TONGAAT Hullet’s Zimbabwe operation, Triangle (Pvt) Ltd’s indigenisation compliance plan has been shot down by government on grounds that it does not satisfy requirements of the empowerment legislation, businessdigest has learnt.
Report by Taurai Mangudhla
Contrary to recent media reports the company had met indigenisation requirements, sources say negotiations between government and the sugar firm on how the latter intends to cede majority shareholding to Zimbabwean locals are dragging on due to fundamental differences between the two parties.
Although specific details on the differences between the two were still sketchy at the time of going to print, National Indigenisation and Economic Empowerment Board (NIEEB) CEO Wilson Gwatiringa confirmed Triangle was yet to comply with the empowerment regulations.
“We are still engaging with the company because this is a process and not an event. We never at any point issued a statement that Triangle had complied so we wonder where that was coming from,” Gwatiringa said in a telephone interview.
Asked to provide details on the outstanding issues in the foreign-owned company’s proposal, Gwatiringa withheld the details on grounds it would violate confidentiality.
“I can’t do that because I will be releasing confidential company information and it’s unprofessional,” he added. He, however, confirmed the two parties still had to iron out some disagreements.
The development comes more than two months after Triangle failed to meet an October 2012 NIEEB order to comply with the indigenisation legislation within a month.
Government subsequently put pressure on Triangle to comply, threatening to revise the sugar firm’s land lease agreements as well as revoke its operating licence on account of its failure to respect the empowerment policy.
According to government’s current requirements, after taking into account challenges in the manufacturing sector, foreign-owned manufacturing companies are required to dispose of 26% shareholding to indigenous Zimbabweans by end of October 2012 and the balance by October 2015. Currently, only 6,7% of Triangle is in indigenous hands.
As a result, government is pushing for the company to dispose of 43% of its shares to indigenous Zimbabweans. Of this stake, 10% should be for the local community trust and 5% for the employees trust.
NIEEB argues Triangle has an obligation to participate in a community share ownership trust as it is involved in the exploitation of natural resources. Government intended to launch the trust by November 6, 2012 primarily through the disposal of 10% shares.