ON Sunday, October 12, the Sunday Mail in an article titled: â€œThe Central Bank probes KMALâ€ reported as has been widely expected that the RBZ was investigating Kingdom Meikles Africa Ltd (KMAL) following
what may have appeared as an isolated shareholder and director dispute in a private company limited by shares, and whose general meetings should ordinarily be reserved for holders of shares rather than the state and the public at large.
The timing of the KMAL probe, the context and content of the alleged disputes exposes the hand of the state in using criminality to disable and eventually to undermine private property rights.
At face value, the dispute appears to be between John Moxon and Nigel Chanakira but the subtext is pregnant with issues of race and broader questions of corporate democracy.
To what extent is Chanakira being manipulated by state actors to give life to an argument that indigenisation and empowerment of blacks is under threat if Zanu PFâ€™s grip on key ministries is transferred to the opposition?
Phillip Chiyangwa, George Charamba and other voices whose standing in terms of the shareholding of KMAL is concerned is questionable have already joined the bandwagon calling for the subordination of Moxonâ€™s rights as a shareholder to vote off the board the three directors who happen to be black, creating a new and dangerous phenomenon of lawlessness camouflaged as empowerment.
A case has been made and continues to be made that notwithstanding the provisions of the Companies Act, the three directors must not be removed. What is ironic is that Chiyangwa who is also a businessman would not countenance third parties interfering with his own rights to hire or fire an executive or director of his companies.
On what basis would Chiyangwa, albeit on behalf of the Affirmative Action Group (AAG), seek to undermine the rights of shareholders to decide who should or should not be on the board of their companies?
Equally, it is not evident on what basis Charamba, who is President Robert Mugabeâ€™s spokesman, seeks to transform the affairs of a listed company into state affairs or a referendum on the state of black economic empowerment and by default advance an argument that allowing the removal of Chanakira and his colleagues from KMALâ€™s board would constitute a national threat and a warning of what is in store if MDC were to be given the powers they seek through the current Sadc-mediated talks on power sharing.
The context and content of the relationship between Chanakira and Chiyangwa in relation to the First Mutual Life (FML) saga is well documented to justify legitimate questions being raised about the motives of the actors involved.
Only a few years ago, it was Chiyangwa who criticised Chanakira as untrustworthy, justifying him filing a complaint to the Zimbabwe Republic Police regarding allegations of corruption in relation to the use of FML funds in the listing of Econet shares as well as the disposal of Daniel Shumbaâ€™s shares in Econet by Kingdom stockbrokers but now surprisingly Chiyangwa is describing Chanakira as an icon of indigenisation.
Given the shares under the control of Moxon, the inevitability of the removal as directors of Chanakira and his colleagues is not in doubt. What is of concern is that disputes that should be democratically resolved at a meeting of shareholders have now been moved from that theatre into the political arena.
The involvement of the RBZ was also predictable as was the statement by Governor Gideon Gono that: â€œAt first, there was little co-operation on the part of the KMAL authorities. However, they are now co-operating, as we have read them the riot act.
Chickens are coming home to roost and we thank our brother Nigel and the whistleblowers for the information. With US$18 million (allegedly stashed by Moxon in foreign accounts) we could buy all the fertiliser, drugs and maize that our country requires.â€
Using this argument to President Mugabe, it then becomes obvious that Gono has found another convenient ploy to justify why he should not be criticised for the dismal performance of the economy. The real argument that is being advanced with the help of Chanakira is that the Zimbabwean economy is a victim of sanctions and economic sabotage.
To the extent that the likes of Chanakira are lending credence to the externalisation charges by being complainants, a case has now been made that in actual fact there is no problem in Zimbabwe and, therefore, there is no need to change course. Rather what is needed is for the governor to be given more time to rid the system of criminals like Moxon.
As predictable, Gono had this to say: â€œWe are at full throttle, digging into the externalisation of those funds. It is an interesting investigation, which is still continuing.â€
The outcome of the investigations are known and it will not be surprising if Moxon is specified in the next few days as will be his companies.
Having walked the same road, I know where Moxonâ€™s fate lies. Once his companies are specified, it means on the day of the extraordinary general meeting, companies associated with him will not be allowed to vote leaving Chanakira with no opposition.
So Chanakira like Mugabe will remain in power through manipulation rather than as a consequence of democratic choices.
After specifying the companies as well as Moxon, the path will be cleared for the government to expropriate his assets with no compensation using the argument that he is culpable and liable for the US$18,6 million allegedly externalised.
The KMAL saga has been given the kind of media coverage to construct a scenario that can easily be sold to President Mugabe that now is not the time to retire.
The construction of the case that To Page 16
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has been made by Chanakira in his report to the police alleging that KMAL externalised US$18,6 million is instructive not only because it exposes a bare fact that the currency in question is not a lawful currency of Zimbabwe to make the externalisation charge ridiculous.
How can someone be accused of externalising an external currency? Does Zimbabwe have jurisdiction over US dollars?
It has been reported that Chanakira, in an affidavit filed with the CID Serious Fraud Squad, said: â€œIn the report there is an item marked â€˜funds earmarked for future investmentsâ€™ in respect of Coolbay (Proprietary) Ltd and Mentor Holdings (Proprietary) Ltd. The funds amount to US$18,6 million and are believed to be invested in South Africa.
â€œThere are currently no â€˜future investmentâ€™ projects approved by the board of KMAL. In addition, it is reflected in the same report that R21,2 million security deposit is held by Standard Bank South Africa against Cape Grace Hotel in South Africa. The said hotel is part of Kingdom Meikles Africa Ltd.â€
However, Coolbay and Mentor are companies duly incorporated under the laws of South Africa raising the question of whether Zimbabwean laws have extra-territorial application.
There is nothing illegal about Coolbay and Mentor holding US dollar assets and if this was illegal, it would be up to the South African authorities to adjudicate on the matter.
Chanakira should know that shareholders do not own companies and, therefore, it would be wrong to state that the funds that are in the books of Mentor and Coolday belong to shareholders. It is up to the directors of the two companies to decide how such funds are to be deployed. If this is common cause, then why would Chanakira seek to make an argument that is bad in law using state power to advance his cause?
It is evident that KMAL has no right to force Coolbay and Mentor to pay out cash that belongs to them outside the ordinary course of business. The only way shareholders can extract funds from a company like parents can extract funds from their children is when the company declares at a general meeting that it does not want such funds for its own use. This is normally done in form of a dividend declaration.
What is more significant is that shareholders have no contractual relationship with companies they hold shares in to give them the kind of rights that Chanakira is talking of. Even Moxon has no right to force Coolbay and Mentor to remit funds to Zimbabwe.
Yesterday it was Mawere, today it is Moxon and tomorrow it may be you. Who would have thought that Chanakira would be a foot soldier for expropriation schemes?
By Mutumwa Mawere