A pittance for Call Me inventor?
Makate takes steps to secure billions he says Vodacom owes him
● Vodacom offered R10-million to Please Call Me inventor Nkosana Makate as compensation for an idea that purportedly has earned the company billions, a figure that is believed to be less than his legal fees for a court battle spanning a decade.
The amount is disclosed in complaints that have been filed by Makate with the Independent Regulatory Board of Auditors (IRBA) and the Companies and Intellectual Properties Commission (CIPC) against Vodacom and its auditors, PwC, for alleged reckless management and misrepresentation of annual financial statements.
Authorities confirmed receipt of the complaints and said they were weighing their merits for investigation. Vodacom and PwC said they were unaware of the complaints.
Please Call Me had generated a windfall for the company since its implementation 17 years ago, according to the papers.
Makate’s idea was for a cellphone user without airtime to send a message to another user and request a return call, generating revenue for Vodacom on the return call. Vodacom reneged on an agreement to pay Makate after the service had been launched, leading to a protracted court battle, which ended in a Constitutional Court ruling in Makate’s favour.
Until now the quantum of the offer had remained a secret as parties were sworn to confidentiality in negotiations that began in late 2016 after the Constitutional Court had ordered Vodacom to enter into discussions in good faith with Makate over reasonable compensation. Negotiations broke down in December last year and were referred to Vodacom CEO Shameel Joosub for arbitration as per the agreement recognised by the court.
Makate, in his affidavit as part of the complaints with IRBA and the CIPC, claimed negotiations had not been in good faith.
The submissions contain evidence which claims to show Vodacom has made at least R63-billion from the Please Call Me concept.
“I have endured a traumatic two years of negotiations with Vodacom’s senior executive officers . . . It appears that Vodacom’s senior executive officers were mandated to defend at all costs the institutionalised skulduggery, hence absolutely nothing was attained after two years of negotiations,” Makate says in the affidavit.
Vodacom said it had not calculated the revenue generated by the Please Call Me service.
Asked about the R10-million compensation that it had offered Makate, Vodacom said: “Mr Makate and his negotiating team signed a confidentiality agreement with Vodacom ahead of the start of negotiations. Vodacom remains committed to upholding its end of the agreement.”
However, in the submission Makate made to IRBA and the CIPC, which included documents Vodacom had submitted for the arbitration process, Vodacom said it had arrived at the R10-million based on a model that considered the salary of Vodacom’s CEO in 2001, Alan Knott-Craig, who earned R3.5million, including variable compensation.
“Adding the time value of money from 2001 to 2016, this yielded R7.7-million,” it said. Vodacom concluded its submission to Joosub with a recommendation saying: “In all the circumstances, we respectfully submit that the appropriate determination to be made is one that obliges Vodacom to pay to Mr Makate the sum of R10-million as constituting reasonable compensation.”
A letter from Makate to Vodacom’s legal representatives confirms the additional R2.3-million as a discretionary amount to round off the compensation.
Vodacom also asked the current CEO to consider that Makate had made little input into developing the product and that his allegations of bad faith had no relevance.
Makate is asking the authorities to investigate, among other things, the lack of adequate representation in Vodacom’s financial statements of the liability they could face in this matter.
Vodacom said its treatment of provisions and contingencies was based on the International Financial Reporting Standards.
I have endured a traumatic two years of negotiations Nkosana Makate Please Call Me inventor