(NEWZIMBABWE) The great Old Mutual fraud

The great Old Mutual fraud
26/11/2011 00:00:00
by Tafadzwa Msarara

OLD Mutual recently handed over a cheque of US$11 million to Vice President Joice Mujuru as seed capital for a youth empowerment fund. Old Mutual supporting black youths? Things change!

Old Mutual, which is listed on the Zimbabwe, London and Johannesburg stock exchanges is arguably the biggest private real estate owner in the country. It also has significant stakes in more than 90% of ZSE listed counters which means it appoints and controls senior management in these companies and influences policy direction.

The company, which was formed to protect and consolidate the British South Africa Company legacy, also prospered by feasting on the pension contributions of our grandparents, parents, brothers and sisters over the last decades. It was very unusual for an ordinary working young blue collar black Zimbabwean worker not to subscribe to one or more of Old Mutual insurance/assurance cover products.

We are told that these policies, including the pensions, acquired several high rising buildings in major cities and towns as investments so that they harvest on the rentals paid and grow the wealth value of these contributions. Put differently, most of Old Mutual’s properties were acquired by pensioners as investment vehicle.

When the multi-currency regime was introduced in 2009, Old Mutual arbitrarily converted all policies and pensions into United States currency without knowledge and consent of the policy holders. No-one really knows what exchange rate was used and if there was any Reserve Bank of Zimbabwe foreign exchange dispensation granted.

Pensioners who had contributed for a lifetime were paid off equivalent to three months’ salary or less as final payment. Most of them are terminally ill and have no other source of income, but had hoped that their pensions where going to provide them some cushion. This also includes the children left by parents who succumbed to the AIDS scourge who had signed up to educational policies and pension covers to provide for their families’ future.

If the real estate belonged to pensioners and other policy holders, who owns them now? The pensioners still want to know where Old Mutual got the money to pay them off ? The company has never bothered to explain on such matters. The question is: does the policy lapse because there is a change of currency? Put differently, does Old Mutual reserve the right to change the terms of the contracts and self retire itself from its obligations because we now use the United States dollar?

It is unfortunate that we have a government that spends too much time on infighting rather taking time to interrogate this fraud. Our parliamentary portfolio committee on finance must summon Old Mutual and get the truth.

When the country was hit by a cholera outbreak which affected more than 50,000 Zimbabweans and killed 3,500 people, including some Old Mutual policy holders, Old Mutual never bothered to come to the rescue to provide even cheap medication and water sanitising chemicals. Does community re-investment exist in their dictionary?

Why is Old Mutual now dangling US$11 million to the youths when it failed to come to rescue of more than 50,000 Zimbabweans hit by cholera?

Old Mutual South Africa runs a R300 million (about US$35,2 million) youth fund called Ubosomubvu Youth Fund that seeks to promote and advance the business interests of the youth. This fund, very interestingly, was initiated by Old Mutual South Africa without the government having to create a law to enforce that.

Here in Zimbabwe, Old Mutual had to be forced by the Indigenisation Act to invest in the youth. I thought Old Mutual Zimbabwe reports to Old Mutual South Africa? Why the difference in business culture?

When the country dollarised, many companies especially black-owned were caught flat footed as they failed to pay rentals and other operation costs. Old Mutual, the biggest private real estate owners with a forest of high rising buildings in all towns and cities plus large number of industrial buildings, resorted to evicting non-paying tenants and preferred the buildings to stay empty.

In some cases, the company deployed self-help measures of locking out tenants and switching off electricity. It’s very interesting to note that court orders had to be obtained to interdict Old Mutual, a listed entity, from doing that.

To date, Chitungwiza shopping complex, High Glen, Westgate and Nkulumane Shopping Centres are all ghost business centres as natives were kicked out. These natives would have been able to make more than US$11 million monthly, provide employment and contribute to the fiscus. Old Mutual turned productive black Zimbabweans into charity cases and now it is throwing the crumbs to them. The unity government is quiet about it. Do we have to build new buildings whilst 50% of the country’s lettable space is empty?

There is no doubt that Old Mutual can afford to donate or lease their premises at less than 25% of the market value and incubate small businesses for a period. By doing that, the company would have empowered the Zimbabweans who contributed to its growth.

Old Mutual has shown tolerance to incestuous behaviour. We have seen Muchadeyi Masunda, its chairman, being the Mayor of City of Harare where Old Mutual is the biggest resident. In London, where Old Mutual is listed and also where Masunda was schooled, if one assumes a political or public office they step down from all their private sector engagements to avoid conflict of interest. One wonders how Masunda behaves each time Old Mutual lodges a complaint against the city of Harare and vice versa.

Further, Mr Masunda is a board member of John Sisk (through indigenisation he now owns it +30%) which also does construction work for Old Mutual. In an urgent chamber application made by Pattison Timba seeking to stop the KMAL Annual General Meeting, he contended (in passing )that it was untenable for Masunda to be Mayor of Harare, chairman of Old Mutual and chairman of Kingdom Meikles Africa Limited at the same time.

It seems, however, that Old Mutual does not give a hoot to simple tenets of corporate governance. Occupying so many positions! Is Masunda the last born of this country?

Old Mutual Zimbabwe must, of necessity, conduct a self examination so that it repositions itself in the people’s hearts not in their pockets and behave as expected of the biggest company in the land.

It must be clear to all and sundry that the US$11 million fund launched last week was not given out of generosity by the company, but it was simply complying with a statutory provision. When is Old Mutual going to be generous?

Credit must be given to Indigenisation Minister Saviour Kasukuwere for tightening the screws on Old Mutual using black economic empowerment laws. Indigenisation is working and Tyson must continue to punch hard and furious.

Tafadzwa Musarara is the chairman of the Africa Economic Development Strategies (AEDS). He can be contacted on chairman@aeds.org.zw