
Corruption Bureau (PCCB) were either
complicit in the scandal or were caught
napping.
Shivacom alone distributed more than
half of the fake recharge vouchers,
while the other pirate vouchers were
distributed by its conspirators
Alphatel and Planetel.
The Jero Jero vouchers are the most
fast-moving electronic recharge
vouchers in Tanzania, with Shivacom
printing hundreds of millions of fake
vouchers using pins provided by
Vodacom Tanzania.
The scandal not only caused Vodacom
Tanzania huge financial loss, it also
resulted in the detrimental loss of
customer confidence. This is partly
attributed to Vodacom Tanzania losing
its dominance in Tanzanias mobile
phone industry, with Airtel and Tigo
now threatening to wrestle away the
companys market share.
Insiders say Vodacom Tanzanias MD,
Rene Meza, found out about the
scandal after just arriving in Tanzania
from Kenya to take up the position of
Vodacom Tanzania managing director.
Rene Meza confronted Tanil about the
scandal and demanded a $10 million
kickback to keep quiet. Tanil arrogantly
told him to piss off, so Rene retaliated
by instructing Vodacoms legal counsel
to write a letter to Shivacom to
terminate the electronic recharge
voucher agreement for breach of
contract, said a well-placed source.
Tanil went to Vodacom South Africas
Group CEO, Shameel, and gave him a
bribe of $400,000. Shameel then
instructed Vodacom Tanzania to settle
the matter with Shivacom. Rene Meza
finally settled for a $5 million bribe
from Tanil and Vodacom paid Tanil
hefty compensation for termination of
the contract despite the obvious fraud.
Vodacom Tanzanias lawyers gave
legal advice that the contract should be
terminated and Shivacom should pay
compensation to Vodacom for the
fraud. However, after bribes exchanged
hands, Shivacom ended being paid a
hefty compensation by Vodacom
despite perpetrating the massive fraud.
In all this scandal, Tanil used a Dar es
Salaam-based lawyer, Dilip Kesaria, to
respond to legal queries from Vodacom.
Kesaria, who was disbarred in the
United Kingdom for malpractices but
fraudulently allowed to operate as a
lawyer in Tanzania, is the Principal at
Kesaria & Company advocates.
The following is a chronology of key
events in the massive 675 billion
shillings fraud involving Vodacom
Tanzanias Jero Jero electronic
recharge vouchers:
Key Facts and Figures
2008. A 10-year agreement comes
into effect for Shivacom Tanzania
Limited to provide electronic recharge
vouchers (EVD) to Vodacom Tanzania
Limited. This means that Shivacom
effectively played a dual role of being a
Vodacom super dealer and EVD
supplier in separate agreements.
2008-2012. The massive fraud
committed by Shivacom over the 5-year
period is worth more than $350 million
(675 billion Tanzanian shillings), which
is bigger than the Bank of Tanzania
EPA and Tegeta Escrow account
scandals combined. This fraud was n shillings), which
is bigger than the Bank of Tanzania
EPA and Tegeta Escrow account
scandals combined. This fraud was
done by Shivacom printing TZS 500
electronic recharge vouchers (Jero
Jero) fraudulently and distributing them
into the market without Vodacoms
knowledge.
Other Vodacom super dealers, including
Alphatel and Planetel are also
implicated in directly colluding with
Shivacom to distribute pirate recharge
vouchers.
31 July 2012. Vodacom Tanzania
Ltds Chief Legal & Regulatory Officer
writes a letter to Shivacom Tanzania
Ltd to formally notify the company
about breach of contract. This comes
after Vodacom Tanzania Ltd discovered
that Shivacom has been engaged in
massive fraud over the past 5 years
(2008-2012) by printing and
distributing pirate electronic recharge
vouchers using pin numbers provided
by Vodacom. This letter effectively
terminated the EVD contract between
Vodacom Tanzania Ltd and Shivacom
Ltd.
3 August 2012. Shivacom responds
to Vodacoms letter, disputing the
decision to terminate the EVD contract
under advice from Kesaria.
3 September 2012. Shivacom Groups
Managing Director, Tanil Somaiya,
writes a letter to Vodacoms Group CEO
in South Africa, Shameel Aziz Joosub,
requesting a meeting to discuss the
EVD contract termination. Tanil
succeeds in meeting with Shameeel,
who is compromised and orders
Vodacom Tanzania to settle the matter
with Shivacom and pay compensation
to the company for contract termination
despite the fraud. The meeting between
Tanil and Shameel with other senior
Vodacom officials took place on 1
November 2012.
Vodacom Tanzania MD, Rene Meza,
receives a bribe of $5 million from
Tanil Somaiya to resolve the matter.
9 November 2012. Tanil writes a
letter to Shameel, saying he was
offering his Shivacom Superdealership
subscriber base for sale. Shivacom
gave Vodacom the right of first refusal
and asked for consent to scout around
for alternative buyers if Vodacom was
not interested in buying the dealership.
14 November 2012. Vodacom
Tanzania Ltds Chief Legal &
Regulatory Officer writes a letter to
Shivacom offering compensation
payment for termination of the contract.
This is despite the fact that Vodacoms
lawyers gave legal advice to the firm to
terminate the contract with Shivacom
given the fact that Shivacom have
breached the contract by duplicating
TZS 500 vouchers.
29 November 2012. Tanil writes a
letter to Shameel rejecting Vodacoms
paltry compensation offer. Tanil
demands hefty compensation for loss of
profit, cost of hardware and software of
the voucher production equipment and
cost of unutilized stock of raw
materials.
2012-2015. Vodacom settles with
Shivacom by paying the company a
multi-million U.S. dollar compensation
despite the company committing the
massive fraud.