By Mutumwa D. Mawere

No Case captures the Zimbabwean mind more than the present debacle in Kingdom Meikles Africa Limited (KMAL), not only because it pits first generation black entrepreneurs against inheritors of colonial economic power, but also exposes the government’s opportunistic approach to economic empowerment.

The characters and institutions involved in the KMAL saga from Messrs. Nigel Chanakira, Pattison Timba, Strive Masiyiwa, George Charamba, Phillip Chiyangwa, Super Mandiwanzira; and John Moxon, representing the black and white faces, respectively, to Econet, Kingdom, Renaissance; and Meikles reveal the madness and complexity of the Zimbabwe indigenisation debate.

The connection between race and economic success has been clouded by the unique colonial experience of many former colonies like Zimbabwe to the extent that a discussion of the poverty that still pervades Africa will always take a racial tone.

An interesting subtext of the KMAL affair is that the black protagonists are generally regarded as honest businessmen less tainted by political patronage and yet when one looks closely at the road to fame of the characters involved in this saga it becomes important to broaden and deepen the debate beyond a superficial level.

While the road to political fame is better understood because of the role of citizens in shaping it, the road to economic stardom is relatively less understood, as are the critical requirements for business success.

Nigel Chanakira, the key black actor in the KMAL drama and has positioned himself as a victim of some white conspiracy, is no stranger to the practice of scape-goating. Whenever he finds himself in a corner, he has been able to use scapegoats to distract attention from the core issues at play.

Unlike Chanakira who established a greenfield financial services company, I rose to prominence through the acquisition of SMM Holdings (Private) Limited in 1996 at a time when there were few black generals in the economic arena. I recognised then as I still do that Zimbabwe required black public faces to be custodians of economic change.

Over the years, I must admit that my own personality has been distorted by the events of the last 12 years since my foray into business.

As a pioneer of black controlled business in Zimbabwe, I was acutely aware of the fact that no effort was made by political actors to think about business development issues and historically disadvantaged persons in the post-colonial era and hence my decision to invest in bridging the knowledge, capital and execution gaps that manifested themselves in the mistrust between state and non-state economic actors.

I chose then to invest in an outreach programme that saw state actors accompanying as well as empowerment activists attending some of the road shows I conducted not only in Zimbabwe but in South Africa, Botswana and the USA.

My belief then was that empowerment could only be successful if it was at the center of economic policy thinking and that it was necessary for state actors to better appreciate business issues and what successful enterprise required.

There are many people who still believe that being white is sufficient to guarantee business success while forgetting that without customers who buy the product and services produced by enterprises, success cannot be assured. State actors believe that they are the fountain of wisdom and rarely pause to think about what is required to drive the economic engine and what kind of ideology is necessary to inspire human creativeness and ingenuity.

In my business journey, I have learned a lot and believe that it would be neither in my interest nor national interest to deny the public and future generations my take on issues I regard as in the national interest.

It would be irresponsible for me not to seize the opportunity presented by the KMAL saga to clarify and expose the true facts so that the public can draw its own conclusions. As we try to shape the future, it is important that we better understand the fallacies of the Zimbabwe business indigenisation programme.

After my first article entitled: “Chanakira: Unlikely foot soldier for expropriation” and the accusations that followed about my motives in intervening, I was fortunate to receive from one of the readers an important documents that I attach to this article that expose the real reasons why Chanakira was arrested by police in 2000.

As part two of this installment, I set out the history and background leading to the arrest of Chanakira and the parties involved in the saga. What will emerge is certainly an unholy alliance, which needs attention of every caring Zimbabwean.

The following facts are from a court record that explains the circumstances that led to the arrest of Nigel Chanakira.

¶ JUDGMENT AND OTHER PAPERS

¶ SHUMBA'S TESTIMONY

¶ KINGDOM EVIDENCE
 

The arrest of Nigel Chanakira

On August 2, 2000, A. M. Takawira, in his capacity as the Acting General Manager of NSSA sought a legal opinion from the lawyers of the organisation, Messrs. Sawyer and Mkushi Legal Practitioners, regarding the purchase through Kingdom Stockbrokers of shares that were owned by Dr. Daniel Shumba, one of the founding shareholders of Econet Wireless Holdings Limited (Econet).

According to the court documents in Case No. HC3919/2001 involving NSSA and Kingdom Stockbrokers (Private) Limited (KS), in or around June 2000, a dispute arose between Dr. Shumba and KS as to the amount that he should have been paid for 43.5 million Econet shares that he sold to NSSA through KS.

Following a complaint to the police by Dr. Shumba; Nigel Chanakira, Solomon Mugavazi, as well as former General Manager of NSSA, Mr. Chonzi were arrested on 11 July 2000.

The public has never understood why Chanakira was ever arrested and his involvement in the share deal in Econet. It is important, therefore, to set out the correct facts as presented in the court proceedings.

Econet was the brainchild of Strive Masiwa and according to the records; the company had no white shareholder. Econet was listed on the ZSE in September 1998 following the decision by the Supreme Court of Zimbabwe to grant the company a GSM Cellular license.

The company was controlled by TS Masiyiwa Holdings (Private) Limited (TSM), a company incorporated under the laws of Zimbabwe that owned 60% of the shares of the listed company. Strive Masiyiwa and his wife held 67.5% of the issued share capital of TSM while Dr. Shumba held 10% of the shares of the company and Nigel Chanakira held 2.4% of the shares.

In total, six individual shareholders i.e. Strive and Tsitsi Masiyiwa (his wife), Jeffrey Mzvimbi, Daniel Shumba, Chanakira, and Professor Nyazema were the founding shareholders of TSM with the balance of the shares – 5% held by an employee trust.

In terms of a shareholders agreement, the shareholders of TSM were barred from selling their shares in TSM for 3 years i.e. from September 1998 when Econet was listed to 30 September 2001 to protect the controlling pool represented by TSM.

TSM was structured as the indigenous controlling pool of Econet in compliance with the licensing requirements.

According to Dr. Shumba, he became a shareholder of TSM as a consequence of the finances that he had advanced to TSM as well as in lieu of services rendered to Econet. Sometime in December 1998, Dr. Shumba met with his fellow TSM shareholders to express his intention to dispose of his shareholding in order to pursue other business interests and this was followed by an emergency general meeting held on 15 January 1999 where a resolution was passed for his exit and for the disposal of his shares in the company through an agreed mechanism.

The said resolution authorised Dr. Shumba to disinvest in January 1999 by 16 March 1999 when he ceased to be a director of TSM. Only two institutions were authorised to handle the disposal of the shares i.e. Continental Securities, a stock broking company controlled by NMB, a bank that was involved in the listing of Econet where Mr. P. Timba also worked; and KS, a stock broking company in which Nigel Chanakira had a substantial interest.

Pursuant to this agreement, Dr. Shumba represented that subsequent to the EGM, he instructed Chanakira to find a purchaser for all his 43.5 million shares at a an acceptable price. Chanakira reverted to Dr. Shumba on 16 March 1999 at a meeting attended by Solomon Mugavazi, MD of Kingdom Stockbrokers, informing him that a transaction had been concluded with NSSA at a price of Z$1.50 per share. However, Dr. Shumba declined the deal indicating that he wanted a price of not less than Z$2.00 per share.

At a subsequent meeting, Mugavazi informed Dr Shumba that a deal had been secured with NSSA for the disposal of 50% of Dr. Shumba’s shares at a price of Z$1.80 per share and the remainder at a price of Z$2.20 per share effectively giving an average price of Z$2.00 per share.

Dr Shumba agreed to the transaction and was then informed that NSSA had purchased the shares but it would take some time for NSSA to settle the deal, as it had to fulfill some internal procedures.

The shares in question were TSM shares that were subject to a 3-year restriction in terms of disposal given the need to keep the controlling pool under indigenous control. From March 1 to June 1999, negotiations were held between KS and NSSA on the conditions of the shares that were to be purchased.

An agreement was then signed on 23 June 1999 for the purchase by NSSA of 35 million and not 43.5 million shares on offer for a price of Z$4.25 per share compared to the price of Z$2.00 that Dr. Shumba had agreed to. Dr. Shumba was not informed of the deal variation and continued to be under the impression that the deal with NSSA was at an average price of Z$2.00 as previously agreed.

On 25 June 1999, Kingdom Stockbrokers issued a broker’s note to NSSA quoting a price of Z$4.25 per share for the 35 million shares against which NSSA made a payment of Z$150,238,270 to Kingdom Stockbrokers in four tranches on 12, 19, 23, and 27 July 1999.

On 28 June 1999, Kingdom Stockbrokers made out a cheque for an amount of Z$16,494,748.91 to Dr. Shumba and a sum of Z$19,318,845.50 on Dr. Shumba’s behalf in settlement of the purchase price of the shares.

Dr. Shumba was advised by Mugavazi that the deal with NSSA had gone through at a price of Z$2.00 per share.

Dr. Shumba only discovered in 2000 that NSSA had purchased 35 million shares from KS leaving a balance of 8.5 million shares under the control of Kingdom Stockbrokers. He had only received Z$87 million from Kingdom Stockbrokers as they had represented that the deal was concluded on the same terms agreed with Chanakira on 16 March 1999.

Chanakira sought to distance himself from Kingdom Stockbrokers arguing that KS is a separate legal entity notwithstanding the fact that at all material times it was he who represented the company in its dealings with Dr. Shumba.

When Dr. Shumba uncovered the fraud, he reported the matter to the police leading to the arrest of Nigel Chanakira. Subsequent to the arrest, Kingdom Stockbrokers paid to Dr. Shumba the difference between the amounts received by KS and the payment made to him as well as the value of the 8.5 million shares that remained in the hands of Kingdom Stockbrokers.

Having admitted to the unjust enrichment, NSSA then sought through a civil action as well as criminal proceedings to recover an amount of Z$449,387,520 representing the financial prejudice to the institution from the fraud and to deliver the 8.5 million Econet shares. The court ruled in NSSA’s favour, ordering Kingdom Stockbrokers to make the payments with interest and the costs of the legal action.

The TSM history is one of many attempts by indigenous businesspersons to enter the mainstream economy. This was done through licensing and the beneficiaries of such enterprise were the six individuals. However, of the founding shareholders of Econet, it may be Strive and Nigel who still remain as shareholders of TSM notwithstanding the attempt by government to use state action to promote broad-based empowerment.

The failure of the founding shareholders of TSM to stick together goes a long way to demonstrate that empowerment cannot be successful if it is engineered. Notwithstanding the intention of government policy to promote sustainable black ownership, the real practice has shown that it is difficult for blacks to work together.

Dr. Shumba sought to dispose of his shares to his best advantage, only to find that his fellow black shareholders thought otherwise by deciding to short change him. The theft of his shares and the unjust enrichment did not involve any white person.

The attached information will allow readers to better understand the complexity of the indigenisation debate and the manner in which certain people have chosen to selectively benefit from it.

It is common cause that Strive was a founding member of the Indigenous Business Development Centre (IBDC). Most of the original drivers of the empowerment agenda are now missing in action.

I do hope that our dear Comrade George Charamba on behalf of the government will take time to read the court papers before opportunistically trying to poke his nose in the KMAL affair.

If it is correct that Shumba was a victim of fraud perpetrated by his fellow black colleagues, then there is a need for introspection. Given the information we now have regarding the Shumba saga, are we not witnessing another fraud, this time aided by the government?

With respect to Shumba’s credibility as a witness in the NSSA litigation, this is what the judge had to say: “Shumba is a neutral witness. He was paid his asking price and moved out of the picture. He does not stand to benefit in any way from the outcome of this case. He struck me as an honest and credible witness who had absolutely no motive to misrepresent facts. I, therefore, believe his evidence wherever it contradicts any evidence.”

The transformation of the economy and the role of blacks in shaping the future cannot be overstated. However, it is important that before any adventure is undertaken in the name of indigenisation and empowerment is embarked upon, a serious evaluation be undertaken of the experience so far with a view to properly locating the real and fake role models.

Now that the same Nigel Chanakira has problems with Meikles, he has now forged ‘unholy” alliances with characters like “Comrade” Charamba, Chiyangwa, Mandiwanzira and Gideon Gono to again grab shares and interest in violation of individual and private company rights.

Should we sit and cheer these violations merely because a black flock stands to benefit? If we condone this model of business ethics, what are we saying as a society and what are we telling our children?

Mutumwa Mawere's weekly column is published on New Zimbabwe.com every Monday. You can contact him at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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