Masawara is said to have misrepresented its shareholder composition, amid indications that 74% of the shares could be held by off-shore non-indigenous shareholders.
Permanent Secretary in the ministry, George Magosvongwe, told the Zimbabwe Independent that government wanted to know whether any conditions were breached before taking action.
Among some of the conditions were that the company that would acquire BPSMS would be an indigenous company, honour agreements with dealers, dispose of some of the service stations to indigenous Zimbabweans, come up with an employee share-option scheme and stick to the same conditions of employment of staff post the acquisition, Magosvongwe said.
He denied reports his ministry would cancel the deal.
He said: “Our primary concern is to see whether the conditions have been fulfilled. We met them (Masawara) last week and they reaffirmed their commitment to the conditions. They could be lagging behind in terms of implementation of some of the conditions but we believe they are on course to implement the conditions.”
Magosvongwe said it was up to the minister (Saviour Kasukuwere) to give Masawara a chance to respond to the allegations and then make a decision.
“The minister has requested FMI (Masawara’s operating company) to respond to the questions,” he said.
“Until we get a response, we cannot take any action. We want to retain the stability and integrity of the economy. Our intention is not to destroy the companies that we are dealing with and other companies but to expand the economy and have a strong national economy.”
Kasukuwere was not available for comment at the time of going to print as his phone was not reachable.
The National Indigenisation and Economic Empowerment Board has recommended the cancellation of the acquisition deal but Magosvongwe said the company had to respond to the board’s findings and recommendations first. The initial proposed structure at the time of the acquisition provided for three entities, Masawara plc, Masawara Mauritius Ltd (MML) and FMI Zimbabwe.
FMI Zimbabwe is wholly-owned by MML, while in turn MML is wholly owned by Masawara plc. Shareholders in Masawara plc are institutional and private investors, primarily based in the United Kingdom. The only single shareholder is Invesco plc which holds approximately 29,5% of Masawara.
According to the National Indigenisation and Economic Empowerment Board (NIEEB) the indigenous partner, Shingi Mutasa, through his FMI Zimbabwe (Pvt) Ltd in the Masawara group has possibly far less than 26%, with the balance being held by non-indigenous off-shore groups.
The NIEEB feels the transaction was approved through misrepresentation and fraudulent non-disclosure of information, an offence in terms of the regulations.
Masawara is also behind schedule in terms of implementing an employee share-ownership scheme that would see workers getting 10% of the company’s equity.