Swazi Media Commentary: Swaziland Empowerment Limited

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Wednesday, 28 February 2018

PM SHARE DIVIDENDS UNDER SCRUTINY

Swaziland’s Prime Minister Barnabas Dlamini stands to be paid E150,000 (US$13,000) from a company that has shares in controversial cell phone company MTN Swaziland.

Dlamini in his recently-published autobiography claimed to own 0.1 percent of the investment holding company Swaziland Empowerment Limited (SEL) which has 19 percent shares at MTN Swaziland, the Sunday Observer newspaper in Swaziland reported (25 February 2018).

The Observer calculated the Prime Minister was expected to get an estimated E23,856, before taxes this financial year. It estimated the PM, who is not elected but appointed by absolute monarch King Mswati III, had been paid ‘about E150,000 in total since March 2016’.

In Swaziland seven in ten of the population live in abject poverty with incomes less than E23 per day.

Until July 2017 when Swazi Mobile launched, MTN was a monopoly provider of cell phone services in the kingdom.

King Mswati is a major shareholder in MTN Swaziland. The Sunday Times in Johannesburg reported in July 2014 he holds 10 percent of the shares and is referred to by the company as an ‘esteemed shareholder’. It said MTN had paid E114 million (US$11.4 million at the then exchange rate) to the King over the previous five years.

The Sunday Times reported that at the time 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 E149, while in South Africa the same amount of data cost E79.

Prime Minister Dlamini’s holdings in SEL have been a matter of controversy for years. As long ago as 2011, Musa Holphe, a human rights campaigner and journalist, highlighted that Dlamini’s holdings in MTN might be a conflict of interest since he was also a key decision maker in the affairs of MTN’s only rival for telephone services, the parastatal, Swaziland Posts and Telecommunications Corporation (SPTC).

Writing in the Times Sunday, a newspaper in Swaziland, (26 September 2011), Holphe said, ‘Since SEL’s main, if not its only, investment is MTN Swaziland it is important to understand that the value of the SEL shares will be slashed if anything happens that affects MTN’s profitability.

‘This government has been at the centre of many decisions that affect the ability of SPTC to properly compete with MTN.

‘Each government decision seems designed to hamper SPTC and enable MTN to continue its monopoly and unfairly increase the wealth of its shareholders which as we now know includes the private wealth of the prime minister.

‘It is shocking to see how much money is generated by MTN and that, in spite of the grinding poverty of the majority of us; vast riches are still secretly flowing into the pockets of the elite.’

He added, ‘He may say that it is all perfectly legal but that is the wrong test. Compliance with the law is a minimum standard not a maximum.

‘Leaders must be held to higher standards. Even if what the PM does is perfectly legal, we should still be asking, is it honourable, decent and wise? Is it moral?

He added, ‘Corruption is like pregnancy – you cannot be a little bit pregnant and you cannot be a little corrupt. You either are or you are not. It is time to tackle corruption properly and declare all interests openly. Ministers with interests must excuse themselves from any decision-making that affects those interests not just the major ones.’

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.’

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.’

Tuesday, 27 September 2011

CENSORSHIP AT ‘TIMES SUNDAY’

I highlighted yesterday (26 September 2011) the article in the Times Sunday by leading pro-democracy campaigner Musa Hlophe about the possible fortune Barnabas Dlamini, the Swazi Prime Minister, could have made from owning shares in MTN, the monopoly cellphone operator in Swaziland.

Hlophe wrote about Dlamini’s holdings in Swaziland Empowerment Limited (SEL), which in turn has shares in MTN.

Alas, the Times censored the article before publishing it and left out a very important insight into SEL.

Below is what Hlophe actually wrote – the part in bold was cut out by the Times’ censor.

‘As to who else stands to benefit from SEL’s 19% stake in MTN? It is hard to determine at this stage. The Swaziland Stock Exchange web site does not give us any clues but it does give the address of SEL as Robinson Bertram Lawyers in Mbabane but the email address is for Dlamini at African Alliance in South Africa. African Alliance is a shadowy organization that is alleged to have links to the labadzala who are running this country for their own political and financial benefit. It is fronted by one person who it is hard to conceive could have accumulated all of this capital without powerful friends and investors. His name is not Dlamini.’

Monday, 26 September 2011

DOES PM HAVE A FORTUNE FROM MTN?

Barnabas Dlamini, Swaziland’s illegally-appointed Prime Minister, may have amassed a personal fortune from share dealings involving MTN, the only cellphone operator in the kingdom, according to a Swazi democracy activist.

Dlamini has his fingers in a number of pies as head of government and is the man in charge of the parastatal, Swaziland Posts and Telecommunications Corporation (SPTC), says Musa Hlophe of the Swaziland Coalition of Concerned Civic Organisations (SCCCO).

Dlamini is therefore a key decision maker in the affairs of Swaziland’s national posts and telecommunication. But Dlamini also personally holds shares in Swaziland Empowerment Limited (SEL) which in turn has a major shareholding in MTN, Swaziland’s monopoly cellphone provider, and the only competitor for SPTC.

Holphe, writing in his regular column in the Times Sunday yesterday (25 September 2011), says PM Dlamini has publicly declared that while he did not have direct ownership of MTN shares, he was a minor shareholder in SEL which has a 19 per cent stake in MTN.

Holphe writes, ‘He told us these interests were so small that he could see no real conflict of interest.

‘He declared that he held shares in less than one per cent of SEL.

‘Now my colleagues in the press were, no doubt, so stunned at this half attempt at transparency from the PM that they did not go on to ask some questions that would have shed a bit more light on the matter.

‘Firstly they did not ask, “How much less than one per cent do you own? What is the precise figure?”

‘Secondly they did not ask, “Is one per cent a small or big number? How much do you actually earn and own?”

‘“Who are the other shareholders in SEL?” “Does the prime minister have any sort of formal, familial or other sort of relationship with them? In other words, when he makes decisions about SPTC and MTN, is he acting to favour just himself or do his family, friends and colleagues benefit as well?”

‘I was not there to ask these questions so I started to do a little digging.

‘A quick search of the internet starts to give us some very interesting answers.

‘We can see one report says that in 2009 alone MTN paid SEL over 55 million Euros as a result of its profits.

‘At today’s rates, that is over E550 million.

‘I think that may have been a mistake by the journalist who confused the two currencies so I will take the figure as the more conservative E55 million.

‘Now, if the prime minister owns around one per cent of SEL that means that his share of the MTN profits could be as much as half a million Emalangeni.

‘It might be less than this but since he has not published his interests, it is not possible for me to be more accurate. I wish I could.

‘When I look into the few SEL annual reports I could find, I can see they are wise and prudent investors and do not put all of this money directly into the pockets of their shareholders. They keep some for future investments. This has found favour with other investors and made the shares more valuable. In fact, the share price of SEL has risen from E5.10 at the start of 2008 to E18 this week. With under one per cent of the shares, that puts the prime minister’s holdings at something less than E18 million.

‘Again, I cannot tell you exactly how much less because the Human Rights and Integrity Commission refuses to publish details of what the PM and others hold.

‘Maybe he only has one share, in which case his stake is merely a few Emalangeni.

‘It must be somewhere between these two figures but your guess is as good as mine.

‘Since SEL’s main, if not its only, investment is MTN Swaziland it is important to understand that the value of the SEL shares will be slashed if anything happens that affects MTN’s profitability.

‘This government has been at the centre of many decisions that affect the ability of SPTC to properly compete with MTN.

‘It is shocking to see how much money is generated by MTN and that, in spite of the grinding poverty of the majority of us; vast riches are still secretly flowing into the pockets of the elite.

‘These figures dwarf those of the land grab saga. The PM’s decisions do not seem to benefit the nation, or his office.

‘They seem to benefit the person who holds that office.

‘He may say (as he did in the land grab scandal) that it is all perfectly legal but that is the wrong test. Compliance with the law is a minimum standard not a maximum.

‘Leaders must be held to higher standards. Even if what the PM does is perfectly legal, we should still be asking, is it honourable, decent and wise? Is it moral?

‘By the way, I wonder if the decision to shut down public access to the Lands Registry had anything to do with the land grab scandal.

‘I cannot think of any other reason.

‘As to who else stands to benefit from SEL’s 19 per cent stake in MTN, is hard to determine at this stage.

‘The Swaziland Stock Exchange website does not give any clues.

‘Corruption is like pregnancy – you cannot be a little bit pregnant and you cannot be a little corrupt. You either are or you are not. It is time to tackle corruption properly and declare all interests openly. Ministers with interests must excuse themselves from any decision-making that affects those interests not just the major ones.’

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