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Thursday, 16 June 2016

‘OBSERVER’ HIDES KING’S MTN LINKS

The Swazi Observer has hidden the links between King Mswati III and MTN in its extensive coverage of the cell phone service provider in recent days.

The Observer, which is in effect owned by King Mswati, who rules Swaziland as sub-Saharan Africa’s last absolute monarch, has devoted acres of space to MTN, which has the monopoly of cell phone business in the kingdom.

On Wednesday (15 June 2016), the Observer reported as its main story on its front page the ‘news’ that MTN was scrapping scratch cards for lower denominations of airtime, but people would still be able to top-up their phones from street vendors.

The story ran over pages two and three and was written by the Observer chief editor Mbongeni Mbingo.

On previous days it had devoted pages and pages to the so-called ‘21 Days of Y’ello Care’, which is an ongoing promotion of the company that relies on its staff volunteering time and money for good causes. This year the focus is on education.

What the Observer did not tell its readers was that King Mswati has a large personal financial stake in the company. He owns 10 percent of the shares and is considered by MTN to be an ‘esteemed shareholder’ in the company.

MTN has been the monopoly mobile provider in Swaziland since 1998 and services are provided in a joint venture between MTN, the Swazi Government and the Royal Family.

The King’s income from MTN is generally kept secret from his 1.2 million subjects. Seven in ten of them live in abject poverty with incomes of less than US$2 per day. The King is notoriously secretive about his own wealth; it had been estimated by Forbes that he had a net wealth (assets minus liabilities) of US$200 million.

In 2014, The Sunday Times newspaper in South Africa reported that a number of companies, including MTN had ‘all brokered cosy relationships with the monarchy’.

It added, ‘These companies have either given large chunks of the shares in their Swazi businesses to Mswati directly or to Swaziland’s investment institution, Tibiyo Taka Ngwane over which Mswati has absolute control.’

It reported that the King holds 10 percent of the shares in MTN in Swaziland and is referred to by the company as an ‘esteemed shareholder’. It said MTN had paid R114 million (US$11.4 million) to the King over the five years up to 2014.

The newspaper quoted a report from Freedom House which stated, ‘Foreign companies wishing to enter Swaziland must bribe Mswati with shares or cash in varying amounts depending on the potential for profitability of the proposed venture and the new business’s possible impact on Mswati’s own business interests.’

The Sunday Times reported that MTN had a monopoly in Swaziland and was used by 57 percent of the population. It said MTN was able to keep prices high, citing the cost of 300 megabytes of data in Swaziland as R149, while in South Africa the same amount of data cost R79.

In 2009, Earl Irvine, then US Ambassador to Swaziland, wrote a confidential cable (later published by Wikileaks) in which he said the King operated in his own financial interest. Part of the cable said, ‘Royal politics and King Mswati’s business interests appear to have caused the ouster of Mobile Telephone Network (MTN) CEO Tebogo Mogapi and halted parastatal Swaziland Post and Telecommunications Corporation (SPTC) from selling the MTN shares it owns to raise money for a Next Generation Networks (NGN) cell phone project. 

‘Industry and press observers privately indicated that the King, who already owns many MTN shares, had wanted to purchase the MTN shares himself at a cheaper price than the buyer, MTN, was offering SPTC. 

‘Government officials later prevented the sale, and recently did not renew the work permit for CEO Mogapi, a South African citizen, apparently in retaliation for his role in the transaction, as well as the CEO’s reported decision to oppose government efforts to use the MTN network for electronic surveillance on political dissidents.’

The cable went on, ‘The government’s halt of parastatal SPTC’s sale of MTN shares demonstrates the impact the King’s and other influential individuals’ private business interests can have on business transactions in Swaziland. 

‘Government officials would likely prefer a more malleable Swazi CEO at MTN who would cooperate more fully with royal and government wishes.’

In 2011 it was reported that Prime Minister Dlamini owned E392,000 worth of shares in Swazi Empowerment (Pty) Limited (SEL), a company that in turn had a 19 percent shareholding with MTN Swaziland.

Dlamini is the man in charge of the government-controlled parastatal, SPTC and is therefore a key decision maker in the affairs of Swaziland’s national posts and telecommunication. This raised questions about Dlamini’s impartiality when making decisions about SPTC.

A research article written by Ewan Sutherland of the University of the Witwatersrand, Johannesburg, South Africa, and published in December 2014 in the Communicatio academic journal, explored telecommunications in Swaziland and concluded there was no competition for mobile phones in the kingdom and ‘the monarch and his cronies are financially tied to Swazi MTN, seeking to neuter the state-owned SPTC. The government has no concern for consumers, service delivery or economic growth, with the King and his prime minister looking after their personal financial interests.’

‘Sutherland wrote, [I]t is difficult to see how any investor could have confidence, unless it had the sovereign on their side and, more likely, in their pocket. 

‘The monarch has a significant and lucrative investment in the principal operator, with the effect of confusing and confounding an already feeble system of governance. The opaque profit-seeking of the King conflicts with the purported aspiration to good governance of telecommunications markets and the interests of his subjects. In a constitutional monarchy, arrangements can be made to keep the investments of a monarch separate from politics, allowing for transparency, accountability to parliament and the avoidance of interference with governance (e.g., Japan and the Netherlands).

‘A feudal monarchy knows no such distinction, there are no conflicts of interest for ministers, regulators and directors – they obey their king. It echoes the problems of Morocco, where its king has private interests in telecommunications, has ministers sit on the supervisory board of the state-owned operator, and he appoints the regulator and is head of the judiciary.

‘Ordinarily the MTN Group would be expected to favour competition and market entry. However, in the Kingdom of Swaziland it has violently opposed competition, going to considerable lengths to block a second mobile operator and even a fixed wireless service. This record removes any presumption in other jurisdictions that its actions are pro-competitive. Equally, it has been happy to work with Mswati III, one of the exotic collection of autocrats with whom it does business, with no fear of reputational risk.’

See also

SWAZI ELECTION – SPONSORED BY MTN
DOES PM HAVE A FORTUNE FROM MTN?
US DECRIES SWAZI KING ON MTN DEAL
PHONES CUT AS SWAZILAND PROTESTS
http://swazimedia.blogspot.com/2011/09/phones-cut-as-swaziland-protests.html

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