-A Paragon Consultants’ Candid Observation
There has been quite uneasiness in the Liberian GSM sector when news broke that a British young man had allegedly hacked the Lone Star mobile phone network in Liberia. The self-taught hacker, Daniel Kaye, otherwise called Spiderman, claimed he was paid £30,000 to knockout the entire network of Lonestarcell between October 2016 and February 2017. The victim impact statement presented at the British Court by the former CEO of Lonestar claimed US$70 Million in losses as a result of the 3 attacks carried out by the British man.
Mr. Babatunde Osho, former Chief Executive of Lone Star Cell in a written submission to the court said Kaye’s criminality had been devastating on his company. “The DDOS perpetrated by Daniel Kaye seriously compromised Lonestar’s ability to provide a reliable internet connection to its customers. In turn, Mr. Kaye’s actions prevented Lonestar’s customers from communicating with each other, obtaining access to essential services and carrying out their day-to-day business activities. A substantial number of Lonestar’s customers switched to competitors. In the years preceding the DDOS attacks, Lonestar’s annual revenue exceeded $80m (£62.4m). Since the attacks, revenue has decreased by tens of millions and its current liabilities have increased by tens of millions.
As a result of the foregoing, the MTN’s Liberian subsidiary is now taking advantage of this criminal situation to claim wide-cat loses in the process. Reportedly, LoneStar is making the whopping claim of US$70 million in damages. And it seems all eyes and suspicions are now fixed on a rival company in the country to bear this burden.
Liberians, who are witnesses to the evolution of GSM regime in the country, cannot and should not sit supinely to allow this ongoing saga conclude itself between the rivals since doing so will mean going back to Egypt, losing liberation to the suppressor.
As an independent social, economic and political think-tank, who has followed closely the advent of technology in Liberia, we feel compelled to attest to the facts as they are in the hope that both national and international stakeholders and partners see beyond the machinations afoot and how it stands to afflict ordinary Liberians and Government’s pro-poor agenda.
The Paragon’s Position
Familiar with the GSM environment, Paragons think LoneStar/MTN’s petition for US$70 billion in damages is totally pointless, unwarranted and cruel. Fact and circumstances upon which this company is claiming such colossal amount don’t warrant it. LoneStar/MTN lacks the moral and technical grounds to deserve the award. It is making a mountain out of a molehill, hunting for an elephant in the center of town. The Company further proves its dishonesty claiming US$70 million for a so-called hack and subsequent damages within the timeframe of the incident—just under one year. The 2016 report of the International Monetary Funds (IMF) indicates that Liberia has a population of 4.6 million people with a per capita income of USD 1.5 a day. How could it have raised anything close to what it is claiming?
And these are the reasons:
Instructive Issues to Ponder
1. It Thrived on Unconscionable Exploitation of Liberians
In order to fully understand and appreciate legal and commercial wrangling in the GSM, one must first endeavor to understand the context in which they have evolved. Once upon the time, there came Liberia’s first mobile phone community. It came where Liberia was partly at war and when business was done on the black market—devoid of best practices procedures every 21st Century nation must subscribe to. Thus, the environment was ripe for uncouth business practices, crowned by a monopoly ideally protected by a despotic political regime. There were tax invasions as exploitation and profiteering became the order of the day. The 2012 market trend shows a continuous decline in Lonestar’s revenue performance and devaluation of their brand.
The company had its heydays in the absence of competition. It sold SIM cards for US$65 when it could be sold for US$1. The company sold scratch cards for US$15 when it could be sold for US$1. It had very limited and inconveniencing compulsory validity date on a US$15 scratch card, and Lonestar took fines or charges to unblock SIM cards that reached that validity.
Yes, under those circumstances and conditions, LoneStar made millions. It had a feast at the painful expense of poor Liberians. But from the time LoneStar faced competitors that toppled its monopoly, its ill-gotten wealth hasn’t been the same again. It has taken a rapid nosedive. And it is an open secret, even as per its public lamentations against competitors’ shrewd business tactics, that LoneStar is near insolvency. It therefore should not look for scapegoats.
2. LoneStar has had History of Instability
It is an open secret that LoneStar suffered serial instability due to poor management and bad market strategy, including but not limited to its refusal to adjust to changes in the market coupled. Following massive exploitation under a monopoly, there was advent of new mobile telecommunication competitors on the Liberian market; and as a result of its failure to adjust and rethink its golden days under the monopoly, Lonestar’s revenue began to decline particularly. There was mass boycott by hundred of thousands of its previous customers who felt cheated due to the company’s exploitative policies during the Charles Taylor’s regime.
Another reason for its revenue shrink has to do with the corps of controversial stakeholders of the company. This also negatively impacted the image of the brand. Firstly, there is a usual reference made to the South Africa-based regional mobile operator MTN Group’s Liberian subsidiary, MTN Liberia (trading under the Lonestar Cell brand), which was embroiled in allegations that it may be a financial vehicle for convicted warlord Charles Taylor. For instance, MTN Liberia’s chairperson at the time, Benoni Urey was named by the United Nations (UN) as an alleged accomplice of the former Liberian president and war criminal Taylor. A good numbers of Taylor loyalists were affected by UN travel ban which affected top Lonestar cell stakeholders.
It was quite obvious that this kind of publicity seriously hurt the brand name of the Lonestarcell Company that used its Charles Taylor Government’s connection to compel public officials to subscribe to them, coupled with hike in the use of its network. It can be recalled how the UN Security Council delisted a number of former Taylor associates from its so-called ‘assets-freeze’ and ‘travel-ban list’, with Messrs. Benoni Urey and Emmanuel Shaw all major stakeholders in the Lonestar cell brand prominent.
Some of the MTN Liberia officials were delisted from a UN-compiled report into human rights violations in the 14-year civil war in Liberia. The UN has withdrawn its travel ban and asset freeze on Emmanuel Shaw and Urey’s shareholder and partner in PLC Investment Limited which owns a 40% stake in MTN Liberia.
Investigation shows that 60% of MTN Liberia is owned by MTN Group through its Dubai-based subsidiary, Investcom. It’s understood that PLC Investment was asked to submit its shareholder structure and open up its books to UN investigators amid suspicions that MTN Liberia is in some way providing financial support to Taylor. Those complicated investigations by the UN and other International groups, negatively impacted the image of Lonestar and not just a little known British hacker.
3. LoneStar has been culprit of bad business practices
Besides its covert horrifying exploitation of the people, there were times when the company went overt, and it had the Liberia Telecommunication Authority to contend with. Records have shown that the LoneStar has not gone with impunity on all of its business misdeeds and cruelty against the people and Government of Liberia. On a couple of occasions, the Government of Liberia was forced to flex its muscles against the company for bad business practices. For instance, the Liberia Telecommunication Authority (LTA) fined the company US$225,000 for noncompliance with LTA Order #0005-10-04011 which called for both LoneStar and Cellcom to expand their interconnection trunk and have expansion remain in place.
Again, it can be recall that the company faced another biting fine from the LTA for always running afoul with laws and regulations. In November 2011, the LTA had to fine the LoneStar US$500,000 for negligence and omission on the part of the management.
4. Impact of Bad Associates
That the LoneStar is hunted by its own past is inexpressible. It must have been victim of its own shadow, and needed to face the fact than finding its enemies where they don’t exist. Who does not know that LoneStar obtained its license during the Taylor regime? It is a well-known fact that the structure of the company was such that Mr. Taylor owned a significant percentage (although a minority owner) of the business.
In addition, many of Mr. Taylor’s cronies received small financial interest thereby giving the appearance of a Liberian minority owned business. One needs only to ask how those in government positions can receive shares in companies they did not put a dime into. For this generous allotment, Lone Star was granted almost the entire Spectrum in the GSM space of the country without competition. This adhoc assignment of public property without competition robbed the Liberian treasury of millions of dollars. The denial of revenue to the public coffers continues today because of the lack of proper regulation and control over the uses of this very lucrative cash generating business sector of the economy. Previous governments have either intentionally or unintentionally turned a blind eye on the raw exploitation, thereby allowing Taylor’s cronies to continue their quest to massively loot the resources of Liberia.
The perpetuation of this massive exploitation has now been exacerbated by the Taylor cronies exercising additional ill-gotten claim to the rest of the unassigned spectrum in the GSM space. The interim government of Gyude Bryant did not intervene to stop Taylor’s cronies from facilitating this monopoly and shutting out all competition from coming into the country.
This behavior of non-intervention by the interim government of Gyude Bryant is inadvertently creating an atmosphere for these foreign entities to disregard Liberian laws, allowing the current GSM carriers in the country to be contemptuous of the population they serve. The current cellular service is extremely bad and because of the lack of regulation, customers lose 45 percent of their prepaid cards to dropped calls that cannot be readjusted. The outright thievery of consumers’ money in a depressed economy by “Mr. Taylor Lone Star Corporation” and his Lebanese buddies does not stop there. They have totally ignored the PTSN in the country, by passing all intra-country connectors for call terminations in foreign lands. This condescending attitude toward the Liberian population is denying the people of Liberia legitimate revenue stream.
Adding insult to injury, the Taylor cartel and its lieutenants operating the various agencies and ministries are insuring the complete demise of what little is left of the Liberian National telephone exchange. This, in our estimation, is a national security nightmare. We are not aware of any country in the world that has 100% of its telecommunication infrastructure in the hands of foreign companies. This is a national security disaster if we as a nation allow this to continue. There has to be Liberian participation (legitimate majority owned Liberian companies) to maintain this important national security space. To date, they have refused to require the Cellular operators to interface with the PTSN.
Best put, LoneStar GMS Company does not deserve compensation for damages. There is absolutely no moral, ethical and legal ground to award the company US$70 million. Should it be paid for maximizing monopoly? Should it be rewarded for extortion and exploitation? Should it be compensated for its own technical faults for which it repeatedly apologized to the public? Is this actually an attempt by the LoneStar to reap what it did not sow?
Our position is this: Whoever is in charge and studying the petition of LoneStar for US$70 million for an isolated hacking incident must think twice. Firstly, Lonestar which is saddled by competition and lack of innovation to improve could never have made US$70 under any circumstance not only for that period it is claiming hacked but also anytime in its post-monopoly regime.
It must be noted that LoneStar was already in lamentation, fearing insolvency. It has opposed the masses’ pro-poor 3-day free calls scheme, fighting tooth and nail to undo it. It has lobbied with powerful political forces in the country to cow its competitors into submission on his free call promo. It has lamented that it was losing millions of dollars because of this promo and other superior and shrewd entrepreneurial innovations by its competitors. And certainly, if the LoneStar is looking for the loss of $70 million, it must rather look up to its defeat in the GSM competition and changing dynamics to which it is not heeding than to find largess in a so-called hacking incident.