High Court Rejects Lesotho Government’s Attempt to Stop GVG National RA Contract

Hanlon’s razor states that you should never attribute to malice that which is adequately explained by stupidity. A similar rule should be applied to governments, where you should never attribute to corruption what could adequately be explained by incompetence. Sheer incompetence could be the best explanation for how Lesotho’s government signed an ultra-expensive contract to have all the country’s telecoms revenues audited by systems supplied by Global Voice Group (GVG) despite not asking any other businesses to bid for the work, then decided the contract was illegal, leading to them asking the High Court to nullify the contract, only for the High Court to reject the application on the grounds that lawyers working for the government and the Lesotho Communications Authority (LCA) never bothered to serve GVG with the relevant court papers. The Lesotho Times reports:

Advocate Lintle Tuke had appeared on behalf of the LCA while one Adv K Selimo appeared on behalf of GVG. Adv Selimo argued that the matter should be struck off the roll.

“We are not aware what the purpose of today’s proceedings is because I understand that the applicants were to file the edictal citation which they have not. We are therefore seeking wasted costs for today,” Adv Selimo argued. An edictal citation is a summons published or deposited in a court or other public place summoning nonresident or absent defendants to court in civil or criminal cases.

Justice Mokhesi then granted Adv Selimo’s application.

“The matter is removed from the roll and the respondent (GVG) is awarded today’s wasted costs,” Justice Mokhesi ruled.

Apparently, GVG, who had not been served with court papers, only became aware of the LCA application after reading about in (sic) the Lesotho Times a fortnight ago.

Lesotho’s government committed in 2020 to spending LSL500mn on the new GVG system; this amount is equivalent to USD28mn at today’s exchange rate. The supposed justification of these national revenue assurance contracts is that they will increase the country’s revenues by taxing telcos more. However, all that seems to happen is that an enormous of amount of money is siphoned into the pockets of GVG and nobody can show a single discrepancy that their revenue assurance systems have identified, despite the system supposedly being used to audit revenues. Now Lesotho’s government has gone further by signing a contract that violates their own laws, then wasting even more money by needing to pay GVG’s court costs as well.

However, there is one important takeaway from this debacle. When a government signs a contract with GVG, they even lose the freedom to apply their own lawmaking powers to the contract. This is because GVG insists on its contracts being subject to international arbitration. James Claude, CEO of GVG explained how he assures his own company’s revenues in an interview with the Lesotho Times.

Regarding contractual disputes between a provider and a client from two different countries, it is the most common practice to jointly agree on the designation of an international arbitration chamber for the resolution of disputes. This is the case of this contract, which is subject to international arbitration for the resolution of all disputes arising in connection to it. Both parties agreed on that by signing the contract, and the arbitration clause prevails, according to all international treaties signed by most of the countries of the world, including the Kingdom of Lesotho. Even the validity of the agreement has to be resolved according to the arbitration clause.

You have to wonder at the wisdom of governments that spend so much of taxpayer’s money on revenue assurance contracts that the suppliers of revenue assurance can afford much better lawyers than the governments can. If only there was a way to audit where GVG’s revenues go, but corruption investigators have only so far determined that GVG appears to be ultimately incorporated in the tax haven of the British Virgin Islands.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.