eBusiness Weekly
Business Writer
Government has a legal right to set-up and run companies through proxy as one of the ways it can use to overcome operating challenges such as economic embargoes and legal hurdles. It is not a new concept as it has been employed elsewhere in the world but more similarly by the former UDI-Rhodesian and Apartheid South African Governments.
This comes as various sectors continue to accuse Government of not being honest about the ownership of Zimbabwe Aviation Leasing Company (ZALC) and Zimbabwe Airways. Some quarters are trying to link the ownership to the former First Family and Transport and Infrastructure Development Minister Joram Gumbo.
However, parallels can be drawn from UDI Rhodesian and Apartheid South African Governments that also formed airlines registered in other countries as a way of evading sanctions and other associated challenges.
The Rhodesian Government, saddled by economic sanctions, formed Affretair Cargo airline that was registered in Gabon and had directors in that country and Rhodesia.
Affretair was formed as a Gabon-based associate company of Air Trans Africa that operated a Douglas DC-8 aircraft in the early 1970s as ‘sanctions-busting” strategy that transported high-quality beef to Europe.
Jack Malloch, Affretair’s frontman, had a record of illicit transport operations, starting with a Lockheed Constellation and moving up to DC7s.
Affretair was eventually taken over by Air Zimbabwe in 1983.
In August 1997 it was reported that Affretair’s Douglas DC-8 had been grounded the previous month as it no longer met required international standards and would no longer be allowed to land at some airports in Europe.
The Government stepped in to save Affretair from collapse by facilitating a multimillion-dollar deal with a British aviation company, Aviation Star, which leased a Boeing 707 to replace the no-longer compliant DC-8. By 1998 Affretair was (according to their website) flying a Douglas DC-8-73F into Europe using Brussels as a hub and a Boeing 727 freighter to Lusaka, Lilongwe, Johannesburg and Luanda.
Affretair was liquidated in 2000 under a $511 million debt that had grounded its only aircraft for close to two years.
Likewise the South African apartheid regime formed Laxair S.A when it was under pressure from African Governments that made it difficult for it to use air transport to ship goods to other parts of the world.
Minister Gumbo, yesterday confirmed the common practice, adding the Government of Zimbabwe appointed people with requisite skills even outside Government to run companies on its behalf.
“It’s true that happens, not everyone in Government has the skills we need and there is nothing wrong in sourcing them outside. In other countries, people not even in politics are appointed into Government if they have technical skills needed.
“That is what I have been telling people who are complaining why I appointed directors in Zimbabwe Aviation Leasing Company. Surely not everyone in Government has the skills we need,” he said.
A legal expert said all commercial ventures that Government enters into should be implemented in accordance with provisions of Section 194 and 195 of the Constitution that spells out how businesses should be run transparently and accountably to curb cronyism.
Commercial law expert Itai Ndudzo said all commercial ventures by Government were supposed to be negotiated according to principles, policy and national laws.
“We have challenges where at times Government wants to get into business but does not want to follow statutory provisions. All parastastals report to Ministers but in Zimbabwe 99 percent of all ministers are not businesspeople or are failed businesspeople and cannot superintend over Government companies,” said Ndudzo citing his vast experience working in Government companies.
It has since emerged Zim Airways directors Angeline Karonga and Mufaro Eric Gumbie (all Ministry of Transport and Infrastructure Development officials), Anne Farirayi Mutsviri and Andrew Ndaamunhu Bvumbe, formerly with the Ministry of Finance, but has resigned and joined the World Bank as Africa Group 1 consultant while Phillipa Phillips is a lawyer.
The Zimbabwe Consolidated Diamond Company’s ownership is modelled on the same fashion and its directors are include – Slava Grace Chella (acting chairperson), Alexander Mukwekwezeke, Miracle Muusha and Esau Chiyadzwa, all non-executive members.
However, upon delivery of the first Boeing 777-200ER aircraft from Malaysia, which is part of an envisaged fleet of 10 aircraft to be managed under a new company, Finance and Economic Planning Minster Patrick Chinamasa, revealed the airline is owned 100 percent by the Government.
Ndudzo said that principally, there was nothing wrong in Government venturing into businesses as buttressed by economic giants the world over such as Britain and America that run viable commercial airlines and other businesses.
He said at policy level, Government is supposed to run businesses such as parastatals according to statutory regulations superintended by Parliament.
“So it’s better for Government to enter into business through companies. Parastatals tend to have corruption and cronyism, while the other side is transparent,” said Ndudzo.
He said all the ministers he worked with while he was still in the employ of Allied Timbers, were not businesspeople and the decisions they made left a lot to be desired given their lack of experience in managing businesses.
Therefore, it is believed the newly-acquired planes will add impetus to efforts to open Zimbabwe to investment and boost local tourism and trade, but Ndudzo queried “Minister Gumbo’s capacity” to stir the ship.
In essence, Government, through Zimbabwe Airways, plans to acquire three additional Boeing 777 aero planes to service regional and international routes, including six small planes that will be used as feeder aircraft for long-haul flights.
Although some unofficial information say Government could have paid more for the aircraft, Government has paid $41 million out of the $70 million that is needed for the four Boeing 777 planes.
It is believed that to date, local authorities have managed to arrange funding for two Boeing 777 planes and one Embraer.
