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‘KML saga leaves BEE laws exposed’

AT his brother-in-law’s funeral a fortnight ago, president Robert Mugabe had a few wise words for Kingdom bank founder Nigel Chanakira; indigenisation legislation is there to deal with shareholder problems.

Mugabe, who was speaking at Reward Marufu’s funeral — his wife’s brother — reminded Chanakira he was worried over nothing when the law was at his disposal.

For Mugabe, it was simple; there was no shareholder problem. In fact, he believes it is a “simple and straightforward” issue not worth losing sleep over.

That must have come as a major relief for the troubled businessman, who until that moment had possibly lost a lot of sleep after losing control of the financial services group he founded and built over the years.

His shareholding had been diluted by a series of rights issues. His buddy — Econet founder Strive Masiyiwa — had washed his hands off the fight and sold his shareholding in Kingdom Meikles Ltd to local businesspeople at the height of the fight.
His go-between was not doing the job diligently, he felt. All seemed to have gone wrong.
Until then, Chanakira’s future looked doubtful.

Mugabe said:  “I do not see the problem. We have the Indigenisation Act which is simple and straightforward on business shareholding ownership. Who is the owner of Meikles? If it is owned by South Africans let them take it, but if it’s ours why can’t we use the Act. In fact the Indigenisation Act is very lenient because it gives something to foreigners.”

Analysts say Mugabe’s advice to Chanakira exposes inherent weaknesses of the empowerment laws in the country pointing to his plan to use the law to settle an ownership dispute as a case in point.

This was also not the first time the fight had drawn government officials. The week before had seen RBZ governor Gideon Gono giving Meikles majority shareholder John Moxon and his rival — Chanakira — an ultimatum to deal with the matter by end of August. 

 So far Gono and Finance minister Tendai Biti, who have appointed themselves mediators in the debacle, have not yet taken action despite earlier threats.

And then came Economic Empowerment Fund Board chairman and former deputy Finance minister David Chapfika throwing his weight behind Chanakira, saying Chanakira does not have to rush to pay Moxon as stipulated by the law.

Chapfika says Chanakira has up to five years to raise US$15 million he owes Meikles and pay for Meikles’ stake in KFHL in terms of the country’s Indigenisation and Empowerment Act and its regulations.

“Under the Act, indigenous people have up to five years within which they are expected to pay (for their equity),” Chapfika said. “Proposals should be put in place on how Chanakira can make payments. There is no way he can be asked to pay the money immediately. Moxon will get a fair compensation but over a period of time.”

Analysts say Chanakira has been handed a controlling stake by government but must shun politics.
But given his lack of financial muscle at the moment, this might be his only way out of the situation.

Analysts say the fight has now split leadership along colour lines and could reduce the whole concept of economic empowerment to black and white.

But Meikles remains unperturbed by Mugabe, Chapfika, Biti and Gono’s involvement in the matter, arguing it is purely a shareholder issue.

The company will hold an Extraordinary General Meeting (EGM) to deal with the matter.

Chris Muronzi

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