The government of Guinea has won a marathon legal battle with Global Voice Group (GVG), the suppliers of grossly overpriced national telecoms revenue assurance systems that was founded by Laurent Lamothe, the corrupt former Prime Minister of Haiti. A US court ruled that the USA has no jurisdiction in the dispute between Guinea and GVG over an RA contract originally signed in 2009 and terminated in 2014 for several reasons, including evidence of corruption and fraud involving GVG staff as well as the substandard performance of the RA system itself. The decision will likely influence other African governments that would like to stop paying inflated sums for lengthy national RA contracts when there is evidence of wrongdoing by the supplier.
GVG had previously claimed they were owed USD106mn for unpaid debts and compensation for the termination of their contract. That amount was approximately equal to 1 percent of Guinea’s annual economy at the time GVG made their demand. The dispute was escalated to a court of arbitration in Paris, France, which ruled that USD20mn was owed by Guinea to GVG, plus interest for the period the debt had remained unpaid. However, Guinea’s government did not cave into pressure, and they still refused to pay, on the basis that there was no valid agreement with GVG that said Guinea would be bound by decisions made by the Paris court. So GVG sued Guinea in the USA for the USD20mn award plus USD2mn in interest. GVG hoped that the USA’s domination of international finance would guarantee the seizure of Guinea’s assets. Their failed lawsuit will have instead given other governments confidence that they can terminate their national RA contracts without paying any penalty.
Judge Jia Cobb of the US District Court for the District of Columbia ruled in this case. Guinea’s lawyers argued that Guinea is a sovereign country and hence outside the jurisdiction of the US court system. The essence of Judge Cobb’s decision was that GVG had over-stretched legal arguments about their contract with Guinea being enforceable through the courts of foreign countries. Guinea was ruled not to be a party to an agreement which GVG was trying to use to enforce compliance with arbitration. Furthermore, the court held that it was not obliged to defer to the Paris tribunal finding because there was no clear and unmistakable evidence that Guinea had agreed to delegate questions about the scope of arbitration to that tribunal.
The decision is a boost to activists that argue that the sovereignty of African governments has often been undermined by foreign governments colluding with big business interests. GVG was trying to enforce a lengthy and expensive contract on Guinea despite that deal having been signed by a short-lived dictatorship. The dictator in this instance was Moussa Dadis Camara (pictured), an army officer who seized control of Guinea at the end of 2008 but who fled the country just over a year later. Camara’s regime was responsible for brutal violence, systematic rape, and brazen corruption. Last year Camara was sentenced to 20 years in prison for crimes against humanity. It was unsurprising that Camara’s government signed a lengthy and expensive contract with GVG soon after gaining power.
The citizens of Guinea should never have been expected to continue paying for services that represented blatant exploitation. A fair price for the services provided by GVG would have been less than one-tenth of the amounts stipulated in their contract with Camara’s dictatorship. Even then, the deal would have likely represented a net loss to Guinea’s economy. It should not have been permitted to continue after the fall of Camara’s tyrannical regime. That was always obvious from a moral standpoint, but morality rarely influences the way big businesses pursue profits. The ‘international rules-based system’ has too often been manipulated for the benefit of big businesses that exploit ordinary people who only want to have a phone and use it in peace. This decision by a US judge is a much-needed victory for common sense. A new sovereign government should not be bound by corrupt contracts signed by a dictator who has been overthrown.
GVG is a snake that slithers up to governments, then coils itself around a country’s population before squeezing it with stealth taxes collected through phone bills. GVG pays ‘journalists’ to smear the reputation of telcos as tax cheats. The money they extract by exploiting ordinary Africans is then transferred to offshore tax havens. A change is coming, as the stench of past corruption is prompting newer governments to shed themselves of GVG. For example, Ghana’s new Communications Minister has asked the country’s Attorney General to look for signs of corruption surrounding the 10-year USD179mn national RA contract signed by GVG and the previous government.
It is a sad truth that businesses like GVG succeed because they exploit the public’s belief that the only way to counter the bad behavior of big corporations is to give more power to virtuous governments, who then sign lengthy monopolistic contracts with other big corporations. The public can be so easily swayed by arguments about the supposed bad behavior of some big corporations that they never ask about the motives or behavior of the other corporations mentioned in this scenario. And let us not be racists, because it is not just Africans who fall for this ruse. Last week I debated white middle-class university-educated Europeans who work in tech but not in telecoms about their attempts to petition their country’s parliament. They were foolishly repeating the same simplistic mantra that GVG encouraged Africans to repeat: that a telco risk management technique they barely know anything about must be good because another country has used it. A little knowledge can be a dangerous thing.
Snakes like GVG provide a little knowledge to politicians and the public in order to seduce them into believing they possess a special method that will make the public much wealthier and safer. But politicians and the public do not have the skills, knowledge or experience to evaluate whether such claims are accurate or not. One thing I have learned in my career is that very few people in the communications industry have a good understanding of the arcane techniques that we cover on Commsrisk. I have also learned that people do not like having their ignorance pointed out. Even people who describe themselves as cybersecurity experts often make statements about networks and crime that are not supported by any facts, and will then refuse to retract their statements when challenged.
To the shame of our professional community, such misinformation may then be recycled by people who are employed by industry associations although they only possess a negligible understanding of the subjects they claim to care about. The old canard that every telco must be losing between 3 and 50 percent of its revenues has been used by GVG to convince governments to purchase their services. This pseudo-fact was endlessly repeated by people who could not point to any documented evidence that supported their assertion. They just said it because they heard somebody else say it. None of them challenged the way GVG twisted this claim into an argument that if telcos are losing revenues then governments must be losing tax, and so governments should ‘help’ telcos to find their missing revenues whilst simultaneously accusing them of tax evasion.
We should be instantly wary whenever a politician or member of the public says they want to share their superior insight into communications assurance, fraud or corruption. Their overconfidence is a sign that they have been fed a story by people motivated to feed them that story. That is why risk professionals harm their own profession when they say nothing in response to the spread of misinformation. Why bother paying one person to become expert in the intricacies of how to audit systems or detect crime when there are a dozen ‘experts’ selling get-rich-quick schemes that nobody argues against?
Real professionals must do more to counter the dishonest narratives pushed by businesses that cause more crime and corruption than they prevent. We cannot allow ordinary people to suffer because corrupt multimillion-dollar contracts are signed and then become the subject of decades-long legal battles. The public would be better served by increased support for risk and audit professionals that already work for telcos than by monopolistic long-term contracts which would raise dozens of red flags if they had been subjected to an impartial audit.
The details of this court decision can be found at Law360. Guinea’s lawyers provide a summary of how they won the case here.
