IN a bid to beat targeted sanctions, Zanu PF has formed shelf companies to warehouse its shares in various corners of the economy, the Zimbabwe Independent can reveal.
>The Zanu PF empire, which is crumbling from years of mismanagement and corruption, is moving funds from well-known party firms to lesser-known shelf companies to secure its investments.
Zanu PF investments are in the main held by two companies – Zidco Holdings and M&S Syndicate. The investments, especially in companies listed on the Zimbabwe Stock Exchange, are no longer held by the two entities but through briefcase companies formed to disguise Zanu PF’s involvement.
Listed companies in the financial sector carry out business with European banks and the involvement of Zanu PF in the firms is now considered a liability.
The party’s interests stretch from banking, manufacturing, farming, and printing and publishing to real estate. The reasons for transmutation of M&S Syndicate and Zidco Holdings into diverse shelf companies are contained in the politburo committee’s report on Zanu PF investments, which is currently being discussed by the party’s leadership.
The Independent first disclosed details of the report on October 29.
The committee was set up by the party to investigate alleged graft in Zanu PF’s business entities, some of which have been operating without a profit since Independence in 1980.
Scrutiny of Zanu PF firms increased when the international community reacted to President Mugabe’s repressive policies with targeted sanctions two years ago. The party sought to mask its businesses using shelf companies.
“During the embargo on all companies and banks linked to Zanu (Patriotic Front), the party formed a company called Segmented Investments,” the report says. “Zidco also formed other briefcase companies and staff shares were also created.”
Briefcase companies which have been set up include Sovereign, Hustonville, Tescrom, Amelia, Ryobi, Prinfit and M&S Investments (as distinct from M&S Syndicate).
Records at the companies registry show that the companies were registered between August and September last year. Some of them list prominent lawyer Edwin Manikai as director.
The so-called briefcase or shelf companies now have a combined 32,05% stake in First Banking Corporation Holdings (FBCH) which controls First Bank, Southern Africa Reinsurance (Sare), and troubled NDH.
The shareholding in FBCH is distributed as follows: Segmented Investments 13,76%, Hustonville 4,36%, Amelia 3,54%, Tescrom 3,54%, M&S 3,06%, Smoothnest 3,06% and Ryobi Investments 0,82%.
Before the transformation Zanu PF was represented in First Banking Corporation through AM Treger and Zidco Holdings, which held 13,5% each.
In July M&S Investments and Smoothnest Investments had a combined shareholding of 37,84% in Sare, split equally between the two shelf companies.
The companies now appear to be conduits for siphoning money and the probe has recommended that they be investigated.
On the formation of First Bank the report says: “The party wanted a bank to rely on whenever they (sic) wanted to borrow money. It used to borrow money from the CBZ, which is now under Absa, and it decided to open its own bank, which is First Bank.”
Its representatives in First Bank were Jayant Chiunilal Joshi standing in for AM Treger and Dipak Pandya for Zidco Holdings, a company in which Zanu PF has an interest.
First Bank had a management contract in the Democratic Republic of Congo (DRC), which has since collapsed.
The report says the management contract in the DRC was cancelled after its Congolese partners failed to raise enough money to operate the bank. First Bank had a 50% stake in the project and the Congolese 50%.
The directors of First Bank DRC were Zanu PF secretary for administration Emmerson Mnangagwa, Livingstone Gwata, John Mushayavanhu, Webster Rusere and Dipak Pandya.