By Tendai Kamhungira
HARARE – Empowerment Corporation (Private) Limited (EC)’s February 20 extra-ordinary general meeting (EGM) to ratify the sale of its 40 percent stake in Telecel Zimbabwe (Private) Limited (Telecel) hangs in the balance after key shareholder Jane Mutasa has moved to oppose it.
This comes as squabbling and infighting has intensified among the founding empowerment shareholders of the Telecel International (TI) subsidiary, with maverick businessman Philip Chiyangwa claiming that he was still part of the mobile venture.
In court papers filed this week, Mutasa’s Indigenous Business Women Organisation (IBWO), Magamba Echimurenga (Magamba) and Selpon Investments (Selpon) have not only sought to block the disposal of 80 million shares held by EC, but sought to interdict Patrick Zhuwao, James Makamba’s Kestrel Corporation (Private) Limited (Kestrel), among other key stakeholders, and Brainworks Capital Management (Private) Limited (BCM) from conducting the EGM.
Through their lawyer Charles Chinyama, the parties say they would suffer irreparable damage if the proposed $20 million transaction goes ahead, as it was called by unauthorised persons.
“The… applicants stand to lose all their lifetime investment they had made in Telecel Zimbabwe (Private) Limited through the 6th respondent as their investment vehicle which has ever increasing value well in excess of $200 million and is sought to be donated or to be given away for as little as $20 million,” Mutasa’s group said ahead of the matter’s hearing.
In another supporting affidavit, Magamba’s Andrew Ndlovu said the war veterans’ group had not only fully paid for its shares, but also stands to lose if the share disposal went ahead.
“These shares have been sold or about to be sold through the unlawful acts of the 1st (Zhuwao) and 2nd (IBWO) respondents who purport to have sold these shares to Brainworks Capital Management (Private) Limited. I submit further that 4th (Magamba Echimurenga) applicant’s shares were also stolen by the 3rd (Makamba) and 4th (Kestrel) respondents using the medium of the 2nd (Carlton) respondent…,” he said.
While the parties have always wrangled since Telecel was given a licence in 1998, information obtained by the Daily News late last year indicated that only three out of the seven founding shareholders had managed to pay for their commitment fees and these were Makamba’s Kestrel, the Affirmative Action Group and small scale miners.
And just as the groups were allotted shares between nine, and 15 percent, the EC shareholders also agreed on an issued and paid up capital of 70 percent — with about 30 percent being reserved for a technical partner, an arrangement which fell away when the Telecel International (TI) came on board.
According to company documents, the unissued shares were not only subsequently distributed to the founding shareholders’ investment vehicles such as Native Telecom and Selpon, several other Telecel shareholders forfeited their shares after failing to pay for their allotted scrip through commitment fees, and collateral for key start-up costs.
While Leo Mugabe’s Integrated Engineering Group outrightly failed to subscribe for its shares — as part of a $2 million start-up fund or kitty — Mutasa’s IBWO only managed to partly pay for its commitment, the essential contributions.
As such, Makamba’s firm chipped in with the biggest chunk of cash — an equivalent of Z$16 million then — to rescue the other shareholders, and which money was secured from CBZ Bank Limited.
This was backed up by resolutions of a May 21, 1998 meeting in the capital and whose binding resolution was that anyone who had failed to subscribe for their shares “would forfeit them to other shareholders on a prorate basis”.
With EC being formalised in June 1998, leaders of the various pressure groups including IBWO and the AAG not only transferred scrip to their private entities, but voluntarily sold down their shares to Kestrel.
For instance, Chiyangwa’s Native Telecoms (Native) and Magamba reportedly cashed in their shares, with the former pocketing a Z$14 million cheque, which he is now disputing.
Critically, the maverick businessman says the money given to him by Telecel was a loan and not a payment for his Native shares.
Despite the fact that Mutasa’s Selpon had taken up some shares allocated for IBWO, the latter sold at least two parcels, which also spawned part of the love-hate relationship between Makamba and the feisty businesswoman.
“In May 1998, IBWO sold 1 500 of its shares and subsequently sold a further 191 of its shares, leaving it with 1 692 shares. The IBWO shares were offered to the remaining on a prorate basis,” a source close to the developments to this paper in November 2014, adding Selpon and ZSSMA declined to acquire the shares, and which were eventually acquired by Kestrel.
In an earlier High Court case, Mutasa’s firm has filed another application, claiming among other things, an equal distribution of shares to members of the EC.
This time around, the IBWO president has not only disowned Zhuwao’s appointment as EC managing director, but said the ex-deputy minister was pretending to act on behalf of the Telecel minority shareholder.
In particular, Mutasa is miffed about the purported agreement to sell the mobile cash cow to George Manyere’s BCM, which she describes as null and void.
The chaos around Makamba’s company also comes as its licensing issues and future remain uncertain.
About three weeks ago, the Daily News reported that the Postal and Telecommunications Regulatory Authority of Zimbabwe was grossly unhappy with the firm’s failure to pay its licensing fees, and fulfilment of empowerment requirements.
And as the political wars escalate, TI has also signalled an intention to sell its majority 60 percent stake.
Meanwhile, Chiyangwa has also given Carlton Consultants a seven-day ultimatum to respond to the issues.
In the letter, the Native Investments Africa Group chairman not only emphasised the point that he was still an EC shareholder, but challenged other shareholders to produce proof of payment for shares in the form of cash, bank transfers or cheques forthwith.
He advocated for the sale of the foreign-owned 60 percent shareholding to the founders of Telecel Zimbabwe.
“…as I reiterate this was and is still a political licence. Those with lusciousness must and need to go get their own licence,” he said. Daily News