We did no wrong: Brainworks

HARARE - We are instructed by Brainworks Capital Management (Private) Limited to demand an immediate unconditional apology and retraction from the Daily News, and persons associated with the paper, in particular Messrs.
Mutsaka, Phiri and Chiriga, in respect of certain articles recently appearing in two of your publications.

These articles, appearing on February 14, 15 instant headed “Indigenisation under threat” and “Govt cheated in $1bn deal”, respectively, the latter being the papers headline on that date, form the basis for our client’s indignation.

The articles are defamatory of our client in the extreme and are intentionally designed to inflict, as is clearly evident from the assertions contained therein, the greatest possible reputational damage on Brainworks Capital, and it must be said, by extension, its directors.

Further, similar articles, such as that of the 21st instant headed “Nieebgate scam rages on” have subsequently appeared in the Daily News regurgitating and aggravating the defamatory nature of these original articles.

In particular, we are instructed to point out to the Daily News the following material distortions, omissions, mistruths and the like, appearing in the main, from the original article of the 14th instant, above:-

It is alleged that our client has embarked on a scheme of “massive misrepresentation and grand looting...” Imputed in this statement is criminal conduct on the part of our client. Nowhere in your articles is this statement, not even presented as an allegation, supported by facts.

The statement appears next to what is intended to be a rogues’ gallery containing the individual “mug shots” of our client’s directors. The insinuation by the Daily News is that these persons are at the helm of the said “massive misrepresentation” and “grand looting”

Further alleged and imputed by the Daily News is that our client netted “massive cash contracts without going to tender”, omitting, deliberately in our respectful view, to explain why our client, and others appointed as financial advisors to National Indigenisation Economic & Empowerment Fund (NIEEF), should be subjected to the provisions of the State Procurement Act when, as in our client’s particular instance, the value of the service to be provided had not been quantified as being in excess of the alleged US$300 000 threshold that NIEEF could be obligated to pay.

In other words, no liability accrues to NIEEF to pay anything for services rendered by our client in the first instance: that responsibility rests primarily on the indigenized company. If for any reason there is a cost that must accrue to NIEEF it must be accepted, as a matter of law and logic, that the maximum amount enforceable cannot exceed the threshold of US$300 000.

4. Allied to this, and deliberately distorted in your article is the statement that our client stood to “pocket up to $45 million from the Zimplats deal alone”.

There is a disingenuous attempt to break down this figure elsewhere in the articles.

With respect, a sincere three month investigation would have revealed that our client's invoiced fee from the Zimplats transaction, billed as full and final, is in fact only 1.5% of the transaction value and below the average 2% sought by other financial advisors considered for these mandates, before our client's services were engaged in consummating the ground breaking transaction.

Daily News failed, deliberately in our client's view, to explain, further, that the additional 2.5% for raising any loan to refinance the transaction is in fact success based, and that the percentage is well within the accepted norms in the financial services industry locally and worldwide.

In fact, no attempt was made to balance these figures and percentages with a comparative analysis of local and international industry norms, more so when making very serious allegations of “grand looting”, and other criminal conduct.

5. The articles state that “only British courts will handle any disputes which might emanate from the empowerment deals reached...” and “that London Courts will have jurisdiction...” and that “if there is a dispute, Mugabe will have to deal with British courts”.

Whilst it is unclear, from the article itself, as to whether this relates to our client's mandate letter or the Zimplats Term Sheet, the fact is that, either way, this is absolute falsehood contrived to cause the greatest possible market confusion, despondency, and incite a political reaction to the detriment of our client's interests.

No such clause, giving jurisdiction to the British courts, appears in the term sheet signed between the Zimplats, Government and NIEEF or indeed in our client’s mandate letter. The imputation, with respect, and its intentions are mischievous and malicious in the extreme.

6. It is further stated that the Reserve Bank of Zimbabwe and the Ministry of Mines 'who play an advisory role in such deals, were not consulted.

This is a distortion of the Term Sheet’s provisions, which clearly refer to the requirement for all necessary regulatory approvals in the implementation of the transaction pursuant to definitive legal documentation to b concluded between the parties in respect of the transactions forming part of the Zimplats indigenization implementation plan.

It is imputed that our client was party to a “stinking deal”.

The manner in which the deal “stinks” is not stated or elaborated on by the unnamed sources quoted by the Daily News. Nor, it is clear, was any attempt made to find the source and cause of this smell in the so-called “three month investigation”.

The Daily News “discovered that Brainworks was verbally appointed without going to tender as is the norm with government deals worth more than $300,000”.

It is not explained how Zimplats, a public listed company, responsible for payment of the advisory service fees, is suddenly subject to the tender laws of Zimbabwe.

Critically, and obviously omitted, is the fact that our client signed a mandate letter with the National Indigenisation and Economic Empowerment Board on 8th June, 2012, dealing with, inter alia, the Zimplats transaction.

There is nothing “verbal” about a signed mandate, and as stated above, there was, and is, absolutely no obligation that such a mandate be subject to the tender process.

In short, the reports are malicious and defamatory of our client. They impute criminal and corrupt conduct on its part and that of its directors in collusion with officials from Government and NIEEB.

These articles have already formed the basis for other reports in the local and international media, particularly on the internet at a time when our client is engaged in an ongoing fundraising exercise to further its business objectives.

Your articles have significantly prejudiced the successful outcome of this fund raising process.

The impeccable business and professional reputations of its directors have been soiled by articles appearing in the Daily News.

It will be emphasized for the record that these articles, and further related articles (our client reserves the right to incorporate these related articles, appearing in the Daily News, in any legal action) are designed to inflict the greatest possible reputational damage on our client and its directors and pour scorn on what is effectively the beginning of the single largest empowerment transaction in the history of Zimbabwe.

So recklessly published are these articles, containing express and implied instances of alleged illegal and unlawful conduct, that one is constrained to assign intentional criminal defamation on those responsible.

Our client reserves its right to file a criminal complaint in the future should it so deem appropriate.

It suffices that for now our client demands a full and formal unconditional apology and retraction, through a written statement approved by Brainworks, and ourselves, published in a manner similar to the prominence given to the offending articles, in the Daily News as well as all national papers and the internet over a period of seven days.

We have instructions to issue out summons out of the High Court claiming damages for defamation in the amount of US$50 million, as well as proceeding with all other legal remedies available to our clients in the event that such a retraction is not agreed to, finalized and published within THREE DAYS after receipt of this correspondence.

Please be advised accordingly.

Yours faithfully,


*This is an unedited letter from Brainworks Capital lawyers.

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