A botched takeover bid and a dispute over shareholders’ agreements has seen WIA Group Limited of Dar es Salaam file a case against five companies at the Commercial Division of the High Court in Dar es Salaam.
It is case number 13 of 2012 and has been assigned to Judge Kassim Nyangarika, it has been established.
WIA Group lawyers are seeking legal proceedings against Convergence Wireless Networks (Pty) Ltd of South Africa, Convergence Wireless Networks (Mauritius) Ltd, Convergence Partners Investments (Pty) Ltd of South Africa, Johannesburg-based Communications Solution (Pty) Ltd (trading as Comsol Wireless Solutions), and Dimension Data.
WIA Group, a leading Information and Communications Technology firm, is also intent on instituting legal proceedings against South African residents Andile Ngcaba and Brandon Doyle, as part of the case.
According to the plaint, the firm accuses the South African companies and their affiliates of hatching a “joint predatory scheme” to try to take it over by forcing it to enter into fraudulent and uneconomic contracts so as to financially suffocate it.
The Tanzanian firm associates Convergence Wireless Networks (Pty) Ltd of South Africa with “improper and fraudulent inducement and representations”, which allegedly made its (WIA Group) shareholders agree to sign the South African firm’s conditional offer and subsequent sale of shares and subscription agreement (SSSA) and shareholders’ agreement.
Upon acquisition of the shares, so submits WIA Group, the South African firm allegedly failed to fulfil the terms of the promises, propositions and representations contained in the share sale agreements.
According to the plaint, Convergence Wireless Networks (Pty) Ltd of South Africa and Convergence Wireless Networks (Mauritius) Ltd failed or refused to pay “in favour of WIA Company Limited, at least $1 million on a single STM-1 of capacity on the Seacom undersea cable system on a 20-year IRU basis”.
The Tanzanian company also accuses the defendants of failure to issue a credit note worth $400,000 in its favour favour from Communications Solutions (Pty) Ltd t/a Comsol Wireless Solutions.
It is alleged that Convergence Wireless Networks (Pty) Ltd of South Africa and Convergence Wireless Networks (Mauritius) Ltd also failed to ensure that its subsidiary or parent companies, Convergence Partners or Convergence Partners’ affiliates, provided WIA Group with consulting services worth $200,000.
The two companies are further alleged to have failed to introduce a strategic equity partner with direct relevant industry knowledge to hold equity and facilitate access to a range of resources partnership and technical capability.
They are alleged to have been involved in “confusingly unwarranted interference with the business and affairs of WIA Company Ltd by coercing it to enter into a number of commercially uneconomical inter-company contracts with them or with their respective affiliates based on unconscionable and uneconomical terms and conditions in breach of good corporate governance.
According to the plaint, the dubious contracts were aimed at suffocating WIA Company Ltd and thus causing it to suffer irreparable losses and damages.
The two foreign companies are also alleged to have allowed their affiliate company, Communications Solutions (Pty) Ltd t/a Comsol Wireless Solutions, to conduct competing business against WIA Group and trade in Tanzania contrary to the shareholders’ agreement.
The move was allegedly intended to “financially and economically suffocate WIA Company Ltd in pursuit of the defendants’ concerted predatory efforts to take over the interests of the … plaintiffs in WIA Company Ltd.”
WIA Group had a total equity value of $5 million as of November 2008 but was run down within a matter of three years of the interference of the South African firms and their affiliates to a value of “nil” as of June 30, 2011, as evidenced by an audit report from KPMG.
Convergence Wireless Networks (Pty) Ltd of South Africa and Convergence Wireless Networks (Mauritius) Ltd are also associated with “confusing, unlawful and unwarranted interference with the management and execution of third party contracts entered between WIA Company Ltd, the plaintiffs and the first defendant and/or any other third party”.
The two companies are alleged to have claimed they would inject $3.8 million into WIA Group by way of new cash injection, but later failing to keep their word. Their affiliate company, Convergence Partners Investments (Pty) Ltd of South Africa, is also alleged to have similarly failed to inject an additional $1.8 million capital into WIA Group.
Lawyers for WIA Group Ltd want the court to declare the conditional offer, the SSSA and the shareholders’ agreement as “null and void for want or insufficiency of consideration”.
Alternatively, WIA Group Ltd would like the court to declare the “conditional offer and its subsequent SSSA and the shareholders’ agreement all vitiated by want of consideration, fraudulent misrepresentation, lack of consent and coercion and therefore voidable”.
WIA Group is also demanding compensation for losses and damages suffered by its shareholders and payment of general damages for loss of business, loss of goodwill and other resultant losses and damages.
According to WIA Group’s lawyers, Convergence Wireless Networks (Mauritius) Ltd and other affiliates clandestinely received unauthorised payment of $942,290.20 (over 1.5 billion/-) being amounts paid under the disguise of consultancy fees or purchase of equipment and technical support.
The case came up for first mention at the court on Monday is due for a second mention on May 29 this year.