HomePoliticsCIO boots out Mandaza

CIO boots out Mandaza

Dumisani Muleya

THE Central Intelligence Organisation (CIO), which has wrested control of private newspapers in a publicly funded covert operation, has forced out Zimbabwe Mirror Newspapers Group CEO and edi

tor-in-chief Ibbo Mandaza.

Intelligence sources said yesterday Mandaza – after weeks of determined resistance to remain entrenched in the media house -had eventually been muscled out. He is expected to quit the company he founded in 1997 on December 31.

An evaluation of the Mirror group, whose assets are in dispute, would be done and Mandaza would get his terminal cheque.

“Mandaza is expected to quit on December 31 after he lost the struggle for the Mirror papers,” a source told the Zimbabwe Independent. “The issue has now been settled and he will be paid off. He could have gone earlier but said he wanted to remain for the sake of the over 100 staff members.”

Mandaza’s ejection came after he was summoned by State Security minister Didymus Mutasa on September 19 for an emergency meeting at his office. The meeting was also attended by CIO director-general Happyton Bonyongwe and disputed Mirror chair Jonathan Kadzura.

Sources said Kadzura told the meeting the Mirror “board” – dominated by former CIO officers Thomas James Meke, John Marangwanda, Charm Ndaba Mukuwane and Alexander Kanengoni – had adopted Ernst & Young’s forensic audit.

He said the report uncovered siphoning of money from the Mirror to Mandaza’s origination firm, Pre-Print Services, and other companies. At least $507 million was paid to Pre-Print and $1,7 billion to Southern African Research Consultancy (Sarc). It was claimed Mandaza had diverted as much as $10 billion.

However, Mandaza confronted Kadzura, saying the report did not say what he claimed. Mandaza said the report was just a draft and it never mentioned any misappropriation of funds.

Ernst & Young presented its report to the Kadzura faction on September 12 and to the Mandaza camp, which includes Ambassador Buzwani Mothobi and Amy Tsanga, last Friday. Ernst & Young told the Mandaza faction yesterday its disputed report had not yet been finalised.

A document compiled by a former Pre-Print employee was attached to the Ernst & Young report to back allegations against Mandaza. But Mandaza dismissed the document, allegedly drafted in Mukuwane’s office, as false.

Mothobi said yesterday the Ernst & Young report was the product of a fraudulent board meeting which purportedly resolved on a forensic audit.

“The report was triggered by a purported board resolution when in fact there was no such meeting nor resolution,” Mothobi said. “Consequently, in retrospect, the whole thing was clearly contrived to achieve certain objectives either of a group or particular individuals.

“The haste with which it was claimed the report had been finalised and adopted – when in fact this wasn’t the case at all – further proves there were hidden agendas being pursued.”

Kadzura said two weeks ago he would issue a “comprehensive statement” on these issues.

The Kadzura and Mandaza factions were said to have worked well with each other until a highly-charged October 25 2004 meeting attended by former State Security minister Nicholas Goche, Bonyongwe, Mandaza and Kadzura to discuss the media deal.

After a series of dramatic events, Mandaza was said to have informed Mutasa on September 20 following their meeting the day before, he was prepared to leave as demanded by the CIO but only if they paid for the 70% shareholding secured under dispute.

Mandaza put his message to Mutasa in writing on September 21. A reply to Mandaza’s letter was understood to have come on Tuesday. The CIO accepted his departure date.

Prior to that, there had been battles over the issue of the CIO presence at the Mirror, “board” meetings, and company assets and debt guarantees.

On September 14, Marangwanda wrote to Mandaza on the Mirror shareholding structure and Shareholders’ Agreement of Intent, still a sticking point.

Sources said Mandaza replied to Marangwanda on September 16, saying the CIO had not complied with a provision of the agreement because it had refused to sign the Deed of Indemnity prepared by AMG Global and lodge securities with the Jewel Bank, the Mirror’s bankers.

It was said the CIO had tried to force Jewel Bank last year in June to cancel his sureties guaranteeing the company debt of $20 billion. Jewel Bank refused to do so.

The sources said Mandaza was forced out in a chaotic hostile take-over after his efforts to use shark repellent tactics failed. The CIO would now keep an effective 70% majority control, while a new consortium of local tycoons will grab Mandaza’s 30% stake.

The allotment of Mirror shares by AMG Global was done in mid 2002. Unique World Investments got 51%, Zinstabel 19% and Mandaza 30% through Southern African Printing and Publishing House (Sappho), now split into printing and publishing entities. However, payment took much longer.

Unique – based at 23 New Africa House on Kwame Nkrumah Avenue – signed and paid $500 million on November 28 2003 and then $124 million on January 28 2004. Zinstabel paid $150 million on August 4 2003 and $100 million in November 2003.

The agreement was supposed to have been signed on July 31 2003 – the day Mandaza signed and payments done the following day, August 1.

When the fight for control erupted, Mandaza wanted to pay back the $824 million injected by Unique and Zinstabel, but the CIO reminded him the $17,7 billion to the Mirror from the central bank also came courtesy of them.

About $10 billion was released to the Mirror in July after a meeting attended by Mutasa, Bonyongwe, central bank governor Gideon Gono, and officials of the Mirror board and management.

The money was paid to printers who were owed $6 billion. About $2 billion went to the Mirror and $400 million to Kadzura for newsprint and other costs.

About $300 million paid August salaries (September salaries are still due), $300 million to Sarc, $1 billion to Pre-Print, $650 million for newsprint, and $224 million to meet other expenses.

But Mandaza – who claims to have subsidised the Mirror to the tune of $875 million lately – wants billions for services rendered from January to June.

Sources said signs Mandaza was not wanted actually started at the July meeting. However, events took a dramatic twist on August 19 when Mutasa decided the CIO had no business in newspapers. He later changed his mind.

Chronology of events

* July 2002, allotment of Mirror shares: Unique World Investments 51%, Zinstabel 19% and Sappho 30%.

* July 31 2003, Mandaza signs Shareholders’ Agreement of Intent.

* August 1, 2003, Unique and Zinstabel expected to pay for equities.

* August 4, 2003, Zinstabel pays $150 million before paying $100 million in November the same year. Zinstabel signed agreement in November 2004.

* November 28, 2003, Unique pays $500 million as first instalment.

* January 28, 2004, Unique pays a further $124 million after signing the agreement.

* February 10, 2004, Unique and Zinstabel refuse to sign Deed of Indemnity prepared by AMG Global.

* May 5, 2004, letter to Mirror from Gollop & Blank on Deed of Indemnity.

* May 6, 2004, Unique and Zinstabel again refuse to sign Deed of Indemnity.

* May 7, 2004, first Mirror board meeting. Gollop & Blank letter discussed and a resolution made that Unique and Zinstabel should provide requisite securities and indemnities.

* June 23, 2004, Kadzura writes to Jewel Bank to cancel Mandaza securities.

* June 25, 2004, Jewel Bank CEO responds to Kadzura’s letter, stating the bank could not cancel Mandaza’s securities.

* October 25, 2004, meeting between Goche, Bonyongwe, Mandaza and Kadzura.

* January 3, 2005 Kanengoni comes in as Mirror deputy editor-in-chief to Mandaza after being deployed by the CIO. He is paid $23 million in allowances a month without an employment contract. Kanengoni suspended on August 18 in the wake of mediagate disclosures before being fired on August 30.

* July 2005, meeting between Mutasa, Bonyongwe, Mandaza and Kadzura. Central bank releases $10 billion. Resolved to call for a forensic audit of Mirror finances.

* August 12, mediagate story broken by the Independent.

* August 19, Mutasa decides the CIO had no business in newspapers.

* August 22, Mutasa tells a Mirror official during lunch the CIO has no business in the media but changes later.

* September 12, Ernst & Young presents audit report to Kadzura faction. Report presented to Mandaza camp on Friday last week.

* September 14, Marangwanda writes to Mandaza over Mirror shareholding structure and securities.

* September 15, Mandaza invited to a “board” meeting by Kadzura faction. He refuses.

* September 16, Mandaza replies to Marangwanda’s letter.

* September 19, Mutasa summons Mandaza for a meeting also attended by Bonyongwe and Kadzura. Mandaza told to go.

* September 20, Mandaza informs Mutasa he was prepared to leave on December 31 if paid off.

* September 21, Mandaza puts his message to Mutasa in writing.

* September 26, Mandaza meets Gono for the first time since disclosures.

* September 27, Mutasa replies to Mandaza’s accepting his decision to quit due to pressure.

* September 29 (yesterday), Mutasa/Mandaza meeting called off.

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