Embattled banker, Nicholas Vingirai, is seeking government intervention to rescue a deal in which he is expected to increase his shareholding in banking group, ZB Financial Holdings Limited (ZBFHL), from whose board he was booted out at a recent shareholder meeting.
ZBFHL shareholders voted against his re-election to the board at an annual general meeting (AGM) nearly a month ago following a charged confrontation with institutional investor, the National Social Security Authority (NSSA).
Vingirai’s appointment to the ZBFHL board alongside two nominees from his investment vehicle, Transnational Holdings Limited (THL), saw the reconfiguration of the board to reflect his interests.
THL became the second largest shareholder in the group with a 19,79 percent stake in a deal in which government gave up its own shares to settle a dispute over the takeover of his financial institution by ZBFHL over a decade ago.
NSSA is the single largest shareholder at 37,79 percent shareholding.
Under the deal with government, which was rejected by shareholders at the AGM, Vingirai was to increase his shareholding in ZBFHL to 26 percent. The financial services firm was to allocate additional shares to his investment vehicle, in the process diluting other shareholders.
Vingirai said he was ready to go back to court to assert its rights should government fail to intervene in the latest dispute.
“It is only logical to engage government on the way forward. While some shareholders seemed contemptuous of the government’s efforts in brokering the settlement, THL remains grateful and full of respect for what government did in brokering the settlement,” said Vingirai.
Vingirai also lost his right to a US$658,699 dividend paid by ZBFHL to THL on January 23, 2017 after shareholders said it was illegal.
NSSA, which has shirked its reputation as a supine investor since Vela was appointed chairman in 2015, has protested against the dividend payment. The US$1,3 billion statutory pension fund argues that the record date for the payment was June 17, 2016 and THL was only registered as a ZB shareholder on February 6 2017.
Because the government was still on the ZBFHL shareholder register on the record date, it had received a dividend payment from the financial group. The January 2017 dividend payment to THL was, in effect, a duplicate payment which prejudiced other shareholders, NSSA argues.
THL’s position is that it was entitled to the dividend payment as its share transfer deal with government took effect on May 31 2016.
The shareholders of ZBFHL approved the declaration of a dividend at the AGM of the company on May 24 last year. This was prior to the Agreement of Transfer of Shares (ATS) which took place on May 31, 2016. The dividend was, however, paid out to shareholders, who included government, subsequent to the effective date of the ATS, which was its date of signature.
Government was the registered holder of 23,5 percent of the issued shares of ZBFHL before the ATS and was paid its dividend in respect of its shareholding.
NSSA board chairman, Robin Vela, maintains that their position was correct. He insisted they would not be forced to reconsider their position by any threats or actions Vingirai decides to take.
“As far as we are concerned, the outcome of the ZBFHL AGM was in the best interest of the institutions’ investors and victory for sound corporate governance. We will stand by it regardless of what is being said and we are reading in the papers,” said Vela.
Apparently, ZBFHL had sought counsel from its lawyers on the issue before the AGM. The lawyers agreed with NSSA’s reasoning, saying payment of a dividend to government and THL had created a “situation where the dividend was paid twice”.
Vingirai had embarked on a restructuring of the financial services group after assuming shareholding in the group last year.
He had received the shares from government as compensation for the loss of Intermarket Holdings Limited (IHL) in 2004.
IHL had been bought by ZBFHL in 2006.This was after the Reserve Bank of Zimbabwe bailed out IHLs subsidiaries and later converted the debt into equity under a High Court scheme of arrangement.
Since then, Vingirai had been fighting to reclaim his assets. His battle to reclaim the shares intensified after externalisation charges against him were lifted in 2013.
ZBFHL wholly owns ZB Bank Limited, ZB Reinsurance Limited, ZB Transfer Secretaries, ZB Capital and ZB Associated Services. It has a 75,3 percent stake in ZB Building Society and 64 percent shareholding in ZB Life Assurance. It also has interest in Mashonaland Holdings, Credit Insurance Zimbabwe and Cell Holdings. Financial Gazette
