Tuesday, October 19, 2021

The missing regulators…..

An acrimonious battle has erupted between Botswana’s regulators and leading market players. While on one corner the Botswana Commutations Regulatory Authority (BOCRA) is battling against Multi Choice Botswana, on another corner there is an exchange of blows between another regulator ÔÇô Non Banking Financial Institution Regulatory Authority (NBFIRA) and Capital Management Botswana (CMB). Both regulators strangely want the courts to interpret laws on their behalf.

BOCRA ÔÇô Forever in Court

While outside the courts of law, Multi Choice Africa seems to be rolling up their sleeves in what is likely to be their biggest challenge to date, after Zimbabwean tycoon Strive Masiyiwa launched a new and cheaper pay TV as an alternative to costly pay TV in Sub Saharan Africa, inside Botswana courts the Mauritius incorporated company, through its service provider Multi Choice Botswana is battling with BOCRA ÔÇô a not so competent regulator to some people. BOCRA has been in and out of court with a number of companies which trade in the telecommunications sector including amongst others Mascom Wireless, and Liquid Telecom Botswana Limited (LTBL).

In September 2017, the Botswana Power Corporation (BPC) ÔÇô a state owned power utility company and Liquid Telecom, a company partially owned by Strive Masiyiwa denounced BOCRA’s refusal to issue their joint venture – Liquid Telecom Botswana Limited (LTBL) with a license. Following its license application in early 2017, the internet service provider said it was thrown from pillar to post by BOCRA. By September 2017, both BPC and Liquid Telecom were ready to drag the regulator to court for the license refusal. The decision to drag BOCRA to court was subsequent to an earlier decision in which the power utility corporation signed an agreement with Liquid Telecom for the lease of BPC’s excess optical fibres within its network in October 2016.

Following the signing of the agreement, BPC and with Liquid Telecom formed a joint venture company known as Liquid Telecom Botswana Limited which later applied for a license with BOCRA. The joint venture company’s effort to obtain a license hit a snag, forcing the two shareholders to seek court intervention.

A few months before that, BOCRA is said to have written a letter to BPC on 15 June 2017 suggesting that the power utility is required by Section 39 and 40 of the BOCRA ACT to have a telecommunications service license and/or a telecommunications equipment license for offering and provision of the Indefeasible Right of Use Agreement and infrastructure to LTBL.  

In terms of section 39 of the BOCRA Act, a person is not permitted to provide a telecommunication service unless he or she has been granted a license by the board to do so. The power utility company is said to be in disagreement with the interpretation of section 39 and 40 of the BOCRA ACT by the regulator.

In July 2017, the tension between BOCRA and Mascom Wireless broke into the open after the regulator issued a directive on 24th March 2017, giving mobile operators an option to either remove Off-net premium simultaneously with reductions in of mobile termination rates or remove Off-net premium in a shorter period.  Mascom then dragged BOCRA and rival Orange Botswana and BTC before the High Court.

TOOTHLESS OR FRUITFUL……?

By August 2018, the court will render BOCRA either useful or toothless when it delivers a judgment in which yet another dominant player in the digital sector ÔÇô Multi Choice Botswana says the regulator has no right to control its pricing, atleast under the license that it operates under. On the other hand, BOCRA is saying as long as Multi Choice Botswana is operating in Botswana, it has to be regulated and it has to pay certain fees.

BOCRA has made it clear that clause 13 of its ACT is meant to regulate the subscription fees that Multi Choice Africa (MCA) charges to its subscribers through Multi Choice Botswana (MCB).

According to papers before High Court’s Justice Tshepo Motswagole, also at the centre of controversy is Section 90 of the BOCRA Act which requires all licensed service providers to submit their intended tariffs to BOCRA for approval. MCB argues that it is impossible for them to provide such tariffs because they do not provide such services, instead such services are provided by MultiChoice Africa (MCA).

BOCRA states that “If, however, the Court finds that Multi Choice Botswana cannot comply with clause 13 of the License on any basis then BOCRA contends that in the event that MCB cannot comply with clause 13 of the License then the very basis upon which the License was granted is flawed and one cannot simply set aside or exclude clause 13 of the Licence since its provisions are severable.”

“In any event, MCB would be operating illegally since it cannot comply with clause 4.1 of its Licence in as much as the broadcasting service itself would be unauthorised and BOCRA will seek a declaratory order to that effect as part of its counter application,” BOCRA states.

According to BOCRA, the consequence will then be that it will be open to MCB to either conduct business illegally in Botswana or to voluntarily seek to apply for a licence in terms of section 31 of the Act-which will ultimately lead to both MCB and MCA being compliant.

On the other hand, MCB contends that the regulator included clause 13 in MCB’s licence with the avowed purpose of regulating MCA’s tariffs.

From where MCB stands, the regulator does not have the power to impose a condition on a licensee, not to regulate the conduct of the licensee’s performance of the licensed activities “but to regulate the conduct of the licensee’s performance of the licensed, but to regulate the conduct of a third party.

The Court will therefore in August 2018 tell if it agrees with MCB’s submission that clause 13 is ultra vires and thus unlawful.

NBFIRA ÔÇô The biggest loser

While BOCRA waits August 2018 to check its strength against market players, NBFIRA has already received a kick on the teeth. The regulator has been reminded how incompetent it is by the court in a recent case in which it faced Capital Management Botswana (CMB).

Through a judgment delivered two weeks back, Justice Omphemetse Motumise answered for interrelated questions. The first one was it had the powers to appoint Peter Collins as statutory manager of CMB. In January 2018, NBFIRA made an application with the court to have it confirm the appointment of Peter Collins. Bona Life, an interested party to the case, as well as another player ÔÇô the Botswana Public Officers Pension Fund (BPOPF) were firmly aligned with the NBFIRA’s position. At the same time, Bona Life also made a conditional counter application for the appointment of John Little as statutory manager over CMB. On the other side, CMB, and its director Rapula Okaile bitterly opposed both applications on the grounds of illegality, unreasonableness and irrationality.

CMB is an entity licensed as an asset manager under the Securities Act administered by NBFIRA.

In November 2014, BPOPF and CMB concluded an agreement to create a partnership known as Botswana Opportunity Partnership (BOP).

Justice Motumise’s court papers show that BOP was intended to be a vehicle to be used by BPOPF and CMB for investment parties. The papers further shows that CMB was designated as general partner and fund manager while BPOPF was designated as limited partner.

Following a fall out between the two parties in 2017, by late that year, BPOPF then reported CMB to the regulator, who in turn attempted to shut out its directors by appointing a statutory manager ÔÇô Peter Collins. The regulator however shot blanks as the court dismissed the application with costs.

When delivering his judgment last week, Justice Motumise said that the authority failed to back its action against CMB with evidence thus the need to reverse the appointment of Peter Collins as statutory manager.

Justice Motumise said that the NBFIRA decision was drastic, with adverse and far reaching implications for the embattled asset management firm ÔÇô CMB.

“The absence of the board resolution, consenting to, or ratifying the application is fatal,” Motumise said.

Justice Motumise further said that he is not satisfied or convinced that a reasonable regulator, acting rationally, would consider it proper to delegate its regulatory and oversight powers and functions to the very entities it is by law required to regulate. Worst still an entity that is desperately conflicted and self-interested concerning the subject matter of the delegation.

When seeking the statutory management, NBFIRA had said that the move is in a quest to safeguard interests of CMB clients and also ensure sustained stability in the financial sector.

In his judgement, Justice Motumise said that there is no evidence that the financial sector has been affected by the non submission of audited accounts by CMB.

Following the loss, NBFIRA CEO Oaitse Ramasedi said that the regulator has since decided to appeal against Motumise’s judgement.

“We have thought long and hard about the implications of the judgment as it stands and decided that we need to urgently approach the Court of Appeal and have our reading of the financial services laws as regards related issues confirmed or corrected by the Court of Appeal”, said Ramasedi.

“This is not about CMB, but rather, the true position of the law on such matters”, he continued.

The regulatory authority wants the Court of Appeal to hear its appeal in less than 30 days.

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