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By
Mutumwa Mawere
I
WISH to thank you most sincerely for inviting me to participate in your
forum last week.
I must acknowledge that the content and context of the questions asked
suggests that Zimbabweans wherever they may be are interested in the
future of the country and how businesses are owned and structured to
the extent that my involvement in Zimbabwean business has captured the
imagination of many and generated many conspiracy theories. I decided
that it is important that I answer these questions in form of a series
of letters so that the majority who could not join us can benefit as
well.
The first question from your reader on the forum is as follows:
Mutumwa, you are one of the greatest financial engineers the country has had, and I admire you for spinning an empire out of the rags of Shabanie and Mashaba Mines. However, you have been let down by your former employees because of the unkind manner in which you handled them. You started well by recruiting the best brains the country has...Godfrey Gomwe, Katsande, Mkushi, Manikai, Masvikwa, Gwata but your weakness was to dump them rather than make them equity partners. Do you not see how Munyati, Peter Moyo, Tembo and others have now become you enemies rather than allies?
The message from this article is clear that there is a causal link between the nationalisation of my assets and the manner in which I am alleged to have treated my former employees. The implication in the question is that had I given equity to my senior management, probably the government would not have taken the actions they have taken. In addition, if you read between the lines there is an assumption that the individuals mentioned are to some extent assisting the government in the expropriation of my assets. In fact, the government’s actions can then be justified if it is established that I am a selfish person who uses individuals without regard to their own success. The picture is quite clear from the question that I deserve no sympathy, if I needed any, in what may be perceived to be my quest to recover my assets. It is also evident that the questioner is well informed and may be representing the feelings of the affected and individuals. I also sense that in asking the question, the person is also interested in my honest and frank response. It is in this respect that I thought it is important to put the facts and then let the public make their own conclusions.
I have known Mr. John Mkushi since 1984 when we briefly worked together at the Industrial Development Corporation. Mr. Mkushi was one the few blacks to enter the corporate ladder during the first years of independence. Although I was not in his age group, I knew of him but he was not a close friend to me. Over the years, I would bump into him during my visits to Zimbabwe while working for the IFC. It was in August 1995 that I met him at the Meikles Hotel to discuss business opportunities. At the time, he was the Managing Director of Turnall Fibre Cement, a wholly owned subsidiary of Shabanie Mashaba Mines (Private) Limited (SMM) that in turn was wholly owned by Shabanie Mashaba Mines Holdings Limited (SMMH), a company registered in England, that was wholly owned by T & N Plc, also registered in England. The non-Executive Chairman at the time was Mr. Abner Botsh.
I briefed him of my plans to relocate to South Africa and we discussed in general business opportunities in the country and how I could be of assistance. I then asked him about T & N Plc’s plans for the Zimbabwean operations and he said that he was not aware of their intentions but the companies were profitable and it was unlikely they would be prepared to sell particularly in light of the structural adjustment program that had liberalised the foreign currency regime to allow the company to remit dividends. I then asked whether he was prepared to approach the company to find out if they would be prepared to sell. He said that because he was already working for the company there might be a conflict of interest. I then undertook to approach the company. On my way back to Washington D.C., I then read in the Financial Times of London that T & N Plc was planning to dispose of some non-core assets without mentioning the target assets. I then wrote a letter to the Chairman of T & N Plc in early September 1995 to register my interest to acquire their assets in Zimbabwe. Incidentally, I had already registered a company in March 1995, Africa Resources Limited, in the British Virgin Island in preparation for my relocation to South Africa.
T & N Plc then responded and we met in London to discuss my proposal. At the time, I had already sensitised a number of European banks on the possible transaction that expressed a keen interest to assist. Due to the confirmation of financial backing, T & N Plc took my proposal seriously. I then put together a technical due diligence team that visited Zimbabwe in November 1995. I also engaged a UK law firm to assist with the legal side. Due to the complexity of the deal, it required seed capital that I provided from my pension money that I received from the World Bank when I resigned in November 1995. It is apparent that your readers have the impression that Hon. Mnangagwa initiated the acquisition. This perception is not entirely misplaced because in the minds of average Zimbabweans, the deal was too big and how on earth could I say I did it on my own.
However, the fortunate part is that my version is supported by documentary evidence that is part of my court submission. There have also been speculation that Mr. Mkushi was part of the consortium that negotiated the transaction and that I dumped him later. Mr. Mkushi was neither involved in any negotiation of the transaction nor did he spend one dime to assist me in financing the transaction costs. I have never received a penny from either Hon. Mnangagwa or Mkushi for the transaction. You can confirm this with them. If there is any misperception about their involvement it can only come from the minds that have conspiracy theories. I thought it is beneficial for your readers to appreciate this background before addressing the executive staff issue.
You will note from my UK affidavit that the original financing that was envisaged did not materialise because of the concerns about the asbestos risk. I then approached local merchant banks in Zimbabwe to assist but they also felt that the risk was too high. I finally enlisted the help of Investec Bank Limited that I was working with on a pan African mining finance initiative. They participated in some of the negotiations with T & N Plc. The only sticking point was that the bank was not willing to lend for five years without an environmental liability indemnity that T & N Plc was not willing to provide. At the end, we then decided that the most prudent way to proceed was for T & N Plc to provide the acquisition financing in return for ARL waiving the indemnity.
The transaction was then structured as a leveraged buy-out that was vendor financed. I then hired Mr. Edwin Manikai, who was working for Gill, Godlonton and Gerrans to be the Zimbabwean legal advisor. At the time, Mr. Manikai could not get corporate experience because there were few black corporate clients. I undertook to assist him. I knew Mr. Manikai in 1982 at the University of Zimbabwe where he was a year behind me. As a friend who was struggling to make ends meet, I decided to help him. He is not related to me but he was the first graduate in a big family and had a responsibility to help his younger siblings. Mr. Manikai’s law firm did not donate legal services that were rendered in connection with the transaction but was paid by me.
When the transaction was concluded, I became the first black Chairman of SMM in March 1996. Although Mr. Mkushi was working for the SMM group he was only involved with the industrial operations i.e. Tube and Pipe Industries and Turnall Fibre Cement. The asbestos mine was a white preserve with all senior positions reserved for them. Accordingly, the transition had to be well thought out. It was apparent that we needed a mining person, as I had no intention of being an Executive Chairman. I then approached Mr. Godfrey Gomwe who was working for Ashanti after the company had taken over Cluff Resources Limited’s assets. I briefed Mr. Gomwe on the acquisition and was the basis on which the deal was structured. We then agreed on his package that included an offshore salary, a Zimbabwean salary, and an equity option.
The equity portion was valued at US$1.2 million and was to be paid after the liquidation of the T & N Plc’s acquisition loan. His contract was for five years expiring in 2001. Mr. Gomwe became the CEO of ARL Zimbabwe (Private) Limited and Mr. Mkushi who also had a similar package became the Deputy CEO of SMM while Mr. Adrian Rackham remained as CEO. It was recognised that Mr. Mkushi did not have mining experience and hence the need to appoint Mr. Gomwe. Following the acquisition, the Zimbabwean economy took a nosedive and also SMM was helpless while the Minerals Marketing Corporation of Zimbabwe failed to market the asbestos resulting in stockpiles. Accordingly, the payments to T & N Plc could not be sustained. In 1997 SMM was then allowed to market its own asbestos. In 1998 SMM secured an offshore line of credit whose main condition was that payments to T & N Plc be stopped for the duration of the loan.
Mr. Gomwe left the group in 2001 after completing his contract but with respect to the shares, it was not possible to give him as the arrangement was based on performance. In any event, the shares were held by T & N Plc as part of the security arrangements and not by ZANU-PF. Mr. Mkushi also left the group in 2002 after completing his contract.
Apart from their regular salaries, Mr. Mkushi received an offshore package of US$451,342.67 that was paid to his external account while Mr. Gomwe received US$325,753.00. If I was mean, how could my companies justify paying this amount over and above the local salaries that were already above market average. Mr. Munyati received US$250,066.36 while Mr. Grenville Hampshire received US$541,067.20. Mr. Hampshire was formerly a T & N Plc employee who remained with the group and was treated as other Zimbabwean officials. The only difference is that he was paid less in Zimbabwean dollars. ARL felt that if a white expatriate was paid in US$ then it was important for blacks to be treated in a similar manner. Before the takeover by ARL, Mr, Mkushi did not have any shareholding and also was not paid anything offshore compared to his white colleagues.
You mention the name of Mr. Munyati who is now working for the Reserve Bank. While it is true that Mr. Munyati was supposed to declare his offshore earnings to the Reserve Bank, he is now not accountable to the same laws as for instance James Makamba because he is now working for Governor Gono. I do not believe that Mr. Munyati would have behaved differently from Minister Kuruneri who decided to use his foreign currency to build a house but is now treated like a criminal. With the selective treatment for the same alleged offence, it is clear that the whole externalisation crusade is nothing but a sham. The questioner is therefore entitled to make the allegation that some of the former executives are being used to target me in return for Gono not reporting them to his police friends.
Who would want to
be in Mawere’s shoes and be accused of externalisation while the
real beneficiaries are now working for the state? I will deal with the
other individuals separately that are mentioned in the questions but
do believe that the above will go a long way towards better informing
your readers. I attach herewith a schedule of the list of other employees
who were beneficiaries of the external US$ package and you will not
hear the state pursuing them but will only hear Mawere’s name
as the villain for the benefit of others. That is what leadership is
all about and hence my silence while my name has been defamed and assassinated
for other people’s benefit. I also attach some relevant correspondence
showing who was responsible for the payments.
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