Elephant in the room: The ETHICS of a Regulator joining an Operator

The MTN Group has just announced the appointment of the outgoing CEO of the Independent Communications Authority of South Africa (ICASA) Willington Ngwepe as Chief of Staff of the office of the President and CEO, Ralph Tendai Mupita.

Since we published this story, there have been loads of spontaneous and very interesting reactions from several industry people in Ghana and elsewhere, hence this write up.

Simply put, ICASA is the main telecoms regulator in South Africa, like National Communications Authority (NCA) is to Ghana. So, the move of its outgoing CEO to MTN is like the Director-General of NCA, Joe Anokye leaving NCA and immediately joining MTN.

This is not the first time MTN is employing a high ranking former regulator. In Nigeria, for instance, the current Board Chair of MTN, Ernest Ndukwe, was once the Chief Executive Officer (Executive Vice Chair) of the Nigerian Communications Commission (NCC). There may be similar such cases elsewhere.

But who wouldn’t want a former regulator to join their team? Barring all the ethical issues, which we will discuss soon, one very strategic reason why a company would want to employ a former high-ranking regulator is to ensure it is on point with compliance to avoid sanctions. Who can best help a company get compliant than a former regulator?! As one expert puts it, “Regulator moving to operator can help the operator with compliance issues. A former employee at the regulator can function well as Compliance Manager for the operator.”

 

In Ngwepe’s case, he will be working in the office of the President and CEO of MTN Group, as Chief of Staff. So his role will probably go beyond compliance to several other strategic functions. In the exact words of Ralph Mupita, “Willington brings with him extensive leadership, technology and regulatory experience that will be invaluable as we execute on our strategic intent of leading digital solutions for Africa’s progress – We welcome him to the MTN Group, where his focus will be on providing advisory, strategic and operational support on specific matters driven directly from the GCEO office.”

So the charge is clear. But one very interesting part of this whole move, as reported by TechCentral, was that Willington Ngwepe was originally due to finally leave ICASA in October this year. But he has shifted the date of his departure to August ending in what seem to be an indecent haste to join an operator he still regulates as of today.

In fact, in the many responses we got after publishing the story, interestingly, only one person said “this is a strategic move” for MTN, and another said it is good for Ngwepe “once the money is good”. 

But an overwhelming majority of the reactions we got, raised grave ethical questions about a regulator rushing into the employ of an operator he regulates. One expert, for instance asked “for how long has Ngwepe been negotiating with MTN while holding his office as CEO of ICASA”? That’s a big ethical question begging for answers.

More Questions

Here are a number of other questions that came up in the responses we got:

1. The Rush: Why is the ICASA CEO rushing out of office to join MTN? And why is MTN in a hurry to announce Ngwepe’s appointment even before he could say his final goodbyes at ICASA?
2. Skewed Policies: Were there some policies he pursued in favour of MTN while he was in office as ICASA CEO for five years?
3. Privileged Information: Could he have divulged some privileged information to MTN while in office, and what further privileged information is he rushing to go give MTN as he joins them IMMEDIATELY after leaving office?
4. Other Telcos: What do the other players in the South African market think about Ngwepe’s IMMEDIATE appointment by MTN?
5. The Rules: What are the rules in South Africa regarding top officials of ICASA and other regulatory bodies who leave office and join operators or companies they used to regulate?
6. The Regulatory Capture Question: What is the guarantee that Willington Ngwepe was not compromised in favour of MTN for all the years he was ICASA boss, and is now being rewarded with a job in the office of the President and CEO of MTN after a job well done for MTN?
7. The Espionage Question: There have also been suggestions that telcos do more than just regulatory capture. They sometimes even place fifth columns in competitor telcos to neutralize competition or leak strategic information.

Let’s get into it.

The Rush

In some jurisdictions, there are rules and conditions regarding what people who have held such top and sensitive regulatory positions can and cannot do over a certain period of time after they leave office. In Ghana, I am told that some level of directors at the NCA, particularly the Director-General, are bonded not to join any operator in the market or even say certain things in public for up to 5 years (yet to confirm) before accepting any roles. We are still checking to find what pertains in South Africa in that regard. But even if there are no such rules in that country, it is highly unethical for the CEO of the regulator to rush quickly out of his current role just to join an operator. As a person, Willington should be worried about his own conduct. And as an organization, MTN is not doing itself any favours rushing to announce the appointment of Ngwepe even before he finally departs ICASA.

Other Telcos

 

Some of the experts said, in their responses, that the other telcos in South Africa should be concerned about this indecent haste, and what kind of relationship may have existed between MTN and Ngwepe while he was at ICASA. They think the telcos must begin to put the kind of policies/regulations Ngwepe championed within that context. They should even be more worried about what privileged information Ngwepe may have shared with MTN over the years, to give MTN possible unfair competitive advantage; and also what further information he will be sharing with MTN in his new role, to give them an edge over other telcos.

Indeed, one of the experts stated categorically that he believes Ngwepe is rushing to join MTN most likely because of the kind of parochial policies he pursued in favour of MTN while he was in office. He thinks his new appointment with MTN is a reward for being a “good boy” as CEO of ICASA. “I think ICASA should be embarrassed about this whole situation,” he added.

Regulatory Capture and Espionage?

 

While not directly accusing MTN of anything, one expert noted that appointments like the one we are discussing should make industry regulators and players wake up to the possibility of regulatory capture and espionage activity. And according to him, any industry player could be engaged in those two unethical practices. He explained that industry players often target influential regulators and compromise them in various ways so that those persons would protect their interest in exchange for all kinds of considerations like money, free airtime and data, devices, jobs for kids/family/friends and even juicy opportunities like the one we are discussing.

That expert also stated that beyond regulatory capture, some telcos also engage in espionage activity. He explained that industry players could strategically get espionages into competitor telcos in particular markets where they operate, to help neutralize competition or leak strategic information regularly. Then such espionages are rewarded with juicy jobs either back home or in other countries. Again, without accusing MTN of anything, he recalled at least three persons who worked in top positions with other poor performing telcos in Ghana, now work in top positions with MTN in other countries. We cannot independently confirm if indeed MTN engaged them as espionages, but the expert thinks regulators and telcos need to do proper background checks on people they appoint to top positions because they could be courting fifth columns.

Ghana

Speaking of Ghana, one expert said for an operator to employ a former top-ranking regulator, it would depend largely on how that regulator conducted himself while in office. I have personally witnessed a situation where one telco (name withheld) took the then DG of NCA (name withheld) on a trip outside Ghana. While there, the DG made a supposed ‘off-the-record’ comment to the effect that, that telco needs to be protected by the regulator because of its pivotal role in the economy. That for me was a sound argument. But my thing is, even if it was that DG’s genuine philosophy to protect strategic operators, he did not have to go on a trip sponsored by that operator to go make such a comment and then say it is off the record. It exposes a certain unethical posture that potentially short-changes other players in the market. Indeed, it gives credence to the regulatory capture argument. Maybe, that was part of the reasons why NCA and Ghana government sat by and watched the market imbalance in Ghana to persist for 15 years before doing something about it only recently.

Again, whereas we have not seen any top regulator move to any operator in Ghana, there may be situations in Ghana that point to captured and compromised regulators in favour of particular operators. My reliable information is that some of these top regulators actually have their kids employed by some telcos and some are on monthly allowances and free airtime and data from some telcos. That situation, has compromised them to the extent that they defend those operators tooth and nail in all matters, even including consumer rights breaches. Some of these regulators have allegedly been leaking inside information from NCA to their favourite telcos ahead of official communication from the NCA.

Consumer Complaints

I am now beginning to understand why, upon all the evidence we gathered and presented to the NCA in our #StopTheAirtimeLoot campaign, the NCA has deliberately refused to take any decisive action against any operator or content provider apart from issuing a directive to make it look like they are on top of the issue. Indeed, till date some telcos and their so-called value-added service providers continue to sign people on to unsolicited electronic communications secretly, in blatant violation of the NCA’s own Code of Conduct, Electronic Communication Act and the recent directive. But the NCA is not well motivated to act based on the several reports we have filed and assisted many people to file with hard evidence.

In some cases, the operators told blatant lies in an attempt to implicate innocent organisations, but still NCA finds no reason to take up the specific issues and deal decisively with the respective offending operators. We have always been told that there may be people at NCA who are in bed with the telcos and VAS providers engaged in the airtime loot. Even though that is still speculative, it appears that day after day, it is becoming clearer why the NCA is not doing much about the airtime loot and about several other consumer complaints.

Regulatory Philosophies

According to one expert, there is a whole spectrum of regulatory philosophy, from free market to controlled market, but a true regulatory act is to ensure a BALANCED MARKET where ALL OPERATORS are profitable, CONSUMERS are satisfied and the GOVERNMENT has nothing to say or do (no interference). However, in reality, some regulators work for some operators, while others work for the government or for consumers. I dare say that in Ghana, the NCA is more of a chameleon – they work for themselves and for government when it is about collecting revenue from telcos. But when it comes to consumer rights breaches, they protect the telcos against consumers.

The expert stated that getting a regulator to be truly independent, accountable and uncompromised is an act made in heaven, adding that not every person is fit to work as a regulator and yet all kinds of people, representing the parochial interest of all kinds of people and organizations, manage to get into regulatory office and exact particular agendas.

He however thinks that what has just happened in South Africa cannot happen in Ghana because there are rules regarding what former regulators can and cannot do, as stated above – the said 5-years bond not to even comment on their work after leaving the regulator. But in lose systems, regulators can leave and join operators almost immediately.

Political Influence

Another expert thinks that, in Ghana, like in many other jurisdictions, sadly the head of the regulatory body is usually a political appointee, and therefore compromised ab-initio. So, a job offer from an operator will only be in their stride because their regulatory job is often coterminous with that of the appointing authority, anyway. But a career person who works his way to the top may resist such a temptation.

He therefore recommended that regulatory bodies should be made completely independent of political persuasion, so that meritocracy would trump patronage in public service, thereby promoting operator confidence in regulatory bodies. He thinks this should apply across all sectors and not just the telecom sector.

Upside

However, some experts think a regulator joining an operator or an operator joining a regulator also have its upside. As stated earlier, when a regulator joins an operator he is most likely to help that operator become more compliant and avoid sanctions. On the other hand when an operator joins a regulator, he is also more likely to help the regulator understand the industry it regulates better. In fact, one expert suggested that working experience with an operator should be a requirement for employing anyone into a regulatory role.

Another said, on the surface, crossing over from regulator to operator is pretty much like the healthy movement of talent from operator to operator. It deepens experience and enhances industry growth. However, when the head of the regulatory body immediately joins an operator after his previous role, it could raise concerns of using his or her knowledge and experience to help the operator beat the system, similar to insider trading.

So, for whatever it is worth, I think some of the things mentioned in the article should make MTN and any telco for that matter, examine their ways, because people can understand what it going on.

We leave it here for now.