More questions over Econet

MP demands answers over missing scholarships

Beleaguered cellphone company Econet Wireless is coming under increasing fire as ACT MP Deborah Coddington says commitments made by the company remain unmet.

Coddington says Econet promised in its trust deed to pay $60,000 a year for two scholarships.

“Econet was also meant to pay the Maori trust $24,000 a year for tertiary sports scholarships and $36,000 a year for tertiary academic scholarships for Maori but there is no evidence these commitments have been met," the MP says.

She goes on to point the finger at the Maori Spectrum Trust, Te Huarahi Tika, and says there's a lack of governmental oversight.

"Despite the Economic Development Ministry recommending in 2002 there be regular meetings between representatives of the trust and relevant ministers — David Cunliffe of Communications, Jim Anderton of Economic Development, and Parekura Horomia of Maori Affairs — my written Parliamentary Questions have revealed that not one meeting has taken place".

According to Econet's own annual report, filed with the Companies Office, the company has agreed to fund two scholarships and was to have made the first annual payments in May 2003. However the company has not been invoiced for these scholarships, says the report, "and it is uncertain whether it will be in the future". No provision for the scholarships have been made in the company's accounts.

The company is also supposed to have provided free internet access and computers to four schools or community centres proposed by the Trust, but the annual report says that also has not happened.

The Trust itself is supposed to monitor its relationship with Econet and report back to its shareholders, according to its own deed of incorporation. The deed says the Trust is required to report annually on the "affairs of the Trust" and should include an assessment of how the Trust has performed "in furthering the purposes of the Trust as set out in clause 3".

Clause 3 of the Trust's deed spells out what the Trust is supposed to do — and not do — with the money it was given.

The Trust is supposed to promote educational and training programmes, the clause says, with a view to encouraging Maori students into the ICT field. The Trust is also supposed to provide opportunities for Maori to "re-skill" in ICT as well as establishing scholarships and grants to further that purpose, it says.

The Trustees are expressly told they should not "use the assets of the Trust fund" for any other purposes and must not "agree to any of the business of the Trust being carried on in a manner likely to create a substantial risk or serious loss to any creditors of the Trust".

The Trust is also required to produce an annual report and to insert public notices into "major metropolitan and provincial newspapers" alerting the public to the availability of annual report. It is also supposed to hold an annual meeting, open to the public, to allow discussion of its goals and achievements, the clause says.

The Trust's chair, Mavis Mullins, declined to answer questions on the matter, referring Computerworld to former chair Bill Osborne. Osborne, who oversaw the handing of $4 million to Econet Wireless New Zealand, is now the chair of Econet Wireless and has not responded to Computerworld's repeated requests for an interview.

The various ministers of the crown have all referred Computerworld to the Minister for Maori Affairs. Parekura Horomia was not available to answer questions on the issue last week, including the dates of any and all discussions he has had with either the Trust or Econet Wireless on any issue; the availability of any of the annual reports from 2002 to 2005 inclusively; what steps he as Minister would take should Econet Wireless fold; whether the $60,000 a year has ever been paid for the two scholarships; or whether he will be seeking any kind of return of the $4 million already paid to Econet Wireless.

Econet's parent company, Econet Wireless Group, has also refused to answer any questions from Computerworld, including whether the company will be supplying funds to Econet New Zealand to avoid the company going into receivership. Econet Wireless New Zealand has informed the Companies Office that it has less than $7,000 in funds and no overdraft facilities and is seeking additional funding from Africa to continue in operation.

In its 2003–4 annual report, Econet Wireless NZ said Econet Wireless Group is currently reviewing "various business plans and proposals relating to the future prospects" of the local company.

Timeline:

2000 - Maori Spectrum Trust established, given $5 million and option to buy 3G management rights at reduced price. The trust was established by former All Black Bill Osborne.

December 2001 - The Trust enters into a commercial arrangement with Econet Wireless. The Trust pays Econet $4 million for a 30% stake in the company.

December 2001 - Osborne steps down as chair of the Trust to become chair of Econet Wireless NZ. Osborne retains a role with the Trust, as chair of its commercial arm, Hautaki Trust Ltd.

2002 - Econet claims it is entering into an agreement with Vodafone to co-locate its network on Vodafone's towers, however nothing eventuates and no agreement is signed.

October 2003 - Trust chair Mavis Mullins tells a radio interview that returns on the Trust's investment in Econet would be “multidimensional”, creating not only benefit and potential profit from the network but “an opportunity for Maori to upskill into this area”. Osborne refused an interview with Computerworld, passes the buck to

Econet's legal and regulatory manager, Andy Mikkelsen, who also refuses to answer any questions, saying only “We don’t feel speculation is helpful at this stage.”

2004 - Econet Wireless International begins a legal battle for control of the company following a failed merger with another African telco, Vodacom. Econet alleges it has suffered damages in excess of $US1.8 billion as a result of the decision by the Nigerian shareholders to set aside the agreement with EWI and to accept an offer from Vodacom.

2005 - Econet Wireless International entered into a joint venture with South Africa's Altech Group in which Altech bought 50% of Econet to create Econet Wireless Global (EWG), incorporated in Botswana

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