Optic fiber venture IBC (or by its trading name Unlimited) is paying a $7.5 million annual maintenance fee to Cisco (CSCO), sources inform "Globes". This is an unprecedented amount, paid to the US telecommunications equipment giant under the IBC shareholders' agreement signed at the time that the joint venture was set up.
Against the background of a rupture between the Israeli shareholders on the one hand, and Swedish company Via Europa and Cisco, which are running the project, on the other, the shareholders are demanding information on the agreement between Via Europa and Cisco, and that they should be kept fully informed about the way the company is managed. Cisco gives the venture supplier's financing and in effect stands behind it through Via Europa, as it does not wish to head the project as a direct shareholder.
The Israeli shareholders in the venture (Pujo Zaboludowicz's Tamares Telecom Ltd., BATM Advanced Communications Ltd. (LSE: BVC; TASE: BATM), Rapac Communication and Infrastructure Ltd. (TASE: RPAC), and Yehuda Zisapel) consider that Cisco and Via Europa are doing as they please with the venture, and are denying them critical information about its progress. They claim that they are completely cut off from what is happening in the venture, that the board, headed by Doron Cohen, deliberately makes decisions with consultation, and that at the meetings that have taken place the Israeli representatives did not receive answers to their questions. The Israeli shareholders are highly critical of Doron Cohen, who they say does not represent the shareholders as a whole but rather colludes with Cisco and Via Europa to conceal what is really happening in the venture. The Israelis say that the absurd maintenance payment to Cisco for maintaining a network that does not exist and has only begun to be constructed is an example indicating where the shareholders' money is going.
The Israeli shareholders claimed (and continue to claim) that Via Europa and Cisco are responsible for equipment orders years in advance from Cisco, equipment that the venture has no need of in the near future, so that in effect Cisco and Via Europa have already obtained a substantial payback on their investment.
IBC stated in response, "The main supplier agreements were signed under a procedure of the Israeli government and were approved in all the relevant forums. As part of this procedure, Cisco was chosen as the supplier for planning, implementing, and operating the network. While more cities and major enterprises are joining Unlimited's services, we are witness to a failed attempt by interested parties to damage the fabric of the relationships between the shareholders.
"The claims raised are incorrect. Six regular board meetings are scheduled each calendar year. In addition, unscheduled meetings are held for regular updates as necessary. So far, four board meetings have taken place, even before we are halfway through 2015. The company's board of directors operates according to strict rules of corporate governance, with full transparency, and in accordance with the agreements signed between all the various parties concerned before the company was set up."
Published by Globes [online], Israel business news - www.globes-online.com - on May 10, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015