Vodacom Entangled in R22m Dispute Involving Mobax and Neela

"Neela offered the R10.5 million and Mobax agreed but at last minute they backed down and tried to silence us with an NDA."

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South African rand. Inked Pixels / Shutterstock.com
  • Neela, a KwaZulu-Natal based business, is demanding that Mobax settle an outstanding debt of R22 million, which includes interest, storage, and loss of income until 31 January 2020.

Mobax, a little-known company, is a subcontractor to Vodacom.

It is a management company that subcontract work to providers that deploy and maintain generators, refuels and services them – for managed services – that power the mobile phone company’s base stations.

Mobax replaced Swedish telecom giant Ericsson in January 2018 as a management company.

Neela, a Port Shepstone-based company, has been contracted to Vodacom since 2011.

Neela signed a contract with Ericsson in 2016. The Port Shepstone based company didn’t have a contract with Mobax to provide managed services to Vodacom. According to Neela, Mobax sent them a draft copy of a copy and paste of an Ericsson contract.

On Friday, Neela disclosed to TechFinancials that Mobax has not paid for services rendered.

Neela said it was claiming R22 million inclusive of interest, storage, and loss of income for work done in September 2018, April 2019, June 2019, July 2019, August 2019, September 2019, 31 January 2020.

On the same day, Themba Kinana, the Executive for Public Policy, Stakeholder Engagement and Corporate Affairs at Vodacom, met with Neela executives at the Intercontinental Hotels, OR Tambo International Airport.

Kinana was unsuccessful in trying to broker a settlement deal. He was trying to convince Neela to resolve the dispute with Mobax.

In December, Neela made a R10.5 million offer to Mobax to settle the dispute taking the network in consideration.

“Neela offered the R10.5 million and Mobax agreed but at last minute they backed down and tried to silence us with an NDA (non disclosure agreement),” said Neela.

“Mobax worded a mail like they made the offer with terms and conditions,” Neela argued. See below snippets of the fake letter written by Mobax.

“To settle the matter amicably we herewith provide you, for your consideration, a proposed full and final settlement amount of (R10.5 million), in settlement of all your claims against us,” Onica Seku, the CFO of Mobax, wrote in a fake settlement letter, seen by TechFinancials.

“We also confirm that this amount will be paid to you in good spirit, without you having to provide the required proof of work and or invoices to back any monetary claim provided by written receipt of your acceptance of such and all equipment, etc. has been handed over to our operational team.”

The letter further instructed Neela to “agree and guarantee to release all Vodacom assets to the Mobax operational team upon acceptance of this offer.

“It further states that “…Neela …agree that the terms of this settlement shall be kept confidential in accordance with the non-disclosure agreement (NDA) between us.”

Attempts to reach Mobax for comment were unsuccessful as of Friday.

Vasantha Sawry, CEO of Neela, told TechFinancials that Vodacom needs to take responsibility for this mess.

“We are blaming Vodacom directly for this mess. If Vodacom didn’t bring Ericsson then Mobax, Neela would have been paid for its services,” she said.

“We are not their slaves. Mobax is arrogant and refuses to pay for work Neela has done but hold our money worked for as ransom and want us to sign an NDA before they pay us our money. We will not sign an NDA for the money we have worked for.”

Vodacom claims to be only involved in this matter as a facilitator to the dispute.

“The facilitation was for a long term contract and not payment,” said Sawry. “Vodacom chose to facilitate for the payment after termination without us having a contract.”

Asked several questions related to this dispute, a Vodacom spokesperson said in an email response: “A commercial agreement existed between Neela and Mobax, which led to a dispute between Mobax and Neela. Vodacom was not and is not a party to that commercial agreement.

“Nevertheless, Vodacom was requested by the Portfolio Committee on Small Business Development to act as a facilitator to the dispute between Neela and Mobax, with the objective of ascertaining whether a resolution to the dispute could be achieved.”

Vodacom agreed to act as a neutral facilitator and mediator in the negotiation process between Neela and Mobax to endeavour to determine an amicable resolution, explained the spokesperson.

“For this purpose, Vodacom put together a team to facilitate and mediate between Neela and Mobax. The principles guiding these sessions, which continue to be held, are based on fairness, transparency and respect between the parties,” the spokesperson said.

“The only current outstanding key issue between Neela and Mobax is in relation to the value of the payments to be made by Mobax to Neela. These discussions are currently ongoing and Vodacom has been and will continue to report to the Parliamentary Committee in regard thereto and furnish them with developments in its endeavours to assist Neela and Mobax reaching settlement in the matter.”

Vodacom has always acted lawfully, ethically and morally in relation to the matter, the spokesperson added.

Sawry said the entire facilitation fell through because of Mobax negotiating in bad faith and having plans to get rid of an SMME and doing the work in house instead of managing the network.

Background to the dispute

In 2011, Vodacom appointed Neela to provide to deploy generators, maintenance, refuel and services (or managed services) that powers the mobile phone company’s base stations.

In 2016 Vodacom brought in Swedish telecoms giant Ericsson as a subcontractor to procure the services of Neela, Mobile Diesel Power Systems and other service providers.

However, things didn’t go smoothly, Neela said it received a letter of termination from Ericsson on 5th July 2016 with no reasons given.

The company saw this as an unlawful termination for seven months and solicited the help of parliament after failing to get help from Vodacom KZN Region Manager Steven Barnwell.

Thereafter, Neela had a series of meetings with Vodacom, Ericsson and the Parliament Portfolio Committee on Small Business. On 8 December 2018, Neela came to an agreement with Ericsson for full passive maintenance and the contract was signed in parliament.

Neela claims that this contract was never fulfilled.

“Ericsson is in breach of a signed agreement and it is our suspicion that this whole agreement to sign in front of the politicians was just to calm the matter and prevent any further inquiry into the issue,” said Vasantha Sawry, CEO of Neela.

She added that Ericsson instead encouraged Neela to sue them.

“They are fully aware that we are a small emerging company and it would cost us a lot of money which we cannot afford at this time. Ericsson disrespected government by not adhering to the contract,” Sawry explained.

In September 2019, Mobax outsourced Neela’s work to 24Solutions Group, a system integrator & service provider.

Sawry wasn’t happy about this and wrote an email to Mobax and copied Vodacom’s CEO Shameel Joosub and other Vodacom managers, stating that: “How is this generator repairs been given to another company, when clearly Vodacom made a commitment to Neela for Neela to deploy, recover, repair, maintain and fuel all generators which fall under Neela’s responsibility.

She further wrote: “That commitment was even given to parliament to show parliament Neela’s site allocation was increased which meant work increased.

“This was Vodacom’s commitment in uplifting SMME. Was this all a smokescreen to mislead parliament and continue corporate bullying. Why is Vodacom instructing another company to repair when the entire scope has been outsourced to Mobax. Mobax are you hiding behind Vodacom?”

On 7 October 2019, Mobax terminated Neela’s services.

In an email to Sawry, Kinana wrote that the wording is in good spirit in the settlement letter is not referring to charity but to services rendered by Neela. “Confidential clause referred in the letter is not in any form of silencing any party in this relationship particular in relation to our obligation to prepare a closing report to the 6th parliament.”

On 31 January 2020 Kinana unsuccessfully attempted to convince Neela to resolve the dispute.

Neela is going back to parliament this month to revisit and expose ‘lies’ that has been promised to it on various occasions. – lourie@techfinancials.co.za



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