$350 million (675 BILLION SHILLINGS) stolen from Tanzanians in Vodacom scandal
Posted on April 27, 2015
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 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.
To be continued...