HARARE - Government is in the process of pushing through amendments to the Indigenisation Act due to flaws in the implementation process of several empowerment deals that would have resulted in the country losing out to foreign companies as exposed by the Daily News early this year.

After the Daily Newsexposure of the dodgy deals, there was an outcry from the general public while President Robert Mugabe, parliamentarians from Zanu PF and the MDC and key government arms raised alarm.

Mugabe publicly rebuked Indigenisation minister Savior Kasukuwere for making mistakes in the implementation process and parliamentarians from both the MDC and Zanu PF demanded a probe into the scandal.

Yesterday, Kasukuwere addressed a press conference at his Mukwati Building offices where Daily News journalists were not invited.

He reportedly said he has not yet changed any legislative framework and “any reports to the contrary are misleading and misguided”.

But in a government white paper in possession of this paper, the National Indigenisation and Economic Empowerment Board (Nieeb) now plans to seize shareholding without any compensation using mineral resources as value, whereas in the current law, local blacks had to pay for the 51 percent shareholding.

Stung by the raging Nieebgate Scandal centering on the $971 million Zimbabwe Platinum Mines Limited (Zimplats) deal, Kasukuwere seems under pressure to make amendments.

The 43-year-old Mount Darwin South legislator had not only faced pressure from the public, but also hardened his stance and resisted corrections to what he termed successful indigenisation transactions and a vendor-financing model.

Under the new proposals, Kasukuwere has significantly revised the policy from an equity or ownership point of view to incorporate aspects of the supply-side model punted by Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono — earlier dismissed by critics such as serial political flip-flopper Jonathan Moyo as “reactionary” and “treacherous”.

In recent days, Kasukuwere and the Attorney General’s office have been designing a new thrust to seize 51 percent stake in mining companies for free, but Kasukuwere said yesterday the white paper has been leaked to the press.

Contents of the white paper were first reported in the State-controlled media at the weekend.

“The ministry and Government of Zimbabwe would like to revise materially, the policy and law on indigenisation and empowerment with respect to the acquisition of 51 percent shareholding in all non-indigenous businesses operating in the country,” reads the white paper.

“The motivation for this position arises out of the desire to ensure that the people of Zimbabwe benefit fully, and without cost whatsoever, from enterprises that exploit their God-given natural resources.

“Government’s endeavour in this regard is to realise shareholding in such non-indigenous businesses in exchange for natural resources, thereby creating enterprise partnerships between non-indigenous investors and indigenous entities based on contribution of resource of capital in the measure reflected in by our 51/49 percent law.”

The Zanu PF minister’s white paper claims the changes were necessitated by an adverse 2012 parliamentary legal committee report, which proposes minimum quotas for special interest groups, preferential procurement of goods from women, youths, disabled and local communities and a new comprehensive section on community share trusts, which were not in the original policy.

As first reported by the Daily News on February 14, Kasukuwere had allegedly put Zimbabwe into “bondage” by agreeing to a number of huge and debt-driven empowerment deals with several foreign-owned companies.

From independent observers’ viewpoint, Zimbabweans would need to pay at least $158 million every year in the $971 million Zimplats deal alone to get a 51 percent share in 10 years.

Under that school of thought, there were fears that locals would be unable to pay for the stake in 10 years due to flaws in the vendor financing structure — a lending model in which the selling company lends money used by the borrower to buy the vendor’s products or property.

But if the country fails to pay cash in that prescribed period — which was almost certain since Zimplats has posted staggering losses and has only declared a $50 million dividend in the past decade — they would be given 10 days to cough up cash or forfeit the shares.

In the white paper, Kasukuwere has signalled an intention to ditch vendor financing, a big step towards remodelling the indigenisation template in a move likely to spook foreign investors and cause further capital flight as well as attract international scrutiny from financial investors and politicians.

Kasukuwere told yesterday’s news conference that the Act was not yet amended.

“There has been no new amendment that has been published,” Kasukuwere said, adding the white paper was leaked to the press by people who want to “destabilise” the indigenisation programme.

“The ministry continues to engage businesses with a view to achieve the 51 percent indigenisation shareholding requirement on a mutually beneficial basis,” Kasukuwere told the news conference according to a recording obtained by the Daily News.

“In line with this, my ministry continues to engage the major mining companies on the basis of the term sheets, which we signed during 2012. As previously stated, term sheets are non-binding and subject to negotiation and approval by the relevant government authorities.”

According to the latest proposals, foreign firms will no longer receive fair value for their shares, a move which has been heavily criticised.

“This is a fatal move, a very fatal move,” warned economist Christopher Mugaga of Harare-based think-tank Econometer.

“They are creating a charity economy where you have to dole out donations in the form of shares. However, such behaviour was expected knowing well that any policy that is also focusing on banks is putting a tie on the source of funding for the process,” he said.

Mugaga said Zimbabweans should not underestimate how big this is.

“It will cause disinvestment and deindustrialisation which will put pressure on the job market,” he added.

In a recent address, the 89-year-old leader said Kasukuwere had completely misunderstood what he was supposed to do.

“So the problem ndiyoyo, ivo vakatipa 51 percent vachiti chikwereti chatirikukupai asi tichakubhadharirai mangwana mozotibhadhara that is where the difference is,” Mugabe said.

“I think that is where the minister made a mistake. He did not quite understand what was happening and yet theory yedu ndeyekuti resource iyoyo ndeyedu and that resource is our share that is where the 51 percent comes from.”

Brainworks Capital (Brainworks), an advisory firm led by banker George Manyere which played a significant consultancy role in the indigenisation deals, is yet to receive its seven figure income and fees from the Zimplats deal alone, the Daily News has heard.

The financial advisory firm also has under its armpits, indigenisation consultancy deals for six other top earning companies, where it was again due to mint top dollar.

Manyere’s firm was in line to pocket millions under the empowerment deals it stitched amid lingering questions about the nexus between Kasukuwere, Nieeb and Brainworks.

Mike Nyambuya, the Nieeb chairperson and other spin doctors such as Moyo, insist that Brainworks was awarded the contracts transparently, although there are standing government rules that any public tender above $300 000 must go through Charles Kuwaza’s State procurement agency.

There were also bitter complaints from other quarters such as Zimbabwe’s central bank and the Mines ministry that they were not consulted in the localisation process of Zimplats, and other businesses.

It is now understood to be unlikely that Brainworks will be paid anything, opening up government to multi-million dollar litigation given that there are signed contracts that must be honoured.

Apart from Zimplats, Anglo-American Platinum-owned Unki Mines — which operates in Shurugwi and about 350km south of the capital — has also rejected “illegal instructions” to pay $3,3 million for Brainworks’ advisory services. - Gift Phiri, Political Editor