Vodacom Tanzania Pays $2.3 Million Settlement to Free Employees

(Bloomberg) -- Vodacom Group Ltd.’s Tanzanian unit said it paid a settlement of 5.3 billion shillings ($2.3 million) for the release of five employees charged with depriving the government of revenue.

The state said it didn’t receive more than 11 billion shillings from Vodacom Tanzania Ltd. due to irregularities that the company and employees, including Managing Director Hisham Hendi, were involved in. Prosecutors accused them of organizing a “criminal racket” and allowing third parties unauthorized access to network services, according to court documents.

Vodacom made the payment “in order to settle charges,” the company said Thursday in an emailed statement. Vodacom retained Squire Patton Boggs LLP to conduct an internal review into the facts underlying the accusations, it said.

The charges come two years after Johannesburg-based Vodacom listed its Tanzanian unit on the local stock exchange following pressure from the government to increase domestic ownership. The run-in is the latest between President John Magufuli’s administration and international companies, with Bharti Airtel Ltd. agreeing to cede a portion of its local unit to the state in January after claims the operator acquired its initial shareholding illegally.

Vodacom also has operations in the Democratic Republic of Congo and Mozambique, and is the market leader in South Africa.

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