BP deal irreversible: govt

HARARE - Empowerment minister Saviour Kasukuwere says Masawara plc’s acquisition of BP & Shell Marketing Services (BPSMS)’s local assets was unequivocally approved after the company had created a share trust for it’s employees.

The view, enunciated in acting Indigenisation secretary Emmanuel Ngwarati’s opposing affidavit, comes as Shingai Mutasa’s company faces renewed legal troubles from a group of retrenched former workers led by Don Nyamande.

“As the applicants rightly concede, first respondent (Kasukuwere’s ministry) approved second respondent (Masawara) application for the acquisition of shares in Shell Zimbabwe… and BP,” he said, adding the order sought was in relation to the cancellation of the clearances given on the grounds that the new investors had not fully complied with government regulations.

“This is untrue. Second respondent has fulfilled the condition set in the approval letter dated 28 February 2011. I confirm that… submitted a deed of trust for the employee share ownership scheme, which was vetted and deemed to be compliant with section 14 of the Indigenisation Act,” Ngwarati said in papers deposed by his lawyers Mlotshwa and Company.

While Nyamande has sought to use the National Indigenisation and Economic Empowerment Board (Nieeb)’s report on the nullification of the $33 million deal, the parent ministry says it is not compelled to act on the recommendations.

The lawyers not only insist that Kasukuwere has the sole discretion to act or decide on the paper, as it is a mere opinion, but also question how the appellants acquired the voluminous document.

“The applicants have no locus standi to order the minister to abide by recommendations of the Nieeb or to interfere in the second respondents’ compliance process. This is for the first respondent, which is the sole authority for (the) purposes of administering and enforcing the… Act,” they said.

Crucially, Ngwarati said a reversal of the transaction had “dire consequences” as the acquisition had been concluded, payments and franchises effected, while a re-branding of the enterprise was in the process.
In a nutshell, the desired action was impractical, he said.

“Furthermore, nullification would result in the status quo ante being restored. Considering the sellers of the assets… were non-indigenous entities, this would result in the reversal of the indigenous process, contrary to the objectives of the Act,” the Indigenisation ministry accounting officer said.

While Ngwarati queries how Nyamande and friends seek to benefit from their intended actions, the company itself (Masawara) also queries the quartet’s bonafides and that the lawsuit was wrongly misplaced.

According to its defence outline, Mutasa’s company says their share ownership scheme and trust does abrogate group rights for individuals, and if ever there was any legitimate cause for the lawsuit, then it should have been triggered by the board of trustees.

But in their court action, launched by Hussein Ranchold and Co, the four are seeking “the transfer of a 10 percent stake in the company”.

“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.

This, despite the fact that this was a condition for the approval of the sale of Shell Zimbabwe (Pvt) and BP Zimbabwe… by the minister… in terms of the Indigenisation Act.” On the other hand, they are also seeking an independent audit of the former BPSMS’s accounts for the purposes of adducing compensation in terms of the order.

“There have been significant/material developments or events that have a direct adverse/negative impact on me as a shareholder… through the condition of approval of the company that have happened without any input or involvement of employees as shareholders,” the applicants say.

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

As of 31 December 2011, the value of the company was worth $50,7 million, resulting in a profit on ‘bargain purchase’ of the company of $18 million (and) 10 percent profit of this profit ($1,8 million) must accrue to the employee trust,” they added.

With Mutasa acquiring BPSMS through a raft of Mauritian and Zimbabwean subsidiaries — in turn owned by the tycoon’s 63 percent-owned London fund Masawara — the transaction encompassed all of the multinational(s) entire portfolio in the country, including 10 depots countrywide and 70-plus outlets. - Business Writer

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.