NETONE lost over US$1 million in a USSD server gateway deal when top management, including the firm’s chief executive Lazarus Muchenje allegedly ignored advice from engineers on the associated national security risks of having foreigners control telecommunications traffic, the Harare Magistrates’ Court heard yesterday.
It is alleged Muchenje further prejudiced NetOne of more than $800 000, which was paid by the parastatal towards his personal security guard, furniture and hiring of luxury vehicles.
Yesterday, seven executives from NetOne, including Muchenje, and a former intern were in court for remand on charges of criminal abuse of office or alternatively fraud.
The executives were granted $3 000 bail each by magistrate Mr Lazini Ncube after spending the weekend in custody.
Shamaine Kedenhe (29), who was a legal intern when the offence was allegedly committed and has since left NetOne, was freed on $700 bail.
Muchenje appeared in court on three separate charges.
On the first, he is jointly charged with NetOne interconnection and roaming manager Tawanda Sibanda (49), acting chief finance officer Tinashe Severa (43), chief technology officer Darlington Gutu (53), chief operating officer Spencer Manguwa (43), acting head of legal services Tanyaradzwa Chingombe (28) and Kadenhe.
This matter involves the complex financing of equipment allegedly offsetting the cost against illegally discounted services with a Mauritian company allowed to control a NetOne telecommunications platform.
On the second set, he is being jointly charged with former board member Paradzayi Chakona (56) over an unapproved lease agreement at a significantly discounted rent.
On the third, he is appearing alone after authorising the purchase of furniture and security services the State says he was not entitled to.
As part of their bail conditions, all accused were ordered to report once a week to the police, surrender passports and not to interfere with witnesses until the matter is finalised.
They are being represented by Mr Arshiel Mugiya, Mr Innocent Chingarande, Mr Nikita Madya, Mr Webster Jiti and Mr Mehluli Tshuma.
Mr Ncube remanded them to June 2 and Mr Mugiya indicated that the defence team would file an application challenging their placement on remand.
The prosecution led by Messrs Michael Reza and Charles Muchemwa alleged that sometime last year, Muchenje, Sibanda and Severa held several meetings with Paragi Agarwal, a director of Bankai Pvt Ltd, which is a corporation in Mauritius.
Agarwal allegedly purported to be representing 6D (Pvt) Ltd, an Indian company which had supplied NetOne with a service delivery platform and USSD server gateway and was owed US$1 million by NetOne.
Agarwal proposed to the trio that NetOne should provide nine million minutes on-net voice termination service to Bankai Pvt Ltd, valued at US$1 million at an interconnection rate of US$0,13 per minute.
But the State argued that the interconnection rate of US$0,13 was against the interconnection rate stipulated in the 2008 telecommunication regulations which barred Zimbabwean telecommunication services from accepting less than the minimum international termination of US$0,20.
Bankai would pay for the discounted net voice terminations minutes by offsetting the debt owed to 6D by NetOne.
Muchenje instructed Sibanda and Severa to cause Nyaradzai Shoko to initiate paperwork for the agreement. 6D was contacted, but that company through an email indicated that Agarwal was no longer working for 6D and the company indicated that it was not part to any deal negotiated by Agarwal.
However, Muchenje and his accomplices went ahead with the deal, it is alleged.
Muchenje instructed Sibanda, Severa and Kadenhe to exclude the clause that indicated offsetting of the 6D debt.
On December 10, the accused persons caused NetOne to enter into a contract with Bankai Mauritius when they signed the unilateral buy agreement.
The court heard that Bankai then connected equipment which included a Telco bridge at the NetOne data centre which was configured to allow Bankai access and control over the telecommunications traffic on that platform.
Muchenje was allegedly informed by NetOne engineers of the national security risks involved, but insisted that the connection went ahead. It is the State’s case that Muchenje did not seek NetOne board approval and clearance from Ministry of Information and Communication Technology before proceeding with the deal which caused NetOne to lose over US$1 million.
After signing the agreement with Bankai Pvt Ltd, it is further alleged that on December 12, Muchenje connived with Gutu, Manguwa and Kadenhe and supplied Bankai with 2 000 NetOne numbers without sim cards.
Muchenje allegedly authorised use of the lines which were configured on the NetOne mobile switching centre without subscriber identification.
In so doing any calls made using the lines bypassed the home location register thereby exposing the country to high risk against national security, the State alleged.
It is the State’s case that the accused persons corruptly agreed to share revenue generated from the deal at a rate of 80 percent to 20 percent in favour of Bankai.
On January 16, Muchenje, the court heard, connived with Gutu and Chingombe and corruptly entered another agreement with Bridgevoice INC a company incorporated under the laws of United States of America to sell NetOne airtime overseas by connecting Bankai to NetOne’s prepaid platform.
Muchenje is said to have agreed to give Bankai and Bridgevoice a 20 percent airtime discount which was above the standard 11 percent discount NetOne was giving to its existing dealers.
On the record he is appearing alone, Muchenje is accused of causing Innocent Mukandatsama, NetOne’s head of administration to generate several memorandums seeking authorisation to purchase Muchenje’s furniture for $200 000 which he then authorised and was purchased.
He further authorised purchase of more furniture at a cost of $423 587 which was not part of the benefits in his contract of employment.
Muchenje further caused NetOne’s transport department to initiate hiring of luxury vehicles for his use from September last year to February this year at a total cost of $225 925.
It was further alleged that Muchenje also wanted a personal guard saying he was followed by strangers and caused NetOne to pay $13 513 towards the security guard.
On the charge he is being jointly charged with Chakona, the court heard that the pair allegedly corruptly entered into a lease agreement for a NetOne house without board approval.
Chakona allegedly represented NetOne as the lessor and Muchenje as the lessee and they agreed to a $1 000 monthly rent of the house, while the actual rental range was supposed to be US$2 500 to US$3 500 a month, converted at interbank rates, thus allegedly prejudicing NetOne of $363 875.