FMI saga: Court reserves ruling

HARARE - A High Court judge has reserved ruling in a case in which FMI Zimbabwe (Pvt) Ltd (FMI)’s employees are seeking an order to compel Indigenisation minister Savior Kasukuwere to cancel the former’s acquisition of BP & Shell Marketing Services (BPSMS) local assets.

FMI — a subsidiary of Masawara Energy Mauritius Limited, owned by London-listed investment company Masawara Plc which businessman Shingai Mutasa is a shareholder — acquired BPSMS assets under the indigenisation programme.

It has since rebranded the former BP and Shell service stations to Zuva Petroleum. The employees Don Nyamande, Kingstone Donga, Sharon Otoo and Emmanuel Masendeke filed the application last year, citing Kasukuwere and FMI as respondents.

The four are seeking the formation of an employee share ownership scheme and 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 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 Youth Development, Indigenisation and Empowerment minister in terms of section 4 (i) (b) of the Indigenisation and Economic Empowerment Act (Chapter 14:33),” reads part of the application.

High Court Judge Happias Zhou’s ruling will determine whether the matter would proceed to be heard on merits or dismissed on the basis that the employees have no legal right to bring the proceedings as alleged by the respondents.

However, the employees’ lawyer Lewis Uriri told the court that Kasukuwere’s decision to indigenise BP and Shell constituted an “unlawful administrative conduct” and should be set aside.

“It is not necessary to join BP and Shell because what were sold were the shares in BP. The liabilities will remain the liabilities of the company and not the shareholders,” Uriri said after the respondents had argued the employees should have joined the former owners of the company to be part of the proceedings.

He said the law allows the court to make a determination based on parties before it.

An investigation by the National Indigenisation and Economic Empowerment Board (Nieeb) early last 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.

“The indigenous partner in the group has possible far less that 26 percent, with the balance being held by non-indigenous offshore groups. (Shingai) Mutasa has ceded 21 percent of the remaining 26 percent as security for an undisclosed loan. Therefore there is no room for an employee share scheme in the current structure,” the report concluded.

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.

“Contrary to the stipulation of indigenisation legislation, the former BP and Shells assets have been exposed to external control. What is happening as a result is externalisation of business proceeds from the assets through possible supply contracts and transfer pricing,” the report reads. - Tendai Kamhungira

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