THE ubiquitous and disappointing talk of the town last week was that the Governor of the Reserve Bank of Zimbabwe Gideon Gono had for some strange reasons decided to irrationally and irresponsibly throw all caution to the wind to manufacture and peddle outright lies and malicious misrepresentations about the Zimplats Indigenisation Transaction which Tsvangirai’s MDC found too juicy to ignore for its mindless and now thoroughly discredited opposition to Zanu PF’s indigenisation reform programme that is now supported by the majority of Zimbabweans.
This talk was reinforced by an ill-advised, ill-timed, misplaced and ideologically bankrupt opinion piece that Gono audaciously published under his name last Thursday in the Financial Gazette essentially opposing the equity or ownership model of indigenisation in favour of the so-called supply side model whose reactionary trappings loomed as large as its treacherous intentions.
What complicated things for the now embattled Governor of the Reserve Bank is not only that the articles published by the Daily News replete with defamatory lies about the Zimplats Indigenisation Transaction were so clumsily done as to leave little to the imagination as to the identity of their source but also that the wolves that immediately jumped into the fray hoping for a cheap kill included the likes of Finance Minister Tendai Biti, Tony Hawkins and John Robertson. To make Gono’s case even more untenably curious, the MDC-T issued an opportunistic statement against the indigenisation programme whose treachery was as open as Tsvangirai’s zip.
It is just difficult to understand how the Governor of the Reserve Bank really believes that he can get away with being used by the enemies of the indigenisation reform programme in and outside Zanu PF to publicly derail the revolutionary Party’s national agenda through the so-called independent Press that has never supported the programme and with the assistance of Rhodies like Hawkins and Robertson who have never supported anything revolutionary in Zimbabwe.
If by attacking the equity or ownership-based model of indigenisation in favour of the so-called supply side approach, the Governor of the Reserve Bank is hoping to be a striker in the Bhora Musango brigade ahead of the forthcoming general election that is around the corner, he honestly and seriously should think again. This is not 2008. The game this time round is Bhora Mugedhi and the players are Zanu PF only. This should be food for thought for the misguided comrades out there who imagine that they can settle their personal or political scores with the Minister Saviour Kusukuwere by hiding behind Gono or by fronting him to fight the indigenisation reform programme in the treacherous hope that its failure would mark Kasukuwere’s political demise.
It has now become all too clear that when some spineless cowards in our midst want to attack a Zanu-PF policy or when they want to attack President Mugabe, they hide their nefarious agenda by attacking the minister responsible for that policy using all manner of subterfuge under the age old ploy that if you want to kill a dog that you don’t like, just allege that it has rabies. Against this backdrop, the following seven juicy lies were told in the media last week about the Zimplats Indigenisation Transaction under Gono’s disappointingly dirty hand:
- That the Term Sheet is a final agreement
- That the Zimplats transaction is inconsistent with Zanu PF’s indigenisation ideology.
- That Zimbabwe’s platinum resources have been undervalued under the transaction.
- That the transaction requires the indigenous entities to pay 10 percent interest per annum.
- That the transaction has been sealed without the necessary consultations in government.
- That the transaction is to be adjudicated in London under English Law allegedly to the mockery of President Mugabe’s stance that Zimbabwe will never be a colony, again.
- That Brainworks Capital, who are the transaction’s indigenous advisors, have been paid $45 million for their advice to the detriment of the country.
Firstly, there has been a pervasive and gross lie deliberately told via some gullible sections of the media whose import has been to give the false and thus misleading impression that the Zimplats Indigenisation transaction is a done deal which has been finalised and completed. This is far from the actual truth. Page 1 of the Term Sheet which has 16 pages and which was signed on January 11, 2013 clearly and unambiguously states that, “The terms and conditions set out in this term sheet in respect of the Zimplats IP (Indigenisation Implementation Plan) are non-binding and are subject to definitive legal documentation in respect of the transactions forming part of Zimplats IIP”.
Paragraph 22 of the Term Sheet clearly provides that “In addition to any other conditions set out in this Term Sheet, the Zimplats IIP, including each of the transactions forming part thereof, is, subject to waiver at the discretion of Zimplats Holdings, subject to the fulfilment of the following conditions precedent by 30 June 2013 or such other date as the key participants may agree upon in writing. The key participants shall use their reasonable endeavours to fulfil these conditions precedent by 30 June 2013. However, should regulatory authorities or other processes necessitate an extension beyond 30 June 2013; the key participants agree that the said date shall be extended to a date agreed by the key participants to accommodate such regulatory process”.
It is therefore quite clear that all the talk which claims or gives the impression that a deal has been finalised is false and nonsensical with no empirical or documented support whatsoever. So far, there is only a non-binding Term Sheet pending the finalisation of substantive agreements such as a Shareholder’s Agreement which is yet to be concluded.
Secondly, there’s been the juicy lie that the Zimplats Indigenisation Transaction is inconsistent with Zanu PF’s indigenisation ideology which, as an expression of resource nationalism, provides that the ownership of Zimbabwe’s God given natural resources belongs to the indigenous population. It is notable that those making this claim are in point of fact opposed to the equity or ownership model of indigenisation and they prefer either Foreign Direct Investment (FDI) approaches or the so-called supply side model touted by Gono whose logic is akin to that of a house nigger whose hopeless mentality is that it is far better to profit from selling the furniture of the house as a vendor under the spell of Maslow’s discredited hierarchy of needs than to own the house even if it does not have any furniture.
The Zanu PF ideological position is very clear and it is that all natural resources and indeed economic opportunities in our country belong to the people of Zimbabwe who should have a majority share in the exploitation of those resources for generating wealth, creating employment, community empowerment and national development.
But, in the exploitation of these resources that are wholly owned by Zimbabweans without exception, the schemes for exploiting the resources must not be confused with the ownership of the resources. Holding 49 percent in Zimplats does not and cannot mean owning 49 percent of our platinum resource. It means owning 49 percent of the business and the business and our platinum resource are two different things. As Zimbabweans we will always own 100 percent of our resources although we may own 50 percent of 51 percent of the various businesses - such as Zimplats - that may from time to time exploit those resources for economic gain.
Thirdly, there has been the juicy lie that Zimbabwe’s platinum resources have been undervalued in the Zimplats Indigenous Transaction with the implication that “we was robbed” as Zimbabweans. In commercial terms, taking into account Zimbabwe’s so-called sovereign risk, commodity prices and mineralisation style, the Zimplats Indigenisation Transaction, has been valued at $2,764 billion compared to a valuation of $4 billion by JP Morgan and $3,230 billion by Citi. For purposes of disposing the 51 percent to the indigenisation entities, the $2,764 billion was effectively discounted to the value of $1,6 billion. RBZ officials have spuriously asserted that this represents an undervaluation of the resource with claims that a correct nominal value would be some $90 billion or $180 billion depending on the nominal assumptions made.
If this argument is sensible, which it is not, then surely we must all applaud the Zimplats Indigenisation Transaction for pegging an asset allegedly worth $180 billion at a paltry $1,6 billion thereby enabling the indigenous entities to purchase the asset for some $818 million representing 51 percent of the value. Fifty-one percent of $180 billion would be staggering and unthinkable. But of course by sucking their thumbs to come up with the figure of $180 billion as the value of the resource in-situ, the RBZ is pursuing a propaganda smokescreen to argue that the indigenous entities should not pay anything to Zimplats because they own the resource which is worth $180 billion blah blah blah. This is constructive confusion designed to muddy the views of the uninitiated among us.
The fact of the matter is that the indigenisation policy is being implemented under the Indigenisation Act and this law was amended to remove the original requirement that the indigenising companies must “cede” 51 percent of shareholding to indigenous entities and to replace it with the condition that they must “dispose” that shareholding. The difference between “ceding” and “disposing” is like night and day: in the one case, the implication is compulsory acquisition while in the other case it means purchasing the shares and this is exactly what is happening.
Unlike in the land reform where the law enabled compulsory acquisition of land as a natural resource, there is no law in Zimbabwe which enables the compulsory acquisition of shares to effect the indigenisation reform programme. When seen against this background, what has been achieved so far through pending acquisitions such as the Zimplats Indigenisation Transaction is path-breaking and must be commended by all all right-thinking revolutionaries in the nationalist movement and within Zanu PF and not condemned.
Fourthly, there has been the juicy lie that the Zimplats Indigenisation Transaction requires the indigenous entities to pay an interest rate of 10 percent per annum. According to the third bullet under paragraph 14 of the Term Sheet on page 4, “The amount outstanding under the VF (Vendor Financing) will escalate at an escalation rate of 10% (ten percent)”. There is absolutely nothing in the non-binding Term Sheet which refers to an interest rate of 10 percent per annum as claimed by RBZ officials and MDC media mouthpieces. Nothing! This matter is still open ended and subject to further negotiation in the substantive agreements that have not been done.
It is still possible as the best case that the indigenous entities will interpret this provision - as they must - to mean a “once-off” escalation on the amount being paid for the shares. Yet the false claim of an interest rate of 10 percent per annum has been peddled around simply to poison opinion about the transaction in the treacherous hope of derailing, stopping or reversing it in order to assist the juicy lies of Tsvangirai’s MDC through the new Bhora Musango game that is bound to fail in 2013.
Fifthly, there has been the juicy lie that the Zimplats Indigenisation Transaction has been sealed without the necessary consultations in Government. As has already been pointed out, no deal has been sealed at all. What is there is a non-binding Term Sheet whose substantive agreements are in the process of being negotiated with a renewable deadline of 30 June 2013. What this means is that consultations are now due and that the Term Sheet is the basis of the necessary consultations.
It is therefore utterly malicious for anyone, especially those at the RBZ to run to the media claiming that they have not been consulted. What makes the case of the RBZ worse on this score is that Gono has publicly attacked the equity-based indigenisation model as recently as last Thursday when he used acres of space in the Financial Gazette to push for the so-called supply side model which is neither in the law nor in the policy of the Government and country and which is contrary to Zanu PF’s indigenisation ideology. If you oppose a national programme in public, you forfeit the courtesy to be consulted because your views are public and thus known. In any case, there is nothing in the Indigenisation Act which requires that there be the kind of consultations that were allegedly not done.
In any event, it is also notable that Minister Biti, the Minister of Mines and Mining Development Obert Mpofu and Attorney-General Johannes Tomana cannot credibly argue that they have not been consulted when they sit in Cabinet or the Politburo or both.
Sixthly, there has been a sensationally juicy claim - which is said to be the one that has miffed President Mugabe the most - that “London courts will have jurisdiction over local empowerment deals” in terms of the Zimplats Indigenisation Transaction. But this is a blatant juicy lie with no basis in fact and certainly with no basis in the Zimplats Term Sheet.
While paragraph 9 of the Term Sheet makes clear that the interpretation of the arrangements relating to the vendor financing will be in terms of English law, this does not mean the interpretation will be done by English courts in the same way the application of Roman Dutch law in Zimbabwe does not mean the jurisdiction is with South African or Dutch courts. It is a fact that in Zimbabwe we have common law, Roman Dutch Law and English Law. Vendor financing is much clearer in English law which is in force in Zimbabwe than it is in Roman Dutch law which is also in force in Zimbabwe. Otherwise, according to paragraph 5 of the Term Sheet “The relevant applicable law governing the Transaction is The Indigenisation and Economic Empowerment Act (Chapter 14:33) (act 14/2007) and the Indigenisation and Economic Empowerment (General) Regulations, 2010”.
Anyone who thinks this Act is subject to the jurisdiction of the courts in London is very, very dangerous and needs to be watched very closely. Paragraph 27 dealing with “Dispute Resolution” clearly states that “Arbitration will be under UNCITRAL (United Nations Commission on International Trade Law based in London” to which Zimbabwe is a state party while paragraph 28 headlined “Governing Law” clearly provides that “this Term Sheet is to be governed and interpreted in accordance with the laws of Zimbabwe”.
It is therefore very clear that the nonsense about the alleged jurisdiction of the courts of London is coming from RBZ malcontents and their counterparts in Tsvangirai’s MDC who have resorted to peddling juicy lies because they just have nothing to offer the people of Zimbabwe who now understand that there is no alternative to Zanu PF’s indigenisation reform programme that is now unstoppable and irreversible.
Seventhly and finally, there is the juicy lie that the advisors to the Zimplats Indigenisation Transaction - Brainworks Capital - are allegedly “looting” some $45 million from the transaction. First and foremost it should be recorded that Brainworks Capital are not the only consultants to have been involved or considered. The record shows that others have been involved one way or the other - including Renaissance Capital from Russia, Capvest Business Consulting, Genesis Global Finance, CBZ Bank and Vunani Capital Proprietary Limited all of which charged the same two percent success fee as Brainworks Capital and Renaissance Financial Holdings Limited who were the only one to ask for $25 000 engagement fee, and a $50 000 monthly retainer while charging a five percent success fee with the argument that the five percent was “substantially below the industry standard of between 7 percent and 9 percent for these types of mandates”.
But of particular significance is the fact that the two percent charged by Brainworks Capital is payable by the indigenising company, and in this case, Zimplats. It is not payable by the indigenising entities or by the tax payers. So what is the fuss about? Is it about tendering? Was there any tendering during Baccossi? Did Finance Minister Biti do any tendering in his distribution of the IMF Special Drawing Rights to dubious companies and banks under dubiouscircumstances? Why are some people making holier-than-thou noises when the public record is so loud against them?
If Tsvangirai’s MDC thinks it will use juicy lies to dupe the people about the indigenisation reform programme, they must know they are in for a battle royale. This time lies will not work no matter how juicy they are and no matter who is used to peddle them. It’s Bhora Mugedhi all the way.