Unkie Mine payment blow for Brainworks
07/03/2013 00:00:00
by Staff Reporter
BRAINWORKS Capital has suffered a new payment blow after Anglo American Platinum (Amplats) refused to pay the Harare firm some US$3 million in agency fees for work related to the platinum producer’s Unki Mine indigenisation plan.
Amplats has since agreed to transfer to locals 51 percent shareholding in its Shurugwi-based Unki Mine in line with the country’s indigenisation legislation but the world’s biggest platinum producer refused to pay costs incurred by the National Indigenisation and Economic Empowerment Board (Nieeb) over the deal.
Brainworks acted as advisors on the $284 million transaction but in letters seen by the Daily News the Nieeb forwarded the US$3 million invoice for the services to Unki in yet another farcical turn for the country’s indigenisation programme.
“Further my letter of 20th December 2012 and our subsequent telephone conversations regarding the above subject, I now write to formally submit to your company the final tax invoice for US$3,275,200 raised by our financial advisors, Brainworks Capital Management Company (Private) Limited, representing advisory fees for the provision of advisory services to the government of Zimbabwe and the Nieeb,” Nieeb chief executive Wellington Zengeza wrote in his letter to Unki.
“As explained in our previous telephone discussion, the submission of the invoice to your company for payment is in line with our principals' directive that advisory charges incurred by Nieeb and the government in the execution of indigenisation transactions will be paid by the companies that are indigenizing in pursuance of the lndigenisation and Economic Empowerment legislation.
However Unki refused to pay the fee, reminding the Nieeb that the advisors were engaged by and provided their services on behalf of the Board and the Zimbabwe government.
“This matter has been discussed internally and I regret to advise that these costs cannot be for Unki's account. Brainworks Capital was not contracted by Unki as its advisors. Neither was the scope of works to be carried out nor fees to be charged agreed upfront,” Unki’s chief financial officer Collin Chibafa said in response.
The revelations come after Zimplats, the country’s leading platinum miner, also refused to pay about US$17 million in agency fees to Brainworks for its indigenisation compliance plan.
Zimplats, majority-owned by South Africa-based Impala Platinum Mines, also said Brainworks was engaged by and provided its services on to Nieed which should therefore pay the firm’s fees.
Brainworks also acted as advisors in the compliance agreements for Canada-based Caledonia Mining and South Africa’s Pretoria Portland Cement.
Labels: AMPLATS, BRAINWORKS CAPITAL, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), PLATINUM, UNKIE MINE
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Zimplats refuses to pay US$17m Brainworks bill
Not sealed ... Mike Nyambuya with Implats CEO Terence Goodlace and Saviour Kasukuwere
28/02/2013 00:00:00
by Gilbert Nyambabvu
ZIMPLATS and its South African parent, Impala Platinum (Implats), have refused to pay advisory fees demanded by a Harare firm for consultancy work on the platinum producer’s US$970 million indigenisation compliance deal, telling the government to pick up the tab.
In letters seen by New Zimbabwe.com, Implats and Zimplats said Brainworks Capital’s US$17 million fee was the responsibility of the Zimbabwe government and the National Indigenisation and Economic Empowerment Board (NIEEB) which engaged the firm.
Zimplats also stated that they could not be expected to pay Brainworks since the company rendered its services to the NIEEB and the Zimbabwe government.
NIEEB chief executive Wilson Gwatiringa wrote to Zimplats on February 13, asking the company to pay Brainworks US$16,7 million “representing fees for the provision of advisory services to the government of Zimbabwe and the (NIEEB) in the implementation of the Zimplats indigenisation plan”.
Gwatiringa added that “the submission of the invoice to your company for payment is in line with our principals’ directive that advisory charges incurred by the (NIEEB) and the government … will be paid by the companies that are indigenising.”
But Zimplats wrote back on February 22 begging to differ.
“Regrettably (Implats) advised that they are not in a position to honour the payment on the basis that Brainworks was engaged by the NIEEB and was acting for and advising the NIEEB/the government in the negotiations …,” said Zimplats CEO, Alex Mhembere.
“Neither Implats nor Zimplats was involved in any way in engaging Brainworks Capital to act as advisors of NIEEB/the government of Zimbabwe or were we privy to the contractual arrangements relating to Brainworks Capital’s fees and Zimplats.
“As such both Implats and the board of Zimplats believe that the issue of Brainworks Capital’s fees should therefore be settled between NIEEB and Brainworks Capital.”
Brainworks Capital has been the subject of bitter recriminations both in and outside the coalition government after it emerged the company would likely pocket up to US$45 million for advising on nearly all the indigenisation deals reached between the government and foreign mining companies to date.
Foreign firms are now required by law to localise control and ownership of at least 51 percent of their Zimbabwe interests as part of an economic empowerment programme driven by President Robert Mugabe’s Zanu PF party, but opposed by his coalition partners.
Apart from the Zimplats deal, Brainworks says on its website it also offered consultancy services on the US$550 million Mimosa mine compliance plan, Anglo Platinum’s US$142 million deal for its Unki mine as well as transactions involving Canada-based gold producer Caledonia Mining and South Africa’s Pretoria Portland Cement.
But it is the Zimplats deal, by far the biggest agreed to date, which has raised eyebrows amid claims the transaction may be financially detrimental to the country and allegations that Brainworks was handed the advisory contract without going to tender.
However, in a strident defence of the deal, Zanu PF politburo member and former information minister Jonathan Moyo said the transaction had yet to be finalised.
He insisted that there was nothing irregular about Brainworks' involvement, adding that “of particular significance is the fact that the two percent charged by Brainworks Capital is payable by the indigenising company, and in this case, Zimplats. It is not payable by the indigenising entities or by the tax payers. So what's the fuss about?”
But Zimplats says paying Brainworks' fees would also likely breach of corporate governance standards.
“We believe you are aware that technically, the company cannot pay one shareholder costs without extending the same to other shareholders as that can be misconstrued as a dividend payment,” the Zimplats CEO wrote in his letter to the NIEEB.
“Furthermore, Implats raises concerns of corporate governance of their side if they were to pay the (Brainworks) invoice on behalf of NIEEB/government as this would be tantamount to influencing the decision of an advisor to a counterpart in the negotiations.”
Labels: BRAINWORKS CAPITAL, IMPLATS, NIEEB, WILSON GWATIRINGA, ZIMPLATS
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Zimplats refuses to pay US$17m Brainworks bill
Not sealed ... Mike Nyambuya with Implats CEO Terence Goodlace and Saviour Kasukuwere
28/02/2013 00:00:00
by Gilbert Nyambabvu
ZIMPLATS and its South African parent, Impala Platinum (Implats), have refused to pay advisory fees demanded by a Harare firm for consultancy work on the platinum producer’s US$970 million indigenisation compliance deal, telling the government to pick up the tab.
In letters seen by New Zimbabwe.com, Implats and Zimplats said Brainworks Capital’s US$17 million fee was the responsibility of the Zimbabwe government and the National Indigenisation and Economic Empowerment Board (NIEEB) which engaged the firm.
Zimplats also stated that they could not be expected to pay Brainworks since the company rendered its services to the NIEEB and the Zimbabwe government.
NIEEB chief executive Wilson Gwatiringa wrote to Zimplats on February 13, asking the company to pay Brainworks US$16,7 million “representing fees for the provision of advisory services to the government of Zimbabwe and the (NIEEB) in the implementation of the Zimplats indigenisation plan”.
Gwatiringa added that “the submission of the invoice to your company for payment is in line with our principals’ directive that advisory charges incurred by the (NIEEB) and the government … will be paid by the companies that are indigenising.”
But Zimplats wrote back on February 22 begging to differ.
“Regrettably (Implats) advised that they are not in a position to honour the payment on the basis that Brainworks was engaged by the NIEEB and was acting for and advising the NIEEB/the government in the negotiations …,” said Zimplats CEO, Alex Mhembere.
“Neither Implats nor Zimplats was involved in any way in engaging Brainworks Capital to act as advisors of NIEEB/the government of Zimbabwe or were we privy to the contractual arrangements relating to Brainworks Capital’s fees and Zimplats.
“As such both Implats and the board of Zimplats believe that the issue of Brainworks Capital’s fees should therefore be settled between NIEEB and Brainworks Capital.”
Brainworks Capital has been the subject of bitter recriminations both in and outside the coalition government after it emerged the company would likely pocket up to US$45 million for advising on nearly all the indigenisation deals reached between the government and foreign mining companies to date.
Foreign firms are now required by law to localise control and ownership of at least 51 percent of their Zimbabwe interests as part of an economic empowerment programme driven by President Robert Mugabe’s Zanu PF party, but opposed by his coalition partners.
Apart from the Zimplats deal, Brainworks says on its website it also offered consultancy services on the US$550 million Mimosa mine compliance plan, Anglo Platinum’s US$142 million deal for its Unki mine as well as transactions involving Canada-based gold producer Caledonia Mining and South Africa’s Pretoria Portland Cement.
But it is the Zimplats deal, by far the biggest agreed to date, which has raised eyebrows amid claims the transaction may be financially detrimental to the country and allegations that Brainworks was handed the advisory contract without going to tender.
However, in a strident defence of the deal, Zanu PF politburo member and former information minister Jonathan Moyo said the transaction had yet to be finalised.
He insisted that there was nothing irregular about Brainworks' involvement, adding that “of particular significance is the fact that the two percent charged by Brainworks Capital is payable by the indigenising company, and in this case, Zimplats. It is not payable by the indigenising entities or by the tax payers. So what's the fuss about?”
But Zimplats says paying Brainworks' fees would also likely breach of corporate governance standards.
“We believe you are aware that technically, the company cannot pay one shareholder costs without extending the same to other shareholders as that can be misconstrued as a dividend payment,” the Zimplats CEO wrote in his letter to the NIEEB.
“Furthermore, Implats raises concerns of corporate governance of their side if they were to pay the (Brainworks) invoice on behalf of NIEEB/government as this would be tantamount to influencing the decision of an advisor to a counterpart in the negotiations.”
Labels: BRAINWORKS CAPITAL, IMPLATS, NIEEB, WILSON GWATIRINGA, ZIMPLATS
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Biti vows to probe empowerment deals
14/02/2013 00:00:00
by Gilbert Nyambabvu
FINANCE Minister Tendai Biti has vowed to investigate indigenisation agreements reached with various foreign companies amid concern over revelations that a single Harare advisory firm has handled the most lucrative of the deals reached to date.
Brainworks Capital provided advisory servcies on the US$750 million Zimplats indigenisation transaction with a local daily claiming that the consultancy firm could pocket up to US$45 million from that deal alone.
An evidently thrilled George Manyere, the company’s managing partner, said of the Zimplats deal: “This transaction is a further milestone in our quest to building an even stronger advisory business in Zimbabwe and we believe that our specialist advisory services will continue to grow this year.”
And grow they have, with the company revealing in January that it had handled compliance arrangements for Mimosa and Unki platinum mines, gold producer Caledonia Mining as well as cement producer Pretoria Portland Cement.
However, the Daily News claimed Thursday that Brainworks was handed the consultancy contracts without going to tender
But Empowerment Minister Saviour Kaskuwere dismissed the allegations on Twitter, quipping: “Wolves are at the door; nothing to lose sleep over. We forge ahead with our empowerment”
Meanwhile, Biti told a business meeting in Victoria Falls that agreements reached with Implats, Aquarius and Amplats would be scrutinised to ensure they do not “cost the country money”.
According to Bloomberg, Biti said some of the agreements may have to be referred to Parliament for approval.
Zimbabwe’s indigenisation laws require foreign companies to transfer at least 51 percent of their Zimbabwe operations to locals.
In addition to the equity handovers, the companies have also been compelled to donate up to US$20 million to so-called community share schemes.
The programme has however, divided the country’s coalition government with President Robert Mugabe and his Zanu PF party insisting it was necessary to economically empower historically marginalised blacks.
The MDC-T says while economic empowerment was needed, the approach taken by Zanu PF benefits the wealthy elite and does little to solve the country’s employment crisis in addition to scaring away much-needed foreign investment.
Bickering over the policy has escalated lately as parties campaign for elections later this year and, with some analysts suggesting the programme is a potential vote-winner for Mugabe and Zanu PF, the MDC-T has sharpened its attacks.
Biti recently claimed that the community share ownership schemes were potentially illegal adding the foreign firms were, in fact, using them to bribe their way out of compliance with the law.
“There is nowhere in the Indigenisation act that compels companies to donate money to a community share scheme or to any farm or to anything so what you are actually seeing is coercion; companies being forced to part up with US$10 or US$15 million,” the MDC-T secretary general said last month.
“(And) to the extent that there is no company in Zimbabwe that I know of which has actually parted with 51% of its shareholding , you are having the anomalous situation where companies are bribing themselves out of compliance with the act by paying a mere US$ 10 million, US$5 million, whatever is the amount of the community share scheme.”
The claim was however, rejected by Kasukuwere advisor and Zanu PF spokesperson Psychology Maziwisa who accused Biti of “stupid politicking” ahead of the new elections.
He charged: “Just because the law is silent about community share ownership trusts doesn’t per se render the schemes unlawful.
“The Indigenisation Act contemplates broad-based empowerment and community share ownership schemes are a means of achieving that. In ordinary life, one would expect a person of (Finance Minister, Tendai) Biti’s background to understand this very simple legal fact but quite evidently, he doesn’t.
“The programme has helped take the poorest of our people out of abject poverty and given them a once-in-a-lifetime opportunity to make something out of their lives. In the process, thousands of jobs have been created.
"We need jobs in this country and community share schemes have gone a long way in addressing this situation.”
Labels: 2011 BUDGET, BRAINWORKS CAPITAL, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), NEOLIBERALISM, SAVIOUR KASUKUWERE, TENDAI BITI
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