Saturday, March 02, 2013

(NEWZIMBABWE) Kasukuwere botched Zimplats deal: Mugabe

Kasukuwere botched Zimplats deal: Mugabe
01/03/2013 00:00:00
by Staff Reporter

PRESIDENT Robert Mugabe has said his empowerment minister was wrong to sign-off the Zimplats indigenisation compliance deal which has left the tax-payer facing a possible US$350 million hit.

Mugabe piled pressure on Saviour Kasukuwere over the Zimplats deal during an interview with state media to mark his 89th birthday.

The Zanu PF leader said Kasukuwere was wrong to endorse an agreement that requires the government to pay for shares acquired under the country’s indigenisation programme.

South Africa-based Impala Platinum (Implats), early this year, reached a deal to reduce its interest in Zimplats to 49 percent from about 87 percent in line with the country’s indigenisation legislation.

Foreign companies cannot own more than 51 percent of their Zimbabwe operations under a programme driven by Mugabe’s Zanu PF party but opposed by his coalition partners.

Under the terms of the US$971 million Zimplats deal, 20 percent of the shares were handed to community and employee share schemes while the state-run National Indigenisation and Economic Empowerment Fund (NIEEF) would take-over a 31 percent interest in the platinum miner.
Implats however, insisted that Zimbabwe must pay about US$350 million for the NIEEB shareholding.

"If they don't come up with the cash the stake will not be transferred," Implats’ then chief executive, David Brown, said at the time.

But Mugabe said the mineral resource belonged to Zimbabwe and should make up the country’s 51 percent contribution to the business. He said Kasukuwere made a mistake when he agreed the deal.

“Problem ndiyoyo, ivo vakatipa 51 percent vachiti chikwereti chatirikukupai asi tirikukubhadharirai mangwana mozotibhadhara that is where the difference is,” the Zanu PF leader said

“I think that is where our minister made a mistake. He did not quite understand what was happening and yet theory yedu ndeyekuti resource iyoyo ndeyedu and that resource is our share that is where the 51 percent comes from.”

Kasukuwere has led the charge to force foreign companies to comply with the country’s indigenisation laws and, buoyed by the Zimplats deal, recently indicated he would target the banking sector.

However, questions have been raised over some of the transactions agreed to date with critics also querying the role of a Harare-based advisory firm which is demanding US$17 million for consultancy work on the Zimplats deal alone.

Implats has refused to pay the fee arguing the company was engaged by and provided its services to the NIEEB and the Zimbabwe government.

Meanwhile, the government has given Implats 30 days to appeal the seizure of about 28,000 hectares of land believed to hold significant mineral resources for allocation to new investors.

“The President intends to acquire compulsorily part of the land held by Zimplats Holdings … for the utilisation of such mining location for the benefit of the public,” a government notice said Saturday.

However Implats is already demanding US$153 million from the government for ground released in 2006 and has said conclusion of the indigenisation transaction also depends on an agreement being reached over the sum.


COMMENT

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Mai Jukwa

Daddy Mugabe is wrong-ish. We have always maintained that indigenisation is not about taking shares without paying for them. This is quite distinct from land reform which was 100% our property and for which we have no moral or legal obligation to pay compensation.

If a company raises 500 million dollars to start a mining operation in Zimbabwe surely it is a violation of the worst kind to wait for that company to invest that money in plant and machinery and then suddenly show up and say give us 51% ownership. Even our comrades in Africa would not support that.

If that was governments intention then why not simply introduce a 51% tax on profits?

The idea behind indigenisation is to give controlling stakes to locals. How companies divest that controlling stake is a matter of imagination. If a company is coming to Zimbabwe then it would naturally have to find local partners.

If the local partners did not have the capital to purchase the shares then the burden of imagination would lie with the investing companies to find innovative ways to overcome this challenge. An option would be to limit-exclude dividends to local shares until such a time as the capital has been satisfied. This would take no more than 4 years, at a modest 20% return on equity.

Daddy Mugabe's position becomes unsustainable when we get into service industries like banks. Would we also just demand they give us 51% on the basis that the people who are banking there are black?

Kasukuwere's mistake was that he took on the burden of imagination. He should have left it to the companies to find ways to become compliant. This would have saved him the BrainWorks Capital pseudo-scandal.

Tweeta @AmaiJukwa

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