Policy holders take Old Mutual to task

HARARE - In South Africa (SA), they have got Theo Botha – the irrepressible shareholder activist – and Zimbabwe could be getting its own version in the form of businessman Chester Mhende.

About two decades ago, he made his name in property development, entered politics and now he has reinvented himself as some David in the anti-Old Mutual Zimbabwe (OMZ) demutualisation process, and subsequent empowerment deal.

In a true shareholder activism spirit, Mhende recently formed an association aimed at addressing ‘injustices’ against policy holders caused by demutualisation of the insurance giant.

“At the very outset, I want it known that we are only standing to protect our rights and to ensure that we recover what belongs to us,” Mhende told businessdaily on Wednesday.

“Ours is simply a cry for information so we can quantify what belongs to us and after recovering it, quietly continue with our lives with the knowledge that we would have fought for and obtained justice for ourselves,” he added.

OMZ demutualised in 1999 in what was described by many economic experts as the “biggest empowerment exercise” the company has undertaken.

To that effect, Mhende not only feels “let-down”, but he has formed a pressure group.

“When demutualisation happened, I had hoped that control of Old Mutual would remain vested in the policy holders who, through demutualisation, I had expected to be the sole shareholders,” he said.

“Where Old Mutual Zimbabwe is concerned, I had hoped that the policy holders, cum shareholders would automatically be the indigenous partners of old mutual plc and that there was need for policy holders to lose value to other indigenous partners,” he added.

This comes as the insurance giant in 2013 approved a $12,5 million loan to the group’s former chief executive Luke Ngwerume and associates to acquire a 3,5 percent stake in the company as part of efforts to comply with Zimbabwe’s indigenisation policy – compelling all foreign-owned firms to cede majority stakes to black locals.

While OMZ did not to respond to questions sent to them last week, Mhende is optimistic that the Zimbabwe Stock Exchange-listed counter would resolve the issue amicably.

“Old Mutual is a known proponent of good corporate governance. We have no doubt that at some point they shall engage us and address our concerns. We have a cause.  That cause is not to be disruptive,” he said.

Economic analysts, however, said OMZ has no case to answer as its demutualisation and empowerment deals were approved by the government – clearly indicating everything was done above board.

But like SA’s Botha, who has fought many a South African corporate giants, it remains to be seen whether Mhende will succeed in this epic contest.

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