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Business News Tue, 3 Nov 2009

Vodafone's Ghana deal attracts UK SFO interest

The UK Serious Fraud Office has contacted Vodafone about its controversial deal to buy a controlling stake in Ghana's third-largest mobile phone operator.

Richard Alderman, director of the SFO, spoke by telephone with Stephen Scott, Vodafone's head of legal affairs, last week about the Ghanaian deal.

The SFO has not launched an investigation into the deal, but is monitoring allegations of irregularity that have been made in Ghana.

Mr Scott, when asked by Mr Alderman if the allegations were true, said that Vodafone had acted entirely properly when concluding a transaction with Ghana's government in July last year to buy a 70 per cent stake in Ghana Telecom, the country's leading fixed-line phone company and third-largest mobile operator.

Vodafone said: "We are confident the transaction was conducted to the highest standards of corporate governance."

Vodafone's deal was repeatedly attacked by Ghana's opposition party, which became the country's government in January.

In May, a ministerial committee was asked to review the transaction and it recommended last month that the government consider renegotiating the deal.

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The government may issue a response to the committee's report as soon as this week.

The report claimed that most of the terms of the sale agreement with Vodafone were "inimical to Ghana's interest".

"The government of Ghana did not get value for money from the sale," said the report.

It also noted how Ghana's government, before it took office, alleged that the transaction was "fraught with irregularity".

Vodafone said in July last year that it would acquire a 70 per cent stake in Ghana Telecom "for a total consideration of $900m (£549m) on a debt-free, cash-free basis".

However, the ministerial committee's report said Ghana's government, because of "a series of complicated financial arrangements", only received $266.6m under the sale agreement.

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The report also challenged a clause in the sale agreement that allegedly precludes the government, which retained a 30 per cent stake in Ghana Telecom, from bringing corruption proceedings against company employees.

Vodafone regards Africa as an important source of growth, as underlying revenue is falling at its core European businesses.

In May it secured control of Vodacom, South's Africa's largest mobile operator, which Vodafone plans to use as a springboard for further expansion on the continent.

Vodafone, which already owned 50 per cent of Vodacom, paid £1.3bn for an additional 15 per cent stake.

Source: Financial Times
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