Time to disclose the missing voice(s)

HARARE - An in(voice) must be supported by a voice of a living person for it is true that in the animal kingdom invoices are not relevant and even in this age of technology no two machines can never be expected to invoice each other in a vacuum.

An invoice is a bill sent by a provider of a product or service to the purchaser and it, therefore, establishes an obligation on the part of the purchaser to pay.

In the matter of Brainworks it would appear at face value the company has lost it by invoicing companies like Zimplats and Unki among others for services rendered seemingly to the National Indigenisation and Economic Empowerment Fund (“Nieef”).

History will not be kind to our generation if we fail to solve this puzzle particularly focusing on why Brainworks would choose to act in the manner it has done.  

All we know is  after the event, both Unki and Zimplats claim to have no knowledge of the true nature of the transaction that would justify a payment to Brainworks.

We are, therefore, compelled to establish who knew what and when with a view to improving literacy on this important phase of the revolution that requires financial literacy than commercial violence.

The Brainworks invoices expose more than they reveal.  

What we do know is that on June 8, 2012, Brainworks formally came on record but this statement in the mandate letter raises more questions than answers: “We can confirm that as at the date of this letter, we had been verbally appointed and have already started to discharge our services to you as follows.”

The choice of the highlighted words “verbally appointed” is significant because it suggests that Nieef could not have been the appointing party and the recipient of the letter, a Zengeza of Nieef, could not have been part of or privy to the appointment.  

The question that then arises is whose voice Brainworks relied upon to start discharging its services.
What then was the state of knowledge on the part of Brainworks and the missing voice?  It is common cause that there were two parties to the acknowledged verbal contract and yet to date the real identities of such voices is missing in action.

When the troubling questions about the Zimplats deal were exposed in the media, it appeared the focus was primarily on the quantum of fees that Brainworks stood to make from the deal rather than on the design and construction of the deal.

Why would Brainworks seek to be paid by vendors instead of Nieef?  Prior to the Zimplats transaction, nothing much was in the public domain about the role of Brainworks in the transaction.  

What was initially thought to be a Zimplats matter has now raised issues of a general nature that can only be understood if all concerned parties come out of the closest in the national interest.

In terms of a letter written by Zengeza dated January 17, 2013 addressed to Unki’s Chief Financial Officer, a Chibafa, reveals more about the legal context of Brainworks’ invoice to the company as follows: “As explained in our previous telephone discussion, the submission of the invoice to your company for payment is in line with our principals’ directive that advisory charges incurred by Nieeb and the government in the execution of indigenisation transactions be paid by the companies that are indigenising in pursuance of the Indigenisation and Economic Empowerment legislation.”

With respect to the confirmed directive, it is important that Zengeza brings the nation to his confidence by disclosing the principals who issued the directive and their standing and capacity in relation to both Nieeb and Nieef.  To date, both the indigenising companies and Nieef have chosen not to disclose the driving force behind the consultancy arrangement and payment thereof.  

This is not good for transparency and even Mike Nyambuya and Jonathan Moyo would agree that at the very least the identity of the principal be disclosed.

In trying to understand and justify what, if any, would be in the interests of justice and fairness for the indigenising companies to pay the consultancy fees one needs to critically examine the deals negotiated so far in relation to the objectives of the programme. The key components of the Zimplats deal are as set out in the Term Sheet (Term A):

It is clear from the Term Sheet that what are for sale are shares in Zimplats by its parent to three so-called indigenous entities.   

This is at variance with the position now asserted by President Robert Mugabe.  

The key question is whether at the time Brainworks was engaged Mugabe’s position regarding the principle that mineral resources would be swapped for shares in mining companies was known to Savior Kasukuwere.

If all parties had constructive knowledge about what was expected then the terms and conditions of the Term Sheet will go a long way towards establishing who benefited most from the proposed transactions and the true role of Brainworks.

It would appear that if the position as articulated by Mugabe was the guiding principle of the Zimplats transaction then Zimplats stood to gain nothing financially from the indigenisation deals.
The starting point of Mugabe is that the State on behalf of indigenous people has 100 percent of the mineral rights and there it is the party that stands to lose 49 percent rather than the other way round.
Using Mugabe’s reasoning; Zimplats’ parent ought to match the value of the minerals in the ground with capital injection to earn the 49 percent equity in the restructured company.

Accordingly, the Term Sheet reverses the roles and it is in fact the parent of the indigenising company that is the true beneficiary to the tune of $971 million for 51 percent while retaining 49 percent that the parent has not paid for as shown (Table B):

Surely, Brainworks only stood to make a maximum of $45 million for delivering a Term Sheet signed by the government that is clearly far much generous to Implats than what would have been possible if Mugabe had not been defied.  

Looking at the transaction from Zimplats’ parent, it would be unreasonable after a lucrative deal has been delivered to pay a small fee to what appears to be the deal maker, Brainworks.

It is important to establish whether Kasukuwere was aware that the deal, as set out in the Term Sheet, violated the principles held by his Principal.

In an article published by the South African City Press on April 9, 2012 entitled: “Kasukuwere changes his tune on compensation” he ruled out any compensation being paid to Implats’ Zimbabwe unit, Zimplats.

In an interview reported in the said article that Kasukuwere had with the Zimbabwe Broadcasting Corporation (“ZBC”) he was reported to have said: “We will not pay for what belongs to us.  We are ascribing a value for our resources vis-à-vis the investment made.  

“We will then determine the ownership structure.  What should be made clear is that this is what we call the intrinsic value of our subsoil assets, where the minerals are.  Where these resources are there is a value and, yes, the value increases when you mine them, so we have taken that into account.”

He like Mugabe underpinned the refusal to pay compensation to Zimplats as linked to the “unfair value” that the government had continued to receive “for a long time” from foreign-owned mines.

He said: “Last year, mining companies in Zimbabwe — most of which are foreign-owned — exported over $1bn worth of minerals.

Only 15 percent of this amount was paid to government, meaning the resources have not been beneficial to the people of Zimbabwe. Hence we ask, why must we be forced to pay for what belongs to us? The resources are ours.”

When one reads the Term Sheet one can sense that the minister changed course between April 9 and the date Brainworks was employed.  

Could it be that Brainworks played its part in changing the minister’s position from the agreed stance taken by Mugabe?  

If this is the case, then surely one cannot question why Brainworks has to be paid by the indigenising companies for it is clear that they are the true beneficiaries.

By changing his own articulated position, there is no doubt the minister fully understood the risks and more importantly that the indigenising companies can be so naive as to now want the world to believe that they are mere pawns in a game whose outcome they did not fully comprehend.

When the Zimplats Term Sheet was signed, this represented a milestone and a dramatic shift from Kasukuwere’s stated position.

On the day of the signing of the Term Sheet, January 11, 2013, Kasukuwere said: “The transaction being concluded today is a flagship of the policy objectives of our government’s empowerment of indigenous Zimbabweans,” suggesting that at the time he believed this deal was in line with his new understanding of the policy objectives presumably with the assistance of the brains at work in Brainworks.

He further said that: “the transaction was proof that ordinary Zimbabweans and not those close to Mugabe were benefiting.”

Obviously satisfied with the Term Sheet, Implats’ Chief Executive, Terence Goodlace said: “The company had confidence in Zimbabwe and was committed to a $460 million expansion of Zimplats’ operations.  I am, during these uncertain economic times, excited about the future of Zimplats and platinum mining in Zimbabwe.  The uncertainty that has dogged Zimplats during the negotiations is now hopefully a thing of the past.  The deal will leave Implats in control.”  

The proof of the pudding is in the eating and it cannot be said that Implats did not know what was at play to now want to refuse to pay what is due to Caesar. -
Mutumwa Mawere

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