Land barons face comeuppance
POLITICAL bigwigs who might have taken advantage of businessman Mr Nicholas Vingirai’s seven-year absence from Zimbabwe and appropriated vast tracts of land owned by his bank Intermarket Banking Corporation (IBC), especially in Ruwa, have been put on notice as ZB Financial Holdings Limited (ZBFHL) and Intermarket Holdings Limited (IHL) head for a de-merger.
The unwinding of the two financial institutions might affect ZBFHL management who are being accused of receiving over $25 million in alleged irregular payments between 2009 and 2016 from subsidiaries that are under Mr Vingirai’s IHL.
Government has already agreed to the split of the two entities, and the two parties have since constituted teams that will lead in the negotiation process.
As the two banks prepare to reconcile assets ahead of the split, it has since emerged that the 598-hectare land in Ruwa owned by Solomio Farms Private Limited, which is 60 percent controlled by IBC, might be a problem spot.
Solomio Farms is the registered owner of Hofmoor of Galway Estate (452 ha) and Lot 1 of New Invernell (145,9 ha).
Former Deputy Minister of Transport and Infrastructure Development and Goromonzi South Member of Parliament Ms Petronella Kagonye — who was relieved of her duties in December 2014 — is alleged to have used her company Glorious Properties to develop the bank’s land into residential stands.
She purportedly used a letter from the Ministry of Local Government that was issued under unclear circumstances to drive through her project.
However, the legislator, though admitting that her real estate business is selling stands in Ruwa, said it was untrue that her company was carrying out land development on the disputed land.
“I own a real estate company; our job is to develop, sell, lease, value, auction properties everywhere and anywhere in Zimbabwe, Ruwa included,” said Mrs Kagonye.
“Go to the Ministry of Lands and Ministry of Local Government and Physical Planning and get your facts right. “Go also on the ground and ask those
building, who gave them the land,” she said.
Similarly, former MDC treasurer-general, who is now president of opposition party MDC Renewal, Mr Elton Mangoma, through Landela Safaris, was also implicated as part of the beneficiaries of the illegal land occupation.
He, however, denies being part of the deals.
In addition to the politicians, five housing cooperatives — Solomon Mujuru, Shingiriro (Women’s League), Totonga Housing Cooperative for ex-detainees, Vaduku Forum for the Youth and Civil Servants Housing Cooperative — also occupied the land before the 2013 harmonised elections as land barons expediently took advantage of the plebiscite to seize the land.
Apparently, there were skirmishes over ownership and control of the bank’s land in 2013.
It appears that the land in question could have been erroneously handed over to the cooperatives and politicians as State land.
The imminent split of ZBFHL could also present headaches for management of the financial institution as they are being accused of unfairly benefiting from more than $25 million in alleged irregular payments since dollarisation.
Information gathered by The Herald indicates that Mr Vingirai’s investment vehicle, Transnational Holdings Limited (THL), has since written to Intermarket Holdings Limited — a company in which it is invested in — demanding $7,3 million in dividends accruing in the 2009-2016 period through “de facto dividends” resulting from perceived “governance lapses since the merger in 2006”.
THL believes since it is a 19,8 percent shareholder in ZBFHL, it is entitled received some payments.
“We write to you as a 15,6 shareholder in IHL to demand, as we hereby do, dividends accruing to Transnational Holdings Limited in the amount of $7 342 645 for the financial periods 2009 through 2016.
The amount arises from declared and defacto lapses since the merger of 2006,” read part of the letter of demand dated May 17, 2017 that was circulated among stakeholders and seen by this paper.
“Over the period, ZB Financial Holdings treated IHL and its subsidiaries as its divisions or departments in that it failed to treat them as separate corporate entities. Using its vantage point ZBFHL and IHL connived to routinely and unduly prejudice THL. . .”
THL says IHL and its subsidiaries paid “excessive and baseless remuneration” to ZBFHL.
Eyebrows have also been raised over $2,6 million that was spent on “legal fees” in 2006 alone, which THL believes were funds that were deliberately being siphoned from IHL subsidiaries.
“Our review of the financial statements of IHL from 2009 to 2016 revealed suspiciously volatile expenditure patterns. The most conspicuous was the $2 625 000 ‘spent’ on ‘legal fees’ in 2011 alone,” added the letter.
Attempts to get a comment from ZBFHL group chief executive officer Mr Ron Mutandagayi were fruitless yesterday.
However, RBZ sources also said a combination of inter-party transactions between the two financial institutions, which include shareholder loans from Government, will also be made as a counter-claim against THL.
Though Government is understood to have approved the demerger, the National Social Security Authority (NSSA) — which has three nominees on the ZBFHL board led by Professor Charity Manyeruke — is understood to be throwing spanners in the works as it angles for a controlling stake in the bank.
It is NSSA that drove the ouster of Mr Vingirai and his nominees from ZB in May 2017, a development that led the banker to make a claim for his assets.
NSSA chief investment officer Mr Herbert Hungwe indicated recently that any corporate action must not erode value for the public pension fund.
“We believe that the board of ZBFH is seized with the matter and that, at the appropriate time, when the board is ready to make its recommendation, it will communicate as required, with shareholders, regulatory authorities and other stakeholders.
“As NSSA, our position remains that any corporate action that is taken by any of our investee companies, should not erode value for us and other shareholders. We will, therefore, assess any recommendation that is put to us, on this basis,” he said.
However, last week, the banker told The Herald he was confident the central bank will expeditiously deal with the matter.
“The RBZ is seized with the issue and we hope that it will be concluded soon,” said Mr Vingirai in a terse response.
The Reserve Bank of Zimbabwe (RBZ) separately met parties from both ZBFHL and Intermarket between July 9 and July 11 this year, which culminated in a meeting of all parties on June 23, where the demerger was agreed to.
It is believed that the separation can be “straight forward” and “quick” considering that the businesses are separately licensed and have different administrative structures.
Though Government managed to forge an agreement with THL last year through which the latter received a 19,9 percent stake in ZBFH, matters came to a head this year as NSSA — a major shareholder in the group (37,8 percent) — resisted the proposed allocation of a further six percent to 10 percent to THL.
There is now growing Government concern, especially from the Office of the President and Cabinet, that since the June 23 meeting, there hasn’t been much traction in expeditiously settling the matter, particularly for companies that are involved in the sensitive financial services sector.