Cancel BP deal: Workers

HARARE - Employees of FMI Zimbabwe (FMI) have approached the High Court seeking an order to compel Indigenisation minister Saviour Kasukuwere to cancel the former’s acquisition of BP & Shell Marketing Services (BPSMS) local assets.

This comes after the minister was quoted in the local media saying the controversial deal was one of the success stories of government indigenisation programme despite FMI still having to comply with part of the sale conditions.

The workers represented by Hussein Ranchold & Co in the alternative are seeking for the formation of an employee share ownership and the transfer of a 10 percent stake in the company within 30 days of the order.

“To date, FMI has not set up the 10 percent employee share ownership scheme in terms of section 14 of the Indigenisation and Economic Empowerment (general) Regulations of 2010 as amended. This, despite the fact that this was a condition of the approval of the sale of Shell Zimbabwe (Pvt) and BNP Zimbabwe (Pvt) Ltd to FMI Zimbabwe (Pvt) Ltd by the minister of Youth Development, Indigenisation and Empowerment in terms of section 4 (i) (b) of the Indigenisation and Economic Empowerment Act (Chapter 14:33).”

The four staff members of FMI are also seeking for an independent audit of accounts for BP Shell Zimbabwe (Private ) Limited and BP Zimbabwe Limited together with dividends due to the aforesaid employee share scheme within 30 days of this order.

“There have been significant/material developments or events that have a direct adverse/negative impact on me as a shareholder provided for at law through the condition of approval of the sale of the company that have happened without any input or involvement of employees as shareholders.”

“Given that the purchase consideration of the company was $32,7 million, the 10 percent shareholding to be held under the employee share scheme at the time of acquisition would have been valued at $3,27 million.

“As at December 31, 2011, the value of the company was worth $50,7 million, resulting in a profit on ‘bargain purchase’ of the company of $18 million. Ten percent profit of this profit ($1,8 million) must accrue to the employee trust.”

A damning report by the National Indigenisation and Economic Empowerment Board (Nieeb) early this year found Masawara to have deliberately misrepresented its shareholder composition and failed to implement an employee shareholder scheme among other pre-conditions to the deal.

 “We recommend revocation of the approval. The legal implication will be that the two parties will not be legally able to conclude their agreement. Both parties will revert to status quo ante.

“The company will continue to operate under BP and Shell through local management until properly indigenised,” Nieeb said in a 23-page report.

“The continuance of the transaction is ultra vires the indigenisation laws.

The transaction approval was procured through misrepresentation and fraudulent non-disclosure of information, an imprisonable offence in terms of the regulations.”

Nieeb said in light of the group shareholding structure, this scheme is not possible because the company that actually owns BP and Shell assets is offshore, based in Mauritius, and it is not possible to indigenise it.

“Further Ernst and Young London has attested to the veracity of these statements. The shareholding between the applicant and the eventual owner of the assets is different.

“The eventual owner (being Mem) through FMI Energy Zimbabwe) is offshore, yet the applicant is onshore, being FMI Zimbabwe,” read part of the report.

FMI Energy acquire BPSMS assets through FMI Zimbabwe, a wholly-owned subsidiary of Masawara Energy Mauritius Limited, owned by London-listed investment company, Masawara plc 63,4 percent controlled by business tycoon Shingai Mutasa.

The transaction encompasses BP and Shell’s entire business portfolio in Zimbabwe, including 73 retail outlets and 60 million litre–storage tanks or depots across 10 strategic centres.

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