eBusiness Weekly
Golden Sibanda and Africa Moyo
The ownership of mobile network operator Telecel Zimbabwe continues to hang in limbo amid indication a fresh and potentially bruising legal battle is now brewing within the company after businessman Dr James Makamba was dragged to the High Court for allegedly swindling other Empowerment Corporation shareholders of their shares, and converting them into his name.
The Empowerment Corporation holds a 40 percent stake in Telecel.
Dr Makamba is also accused of fraudulently selling 20 percent of shares, taken from the 60 percent earmarked for empowerment groups, to technical partner Telecel International, which ended up with a 60 percent instead of 40 percent.
According to court documents seen by Business Weekly, “this transaction has remained a mystery, given the conspicuous absence of the paper trail authorising the same.”
Most of the controversy started at inception in 1998 when Telecel Zimbabwe was issued with a mobile telecommunications operating licence, as part of Government’s quest to empower indigenous people.
Dr Makamba led the process of inviting other indigenous partners through his vehicle, Kestrel Corporation, a situation he allegedly took advantage of, allegedly to acquire shares meant for other groups.
The businessman is said to have acquired shares for own benefit, which some approved members had failed to pay for, without giving other members the right of first refusal, as per Empowerment Corporation’s Articles of Association nor was there a board resolution to authorise the transaction.
Dr Makamba is back in Zimbabwe after 17 years in self-exile and is reportedly now calling the shots at Telecel under unclear circumstances as he is strongly believed to have sold his stake in the Empowerment Corporation.
The businessman has reportedly lost his stake in Telecel after surrendering it to a consortium led by Harare lawyer Gerald Mlotshwa, which helped him settle loans with South African banks.
The chronic shareholding squabbles that have rocked the Empowerment Corporation over a long period, have spawned a nebulous shareholding structure, now pitting Dr Makamba, a number of indigenous empowerment groupings, a local private consortium and Government.
As such, High Court case, number 180 of 2018, was filed on February 27, 2018 by Magamba Echimurenga Trust chairperson Andrew Ndlovu, who is seeking an interdict barring all entities connected to Telecel from holding meetings on, and selling shares in the Empowerment Corporation.
In addition, Ndlovu, on behalf of Magamba Echimurenga Trust, wants the High Court to bar Telecel from conducting business or convening meetings in which the Empowerment Corporation participates, until the shareholding dispute has been legally restructured.
The court application further seeks an order declaring Magamba Echimurenga Trust the rightful owner of a 24 percent stake in Empowerment Corporation.
Ndlovu claims none of the members of the group ever benefitted from the shares since being purchased 20 years ago, nor was the group accorded a seat on the board.
A total of 10 defendants have been cited in the case including Dr Makamba; Kestrel Corporation (owned by Dr Makamba); Empowerment Corporation; Dr Jane Mutasa; Indigenous Business Women’s Organisation (IBWO); Selpon Investments owned by Harare businesswoman Dr Mutasa; Carlton Consultancy; Gerald Mlotshwa; Telecel Zimbabwe and ICT Minister Supa Mandiwanzira.
Carlton Consultancy was allegedly used in the unclear conversion of shares from the original beneficial owners into Dr Makamba’s name.
Eight of the cited respondents, except Minister Mandiwanzira and Carlton Consultancy, were empowerment groups said to have expressed interest in acquiring shares in Empowerment Corporation at its inception in 1998, although some eventually failed to raise the requisite funding.
Ndlovu claims his empowerment group duly purchased and fully paid for shares representing 24 percent of the shares in Empowerment Corporation, but was never allotted their full and rightful shareholding in the organisation.
“Plaintiff, despite having fully subscribed to its share allotment by effecting a payment of ZW$120 000, appear to have been allotted 0,6 percent without legal basis and a further 0,0764 percent was allotted,” the applicant noted in his court application.
“It will be just and equitable that this honourable court declares the plaintiff the lawful owner of 24 percent shareholding in the 3rd defendant (EC).”
Magamba Echimurenga claims to have bought the shareholding that belonged to Native Investments, which had acquired shares originally meant for Affirmative Action Group (AAG).
In the papers filed with the High Court, Ndlovu claims that each of the original empowerment groups that expressed interest to acquire shares in Empowerment Corporation were supposed to receive an equal stake of 9 percent.
“The policy that was to be pursued by the 3rd defendant (EC) in the allotment of shares was to be in terms of equity and fairness that all members of the 3rd defendant had to receive equal shares.”
He alleges that when some of the groups failed to raise funding to pay for the shares, or only raise part of the funds, Dr Makamba converted all the balances into his name and in the end, declared himself the beneficial owner of 90 percent of Empowerment Corporation shares.
This sharply contrasts with 37,5 percent, assuming he never sold any of his interest in Telecel, which he duly paid for, representing a 15 percent stake in Telecel, for his 375 000 Empowerment Corporation shares, which he could lay claim to if ever there was such a basis.
“It then emerged that the first defendant (Dr Makamba) through his investment vehicle (Kestrel) had embarked on a manipulative, nefarious scheming of illicitly acquiring shareholding belonging to other stakeholders and shareholders without resolution of 3rd defendant directors nor any ratification thereof by the same resulting in unjustified claim of ownership of 90 percent.”
Ndlovu says he has since implored the Zimbabwe Anti-corruption commission (Zacc) to investigate all the operations of Empowerment Corporation, which he says has not only prejudiced Government of taxes in the sale of shares between various individuals, but also deprived other shareholders who had duly paid up for the shares in Empowerment Corporation.
Original members earmarked to acquire shares in Empowerment Corporation included Dr Makamba’s Kestrel, Zimbabwe National Liberation War Veterans Association, Indigenous Business Women (IBWO), National Miners Association, Integrated Engineering Group (IEG), Zimbabwe Farmers Union and Affirmative Action Group (AAG).
Empowerment Corporation members that failed to pay for the shares included IEG, led by Leo Mugabe, ZNLWA headed by the late Chenjerai Hunzvi, Zimbabwe Farmers Union led by Silas Hungwe, ZNLWA which sold to Magamba Echimurenga and AAG, which was led by Philip Chiyangwa.
