Row over Zim indigenisation deals

The Zimplats deals is one of many that the governor of the Reserve Bank has questioned. (Supplied)

The Zimplats deals is one of many that the governor of the Reserve Bank has questioned. (Supplied)

Minutes of meetings seen by the Mail & Guardian suggest that Kasukuwere and Gono are failing to find common ground though they have met on several occasions in attempts to settle their differences. Gono, it appears, is unhappy about the structuring of empowerment deals and valuation of foreign-owned companies by the indigenisation ministry.

So unhappy is Gono that he has dismissed Kasukuwere's indigenisation programme as unworkable and its implementation as being "in shambles" because of structural flaws.

Their disagreements arise mainly out of deals between the state-run national indigenisation and economic empowerment board and several foreign-owned companies.

The deals at stake total $1.7-billion and involve the Zimplats transaction worth $971-million, Mimosa's $550-million, Anglo American's $142-million, Pretoria Portland Cement's $27.8-million and Caledonia's $30-million.

The minutes show that Kasukuwere, Gono and their officials held meetings in Harare on February 7, 8 and 11 in an attempt to sort out their disagreements.

Issues that were discussed included company valuations, funding arrangements, legislative issues and conditions pertaining to non-binding term sheets or memorandums of understanding.

The February 7 meeting, called to discuss provisions of the Zimplats indigenisation plan, was attended by both Kasukuwere and Gono.

Questions raised over valuations
The national indigenisation and economic empowerment board's fund management general manager Wellington Zengeza, Godfrey Manyere, who has acted as a consultant for the board in several indigenisation deals, and central bank officials from the foreign investment, exchange control and international banking divisions also attended the meeting.

According to the minutes, Gono questioned the $2.7-billion Zimplats valuation, saying that, given the company was sitting on 190-million ounces of platinum, the true value should be considerably less, taking into account operating costs.

Gono said the funding arrangements of the empowerment plan with Zimplats were flawed and unsustainable. He also said there were problems with Kasukuwere's "utopian thinking", lack of consultation, undervaluation of companies, inconsistent frameworks, exchange rate approvals, applicable law in cases of dispute and the conditions of the memorandums of understanding.

Gono further questioned the appointment of a consultancy firm, Brainworks Capital, and the financial jackpot it had hit from the deals.

According to sources at the board, Manyere, who owns Brainworks Capital, is a friend of Kasukuwere.
The sources also said Kasukuwere played a key role in ensuring Brainworks Capital was appointed as a board consultant.

Documents presented at the meeting detailed that Brainworks Capital had banked $14.6-million in consultancy fees from the Zimplats deal alone. Brainworks Capital, documents show, also collected various amounts from other deals resulting in a total of about $34-million.

The documents also show that other advisory firms that have collected consultancy fees from indiginisation deals include CBZ Bank, MMC Capital, a South African company Vunani Limited and CapVest Capital. They all charged 2% of the transaction value of the deals save for Renaissance Financial Holdings, which asked for 5%.

Election campaign
But at the same meeting, Kasukuwere and Manyere contested Gono's arguments, saying that the deals would benefit locals if the equities, taxes, royalties and other payments were taken into consideration.

Later, in a report dated February 11, Gono said that it was "evident from the preliminary desktop assessment of the execution version of Zimplats implementation plan that a plethora of key features in the agreement were not dealt with" and that this put implementation of "the whole indigenisation programme in shambles".

In a response to the M&G, Kasukuwere said relations between himself and the governor are "cordial" and reported tensions between them are "creations of the media".

Zanu-PF insiders say Gono's battle with Kasukuwere risks derailing President Robert Mugabe's campaign strategy.

The party's election campaign hinges on the controversial indigenisation law that provides for all foreign investors to cede 51% of their shareholding to local investors, community and local trusts and quasi-government bodies.

The government announced last week that a referendum on the draft Constitution will take place on March 16, paving the way for elections later in the year.

The Kasukuwere-Gono war has now sucked in government officials and Zanu-PF politburo members, putting Mugabe in an invidious position because the minister says he is executing his mandate, whereas  Gono, who is close to the president, says he is offering advice.

'Unworkable' model
However, Gono, who is credited with saving Mugabe and Zanu-PF from defeat during the last elections through numerous interventions that included money printing and rolling out agricultural inputs to the poor rural electorate, says the equity model is unworkable.

Gono argues that there are "many other options" that could be used without contracting unsustainable debts and getting entangled in impracticable agreements.

Gono came under fire early this week from Kasukuwere's ally, Zanu-PF politburo member Jonathan Moyo, who said in an opinion article in a weekly newspaper that Gono was opposed to the indigenisation programme and was using a "house nigger's logic" and an associated "hopeless mentality" to subvert the plan, and should not be consulted.

Kasukuwere has also vowed to press ahead with his programme, setting the stage for further clashes.

Moyo warned of a looming "battle royale" over the issue.

The elections could be Mugabe's last owing to his advanced age. He turned 89 on Thursday.

Analysts said they expect more indigenisation deals to be sealed before the elections as companies fear a Zanu-PF win could mean protracted legal battles for assets if they do not comply with the law.

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