Sparks fly over FML, Zimre merger

HARARE - Renaissance Financial Holdings Limited (RFHL) has petitioned the National Social Security Authority (Nssa) to stop an alleged plan to merge its First Mutual Holdings (FMH) subsidiary and Zimre Holdings Limited (ZHL), and subsequently dispose them to a South African investor.

In a December 2 letter to the pensions’ administrator’s general manager Elizabeth Chitiga, Patterson Timba’s company called on the pensions administrator to “terminate all negotiations involving the former Afre Corporation (Afre) assets” until a number of cases around the 2011 takeover of the life group were resolved.

“Our client (RFHL) has become aware that you are involved in a transaction(s) that will result in the merger of Afre’s businesses with those of ZHL,” Vote Muza said in the missive.

“The plan being to then dispose a significant portion of the merged entity(s) together with management control to a foreign entity, who we currently understand to be the Sanlam Limited Group of South Africa,” he added.

The letter, which was also copied to Nssa chairman Robin Vela, the Zimbabwe Stock Exchange, its Johannesburg peer, the Securities and Exchange Commission, ZHL, the Insurance and Pension Commission and Sanlam, also challenged Nssa’s authority to conduct the transaction given that the parties were also fighting over Capital Bank — formerly ReNaissance Merchant Bank (RMB)’s — liquidation.

“The so-called agreements, which purportedly bestowed Nssa with the majority shareholder status in Afre (is)… currently under challenge by our client in the High Court of Zimbabwe under case number 3016/12,” Muza said.

The Muza and Nyapadi law firm senior partner noted that his client’s challenge was premised on the fact that some individuals, who drove the consummation of the bank’s sale, had been dismissed from RFHL’s board by shareholders of the company.

These were Christopher Chetsanga, Collin Kuhuni and Monica Mukonoweshuro, whose legal fees were allegedly being paid by Nssa.

While Timba’s Afre and banking assets were eventually taken over by Nssa — in the wake of a Scanlern and Holderness legal opinion querying the legitimacy or bonafides of Chetsanga’s board — High Court Judge Owen Tagu in February declared all actions and decisions executed by the ousted board — post January 2012 — as null, and void.

As the RFHL representative warned Nssa that it was “treading on thin ice” and that it could face fresh legal challenge — outside the staggering $500 million damages claim already underway — some analysts also expressed “worry over the recklessness and hurry with which Vela’s board was pursuing this merger issue as it could result in huge losses for the pension contributor”.

“Our client had hoped that the change of guard at Nssa, the institution would begin to respect due process and the law, but it appears that lawlessness, and malice are now so institutionalised at the authority,” the barrister added.

Muza noted that Nssa’s latest move was not only illegal, but also goes against the spirit of Indigenisation Act, which pushes for local citizens to control company assets.

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