By Shame Makoshori
The National Social Security Authority (NSSA) has come out guns blazing, vowing to defend any legal action by British tycoon, Nicholas van Hoogstraten, who has approached authorities seeking the reversal of a US$18 million deal involving CFI Holdings Limited.
Both NSSA and van Hoogstraten are the major shareholders in the 108-year old agro-industrial outfit, which has had two of its mills placed under external administration after shareholder squabbles paralysed operations.
Van Hoogstraten controls 35 percent shareholding in CFI through the London-headquartered Messina Investments, which holds interests in several listed firms, including leisure outfit, Rainbow Tourism Group (RTG) and the tri-listed coal producer, Hwange Colliery Company Limited.
NSSA and Messina’s shareholdings are so interwoven in a number of firms whose interests government guards jealously, and in all the firms, the investors have been fighting endless battles, said by NSSA chairman, Robin Vela last week to be the Achilles heels for CFI.
Last week, the Financial Gazette’s Companies & Markers (C&M) reported that the lockdown at CFI had reached catastrophic levels.
Van Hoogstraten has approached the Zimbabwe Stock Exchange (ZSE), the Securities and Exchange Commission of Zimbabwe (SECZIM) and the Insurance and Pensions Commission pleading for CFI and Fidelity’s suspension on the bourse in order to protect his interests and those of minorities.
At the centre of the dispute now under investigation by the regulators is that the tycoon, whose wealth was queried by Vela this week, said ZSE listing rules had been violated when the US$18 million disposal of Langfords Estates to Fidelity Life sailed through at a CFI extraordinary general meeting (EGM) in October last year.
Under the Langfords transaction, CFI sold 81 percent shareholding in the 841-hectare estate to the free spending Fidelity, which has been diversifying into the property market.
Van Hoogstraten claims that there was conflict of interest in the transaction after Zimre Holdings Ltd (ZHL), which holds shareholding in both Fidelity and CFI, voted at the EGM, while NSSA was also in conflict of interest when it cast its vote.
Vela, who spoke exclusively to C&M last week, hit out at the tycoon. He queried why newspapers called van Hoogstraten a “London tycoon” and said if he was cash rich he could have defended CFI, Hwange and RTG, when directors asked for fresh injections.
He claimed that instead of building companies in which he was invested in, van Hoogstraten had destroyed them, leading to him falling out of favour with “most ministers” in President Robert Mugabe’s government. Van Hoogstraten is said to be a close friend of President Mugabe, and Vice President Emmerson Mnangagwa.
“You seem to take a view that whatever van Hoogstraten says to you is right and correct,” Vela said in reaction to CFI stories published by C&M in the past three weeks.
“It’s a view that historically whatever a white man tells to you, you believe. You believe what he is saying is true because it is a white man. Look at the examples of van Hoogstraten in Zimbabwe, objectively. He has invested in Hwange, he has invested in RTG, and he has invested in CFI. All of them have problems.
“All of them have shareholder issues. None of them have been successful, why? It cannot simply be because he is right all the time. The fact of the matter is that van Hoogstraten tells you and everyone else he has a lot of money.
“He has put nothing at the table, ever! The fact that CFI, Hwange and RTG are in trouble as they are is because he has got no money; he barks, he pretends, he says I am going to write a cheque for US$100 million but he doesn’t,” the NSSA boss fumed.
A Wikipedia post updated on November 10, 2016 says van Hoogstraten, who is known for his property empire, as well as his controversial life story, has an estimated net worth of £500 million. Wikipedia says by 1968, at the age of 23, van Hoogstraten was Britain’s youngest millionaire with a portfolio of more than 300 properties.
By 1980, aged 35, he is said to have expanded his properties to over 2 000.
He later sold the majority of his housing, investing in mining and farming in countries like Nigeria and Zimbabwe.
“On RTG, NSSA is now owed US$10 million. We have offered van Hoogstraten and the board a reconstitution of that loan,” Vela said, adding that NSSA has promised to inject at least US$14 million in RTG to rebuild the group.
“And what does van Hoogstraten do? He says no, this is too rich for NSSA. So we met him and we said step exactly into our shoes. Just give us the US$14 million we will allow you to have this very rich deal. He goes quiet. Why? He has got no money.
“Then he goes to an AGM (annual general meeting) and says these guys are thieves they stole money, all these people are fraudulent. Van Hoogstatren has got no money. You say he is a tycoon from London? What tycoon? He is no tycoon! With CFI, it is exactly the same issue. We offered that we are putting US$10 million to rescue CFI. CFI is a national asset.
“It has got two mills that are now under judiciary management. We said we will put in the money to rescue CFI. We said we will do that but remember we have got pensioners money. I need to protect pensioners’ money. So we said we will put in the money as a rights issue or we will do a pure equity placement.
“All of you take your pick. We are not being greedy; we are saying all of you participate. What does van Hoogstraten do? No, he does not want. Why? He has got no money. It is very simple; van Hoogstraten has got no money. He barks, he threatens but when push comes to shove, he has got no money,” he added.
The NSSA boss said in other investments where van Hoogstraten had interests, he had used the same modus operandi.
Asked how van Hoogstraten had managed to increase his shareholding in CFI to 35 percent from about 24 percent last year if he was broke, Vela said the CFI stock was too cheap.
“Look at the share price, what is the share price? In order to buy 10 percent of CFI it costs you about half a million dollars. That is not money. We are talking about putting in US$10 million, US$15 million. That is real money. My challenge to van Hoogstraten is to put his money where his mouth is. If he really is honest, let’s come up with a deal.
“He voted for those transactions. He voted in favour of all these resolutions, all of them. It is only now, late in the day, on the 11th hour, that he needs to find some angles. He starts throwing spanners. We have no doubt we will defend ourselves.
“He wants control but he does not want to put some money. He wants control at the behest of other people funding CFI. In RTG, we offered him the deal, we said bring money. Just pay us our money you take the sweet position. He couldn’t. In CFI, we said put in money but he could not. I am not saying there are no issues at CFI,” said Vela.
He said on CFI, NSSA had completely aligned with ZHL.
They were ready to inject fresh capital.
“NSSA’s problem is not money; NSSA’s problem is getting the right transaction that we will justify to our shareholders. The guy has got no money, but he has 35 percent so he blocks everything,” he added.
But the tycoon, who claims to have significant holdings in London, Frankfurt and New York, immediately reacted to criticism by the NSSA boss particularly on what he called “the race card”. He described Vela’s comments as “pathetic and feminine-like rants”.
“As chairman of NSSA, he should be more circumspect and professional. It does not need the brain of Albert Einstein to work out that the non ZHL and Fidelity shareholders of CFI were consequently defrauded of more than US$20 million!
“Obviously, he is rattled that his ‘cosy’ relationship with the Rudlands at Zimre/Fidelity is not going to work so well now that the illegality of the Langfords deal has been exposed. (It is) interesting that he resorts to playing the race card.
“This is the last vestige of a man that has been caught with his trousers down! Robin now needs to face the reality of the situation and sit round the table with a mandate to resolve this and the related matters,” said van Hoogstraten.
He said Messina did not vote in favour of the transaction but abstained.
“The illegality of this transaction is very clear. Nowhere in the circular to shareholders is there any mention of the fact that both ZHL and NSSA were substantial shareholders in both CFI and Fidelity which would make it illegal for them to vote on the transaction.
“Furthermore, as it was a highly “material” transaction at an EGM, it would require a special resolution passed by the non conflicted shareholders – this is not rocket science! Lastly, but perhaps most importantly, I should also make the point that this land was being ‘sold’ at an effective price of US$2,70 per square metre as opposed to the minimum sale value of such undeveloped and unserviced land in the area of US$6 per square metre. Obviously, I fought this on behalf, again, of the small shareholders,” he added.
CFI has been teetering on the verge of insolvency and has sought to embark on a cash call which shareholders have snubbed since 2009 when the country switched to a multi-currency system following a disastrous hyper-inflationary crisis which ended in 2008.
Confidential documents seen by C&M recently indicate that van Hoogstraten had initiated moves to reverse the Langfords transaction. He approached the three regulators on November 1, asking them to suspend trade in CFI and Fidelity shares.
An analyst said it was possible that the tycoon wanted to make sure stocks under dispute were not transferred to other investors through the open market while the standoff was unresolved. His discussions would mostly be with the Rudland brothers, who swooped CFI shares through the takeover of ZHL last year.
The Rudlands, famous for building the logistics firm, Pioneer Corporation Africa into one of the biggest sector players following the takeover by Unifreight last year, are understood to be edgy about the developments. But the tycoon, feeling prejudiced by the transaction is said to be determined to regain one of the most priced estates on the fringes of Harare.
“We would suggest that, at the very least, while this matter is being resolved via litigation or otherwise, the listing of both companies should be suspended and your own office should carry out their own investigation as to how this transaction managed to circumvent the law and regulations,” said Messina.
Messina says CFI legal representatives, Honey & Blanckenberg, were liable for the damages that Messina and other shareholders had suffered in the letter to ZSE and SECZIM. But the lawyers denied liability. “We dispute that we are liable for damages to you or any other shareholder,” they said in a letter to Messina dated October 31, 2016. Financial Gazette