Mudslinging between Trustco, Econet

BARELY seven months after local financial services company Trustco wed Zimbabwean outfit Econet Wireless in Harare, the business marriage is on the rocks.

The companies are accusing each other of unilaterally terminating the joint-venture agreement signed in October last year.According to Trustco’s spokesperson, Desnei Leaf-Camp, the company has instructed its lawyers in Zimbabwe to apply for an interdict against Econet Wireless.The aim of the interdict will be to force Econet Wireless to comply with its contractual commitments, Leaf-Camp said.Furthermore, the interdict is also directed towards prohibiting Econet ‘from infringing in any way on Trustco Mobile’s intellectual property rights which are protected under Zimbabwean and international intellectual property laws’.This came after, according to Truscto, Econet unilaterally aborted the deal.For its part, Econet put the blame on Truscto for the termination of the agreement.At the time the Zimbabwean deal was revealed with much hype and celebrated with fanfare some seven months ago, it was announced that Trustco would partner with Econet Wireless and another Zimbabwean company, First Mutual Life (FML), to launch free life insurance cover for Econet subscribers.Econet is the neighbouring country’s largest cellphone operator.At the time, Trustco’s group managing director, Quinton van Rooyen, described Zimbabwe as an untapped market. ‘And if you are looking at an expansion strategy, you would look for people who are the highest qualified in Africa. And that is why we came to Zimbabwe.’Van Rooyen said they were also drawn to Econet Wireless’s ‘progressive way’ of conducting business.Now Econet is coming under fire for allegedly delaying payment of royalties to Trustco.As a result of these alleged delays, Trustco served Econet with a notice of default after which the cellphone company allegedly ‘unilaterally and immediately terminated the contract, severed Trustco’s and FML’s access to the Trustco Mobile system and denied that payment was outstanding to Trustco’.FML acted as the underwriter of the new life insurance package.On the day that the deal was announced last year, Trustco’s Johannesburg Stock Exchange (JSE) price rose by close to 12%.At the launch held in the Zimbabwean capital Harare, the chief executive officer (CEO) of Econet Wireless, Douglas Mboweni, said the signing of the deal marks ‘a pioneering event’ in the history of the company that opened its doors in 1998. It has also come to light that Econet accused Trustco of having disclosed confidential information about the deal. Denying this allegation, Leaf-Camp called it ‘spurious’.According to her, the information disclosed to amongst others the JSE ‘is in strict compliance with the regulations of the JSE. Similar information was disclosed by Econet to its shareholders and its analysts as required by the disclosure regulations as both entities are public listed companies.’Leaf-Camp said requests from other Zimbabwean prospective business partners to replace Econet ‘have been declined pending the outcome of the current matter with Econet’.According to Econet’s spokesperson, Ranga Mberi, said their legal team ‘is looking at’ fighting the Trustco interdict.He added that ‘it is very hard to comment’ on whether or not an amicable solution to the drama was possible. ‘Econet is prepared to take such further steps as may be necessary to secure the interests of its customers.’Mberi added that a contingent fund has been set up to cover all policyholders and ‘appropriate technical solutions that ensure continuity of the product [have been put in place]’.