UK - LONDON - Entrepreneur Gilbert Muponda has acquired a 50 % stake in ZimDaily Media, which runs Zimbabwe’s top daily online news site ZimDaily.
ZimDaily Media runs Zimbabwe’s other leading online brands including www.zimface.com and Zimbabwe’s number one online radio www.zimnetradio.com.
The ZimDaily Media Group has been immediately strengthened by the addition of www.zimtelegraph.com a reliable, focused and in depth news website targeted at anyone serious about news. The Zimbabwe Telegraph is partially going live today and will be fully launched this weekend.
The acquisition by Muponda has resulted in the creation of a new media group with 15 web sites, making it a formidable advertising channel and infrastructure, one of the biggest such operations in Africa.
In 2001 Gilbert Muponda led a team of three young professionals from the financial services industry to set up ENG Capital (PVT) LTD, then Zimbabwe‘s fastest growing Financial Institution.
The firm was set up to serve a niche market in provision of advisory services, asset management, corporate finance and private equity. He was the first victim of the Anti-graft political campaign meant to silence and eliminate independent businesses deemed undesirable by the Government of Zimbabwe in 2003-4. ENG was closed and its assets parceled out to politically well connected individuals. He is currently CEO of GMRI Capital which he founded in 2007.
The new group will operate under the 3MG Media Limited brand. ZimDaily founder Munamato Maisva becomes the Operations and Technical Director and Gilbert Muponda will be Chief Executive Officer.
Munamato holds BEng Degree in Telecommunications, Media and Internet Engineering, Msc in Computer and Internet Security and works for the World's leading computer Software company.
They will both sit on the Group’s Editorial Board.
The creation of 3MG Media seeks to establish a leading multi-media content service provider, online marketing systems technology developer and one of the largest electronic distributors of African news, events and information globally.
3MG Media is blessed with a highly diverse group of committed professionals, dedicated to deliver trustworthy and reliable news. We find strength in the diversity of our staff. Our team has accrued collectively over 15 years of experience in generating value through Internet based driven enterprises. We have experienced marketers, web site developers, technicians, editors, and accomplished journalists.
The 3MG Media Limited business team represents more than 50 years in the fields of journalism, investment banking, advisory services, accounting, marketing, advertising and information technology.

The Group will rely on new technology and skill which will allow the group to operate with a fraction of the staff and budget of media companies of similar scope and size. The 3MG Media business enterprise model is based on a 6-level revenue stream of marketing, branding, advertisements and transactions, subscriptions, information sales and technology services which include website development and hosting for external clients.
As a reader and visitor you can directly help develop a strong continental and global voice platform, an alternative for Zimbabwe and Africa by supporting the various 3MG Media brands which will be soon listed on www.3mgmedia.com .
Gilbert Muponda will be available on ZimDaily forums www.zimdailyforum.com from today to answer all questions which our valued readers may have.
Thank you for your support and encouragement, we appreciate.
Munamato Maisva
munamato@zimtelegraph.com
Skype: zimdaily
Gilbert Muponda
gilbert@gilbertmuponda.com
Skype: gilbert.muponda
Monday, December 15, 2008
Tuesday, December 9, 2008
I just had to respond (part 2)
My Second response PART 2 - I wrote my first article not seeking to correct history or self defense. I simply had to state facts and then people can digest for themselves. I have been silent for 5 years and could have been silent for another 5.But who would benefit from my silence?
The ENG issue can not and should not be viewed in isolation but rather in context of the general occurrences in Zimbabwe during that period up to present day. Respectable business people were labeled all sorts of names.
Many have kept silent not because they are guilty but they chose privacy. If Zimbabwe is trying to build a better and progressive nation these business people should be encouraged to share their stories and experiences. It is only after we hear their version of events can we create a credible value system .I am encouraged by the emails sent to me, especially the hate mail which I find particularly motivating as I believe it allows further exchange of divergent views which hopefully will allow us develop a more vibrant and progressive nation.
I personally have nothing against Dr Gono; my assumption is that he is just doing his job. And as such what needs to be challenged are the man?s policies not his person. Dr Gono has presided over the massive brain drain in the financial sector particularly. During that period he has succeeded in transforming the RBZ into the Reserve Bank of ZANU (PF). In short he has turned the central Bank into the party?s finance department. The effect of this is that now Zimbabwe does not have a
central Bank. It is important that this be scrutinized and exposed because Zimbabwe is undergoing a transformation and the new order needs to avoid this.
Is it going to be acceptable for MDC or Mavambo/Kusile transform the country?s central bank to a tool to effect the party?s agenda without parliamentary oversight and approval? The concept here is to look at the principle and not the person.
Zimbabwe?s national institutions are being corrupted to such an extent that unbelievable activities are now
just being viewed as normal or acceptable. Why would the Central Bank directly buy plasma TVs and cars for the judiciary officers? What does the Central Bank or its officers/Governor expect in return for the favor? Is this not supposed to be done thorough normal parliamentary budget allocation to various ministries? It is this trend of rule bending and goal post shifting that results in the economy mal-functioning because everything is just unpredictable.
The country can only attract investment and investors if there is rule of law, not rule by law. The idea of changing rules just to suit an individual or isolated incident is disastrous. Zimbabwe had a fairly well developed legal system; the companies Act, Banking Act and Collective Investments Act were well thought regulations governing Banks, Companies and other financial institutions. But during the so-called anti-graft campaign these rule and regulations were over-ridden in dramatic fashion. This brings instability and increases capital flight and brain drain.
This is beyond personalities. It?s beyond ENG. This is about confidence building and stable institutional frame work that assists Zimbabwe to regain former glory. Even though land reform was necessary, during the fast track land reform it became normal for individuals to take the law into their own hands. This set a bad precedence .Once it becomes clear that there is selective application of the rule of law then there is no incentive to uphold rules and
regulations.
As part of the stage managed anti-graft campaign of 2003-4 I was arrested after a team, masquerading as RBZ Inspectors led by a soldier-(Major Santu) ransacked ENG Capital. I later learnt Major Santu was in fact a soldier ?seconded? by the Joint Operations Command (J.O.C) to ?assist?Dr Gono run the RBZ. Now if you have soldiers running the Central Bank what does that tell you about all other departments of Governments? It is clear the soldiers and security services are now running the country, ignoring the normal rules and regulations that would make Zimbabwe an attractive investment
destination. Now why would any normal country have soldiers manning the Central Bank?
It?s just unfortunate that a majority of Zimbabweans are now starting to know what J.O.C is. This is so because when events are happening to someone people chose to ignore and not pay attention as to what exactly is the allegation and who is doing what to whom. The point is Zimbabweans need collective national value system and when ever that value system is violated people must speak out and take action to defend that value system. That is how strong societies are built. Since time immemorial a successful lawless society is unheard.
Zimbabwe?s current problems may pass but they will return as long as there is no cultural shift amongst Zimbabweans themselves. The notion that it only happened to Muponda or Mawere there fore it?s not my problem is disturbing. When the anti-graft operation was implemented it was welcomed as a messianic mission ridding the nation of all ills.
Zimbabweans only started to be concerned when it got closer to them personally when Operation Murambatsvina, Operation
Sunrise Operation Mavhotera papi were being implemented. The fact is as a nation we must confront situations with facts and voice concern where ever the rule of law is being ignored.
There is need to look at the full picture and assess the implication of whole sale arrest of business people for the purpose of investigating them. The norm else where is to investigate then arrest if there is a case. The simple failure to apply the laws uniformly has accelerated the economic decline.
Businesses destroyed or taken over Royal Bank, Intermarket, Barbican, Intermarket, Rapid, Sagit, Africa Resources, Century Bank. And this all happened within a space of less than 6 months. Jobs were lost.
Business people were scandalized, arrested or haunted out of the country. The list is rather long but it includes such luminaries as Dr Makoni. Mawere, Mushore, Makoni, Chekeche, Jowa, Sachikonye, Chando, Durajadi, Simba, Muzwimbi, Nyemba, Vingirai, Zimuto, Makamba.
Is this normal to see a whole generation of entrepreneurs scandalized and lose all creditability and all at the same time? What are the implications on foreign investor sentiment when they see such hostility to local investors? These are respectable and pioneer first generation entrepreneurs who find them selves scandalized and some how classified criminal even though there is no clear evidence against them.
It is clear there is need to look beyond individuals and start reviewing wider concepts that are at play. Individuals come and pass, therefore its not worth the effort or attention to just focus on the individual whilst ignoring the irreparable damage being done to national institutions and their credibility.
The ENG issue can not and should not be viewed in isolation but rather in context of the general occurrences in Zimbabwe during that period up to present day. Respectable business people were labeled all sorts of names.
Many have kept silent not because they are guilty but they chose privacy. If Zimbabwe is trying to build a better and progressive nation these business people should be encouraged to share their stories and experiences. It is only after we hear their version of events can we create a credible value system .I am encouraged by the emails sent to me, especially the hate mail which I find particularly motivating as I believe it allows further exchange of divergent views which hopefully will allow us develop a more vibrant and progressive nation.
I personally have nothing against Dr Gono; my assumption is that he is just doing his job. And as such what needs to be challenged are the man?s policies not his person. Dr Gono has presided over the massive brain drain in the financial sector particularly. During that period he has succeeded in transforming the RBZ into the Reserve Bank of ZANU (PF). In short he has turned the central Bank into the party?s finance department. The effect of this is that now Zimbabwe does not have a
central Bank. It is important that this be scrutinized and exposed because Zimbabwe is undergoing a transformation and the new order needs to avoid this.
Is it going to be acceptable for MDC or Mavambo/Kusile transform the country?s central bank to a tool to effect the party?s agenda without parliamentary oversight and approval? The concept here is to look at the principle and not the person.
Zimbabwe?s national institutions are being corrupted to such an extent that unbelievable activities are now
just being viewed as normal or acceptable. Why would the Central Bank directly buy plasma TVs and cars for the judiciary officers? What does the Central Bank or its officers/Governor expect in return for the favor? Is this not supposed to be done thorough normal parliamentary budget allocation to various ministries? It is this trend of rule bending and goal post shifting that results in the economy mal-functioning because everything is just unpredictable.
The country can only attract investment and investors if there is rule of law, not rule by law. The idea of changing rules just to suit an individual or isolated incident is disastrous. Zimbabwe had a fairly well developed legal system; the companies Act, Banking Act and Collective Investments Act were well thought regulations governing Banks, Companies and other financial institutions. But during the so-called anti-graft campaign these rule and regulations were over-ridden in dramatic fashion. This brings instability and increases capital flight and brain drain.
This is beyond personalities. It?s beyond ENG. This is about confidence building and stable institutional frame work that assists Zimbabwe to regain former glory. Even though land reform was necessary, during the fast track land reform it became normal for individuals to take the law into their own hands. This set a bad precedence .Once it becomes clear that there is selective application of the rule of law then there is no incentive to uphold rules and
regulations.
As part of the stage managed anti-graft campaign of 2003-4 I was arrested after a team, masquerading as RBZ Inspectors led by a soldier-(Major Santu) ransacked ENG Capital. I later learnt Major Santu was in fact a soldier ?seconded? by the Joint Operations Command (J.O.C) to ?assist?Dr Gono run the RBZ. Now if you have soldiers running the Central Bank what does that tell you about all other departments of Governments? It is clear the soldiers and security services are now running the country, ignoring the normal rules and regulations that would make Zimbabwe an attractive investment
destination. Now why would any normal country have soldiers manning the Central Bank?
It?s just unfortunate that a majority of Zimbabweans are now starting to know what J.O.C is. This is so because when events are happening to someone people chose to ignore and not pay attention as to what exactly is the allegation and who is doing what to whom. The point is Zimbabweans need collective national value system and when ever that value system is violated people must speak out and take action to defend that value system. That is how strong societies are built. Since time immemorial a successful lawless society is unheard.
Zimbabwe?s current problems may pass but they will return as long as there is no cultural shift amongst Zimbabweans themselves. The notion that it only happened to Muponda or Mawere there fore it?s not my problem is disturbing. When the anti-graft operation was implemented it was welcomed as a messianic mission ridding the nation of all ills.
Zimbabweans only started to be concerned when it got closer to them personally when Operation Murambatsvina, Operation
Sunrise Operation Mavhotera papi were being implemented. The fact is as a nation we must confront situations with facts and voice concern where ever the rule of law is being ignored.
There is need to look at the full picture and assess the implication of whole sale arrest of business people for the purpose of investigating them. The norm else where is to investigate then arrest if there is a case. The simple failure to apply the laws uniformly has accelerated the economic decline.
Businesses destroyed or taken over Royal Bank, Intermarket, Barbican, Intermarket, Rapid, Sagit, Africa Resources, Century Bank. And this all happened within a space of less than 6 months. Jobs were lost.
Business people were scandalized, arrested or haunted out of the country. The list is rather long but it includes such luminaries as Dr Makoni. Mawere, Mushore, Makoni, Chekeche, Jowa, Sachikonye, Chando, Durajadi, Simba, Muzwimbi, Nyemba, Vingirai, Zimuto, Makamba.
Is this normal to see a whole generation of entrepreneurs scandalized and lose all creditability and all at the same time? What are the implications on foreign investor sentiment when they see such hostility to local investors? These are respectable and pioneer first generation entrepreneurs who find them selves scandalized and some how classified criminal even though there is no clear evidence against them.
It is clear there is need to look beyond individuals and start reviewing wider concepts that are at play. Individuals come and pass, therefore its not worth the effort or attention to just focus on the individual whilst ignoring the irreparable damage being done to national institutions and their credibility.
I just had to respond (part 1)
I am a founder and former director of ENG Capital PVT LTD (ENG). My company was the first casualty of the so-called Anti-Graft war launched by RBZ Governor Gideon Gono in December 2003. I have had to field questions about the nature of ENG?s problems and what led to its closure and current status .
I had to respond .I will try to limit response to the immediate business case of the Group the politics of the matter will be subject of another writing .It should be noted ENG Capital Group was placed into liquidation at the request of the Directors as a way to secure the firm?s creditors and investors. ENG has fully repaid all claims against it. All the creditors and investors have been fully repaid .This can be confirmed with the Liquidators at CAMELSA .Based on independent valuations and estimates ENG had assets of Z$ 180 billion against liabilities of $ Z 85 billion. ENG was a solid business model and had a strong asset position and this point has been proven beyond any doubt given that All creditors have been fully repaid despite ENG assets being looted and deliberately undervalued.
The direct role of the RBZ led by Dr Gono was in creating a smoke screen and an atmosphere that paved the way for the elimination and externalization of all persons deemed to be undesirable by the government of Zimbabwe in the quest to silence all existing and potential pockets of resistance to bad policies which Gono was about to implement. Dr Gono was appointed with a specific political mandate to deal with the financial services industry that was perceived at the time to undermine the regime and hitherto the government had no specific strategy to intimidate the private sector into compliance with bad policy formulation strategies. The belief then and now was that the financial sector should be a tool for the ruling party and any participant un-affiliated with the ruling party has to be closed down or cowed into submission.
There is need to understand ENG Capital?s ability to mobilize Zimbabwe dollars. At its peak ENG was peerless and unrivalled in the Zimbabwean financial market in its ability to raise and access Zimbabwe dollars.
The ENG Capital Group treasury was made up of the following individual units Century Bank, Century Asset Management, Century Discount House, Leasing Company of Zimbabwe, ENG Asset Management and Hybri Micro-Finance Institution. ENG Capital group had a market capitalization of US$ 175 million, just before the RBZ descended on the Institution. This made ENG one of the single biggest combined treasury units in the Zimbabwe Financial market.
Below is a brief ENG Group Structure
ENG HOLDINGS GROUP STRUCTURE
- SUBSIDIARIES
- ENG CAPITAL INVESTMENTS PVT LTD
- ENG ASSET MANAGEMENT PVT LTD
- ENG REAL ESTATE
- ENG NOMINEES PVT LTD
- ENG PRIVATE EQUITY (PVT) LTD
- ENG CAPITAL ADVISORY SERVICES
- ENG STRUCTURED FINANCE
ADDITIONAL MAJOR ASSETS OWNED
- Century Bank Holdings (now CFX bank)
- Leasing Company of Zimbabwe, Century Asset Managers)
- Century Discount House
- Hybri Micro-Finance Institution
- Care Insurance PVT LTD
- RestCel Insurance PVT LTD
- Amalgamated Health Services ? (Harare West Hospital )
- 15% of OK Zimbabwe Limited
- 15% of Zimplow Holdings Limited
- 20% Medtech Holdings Limited
- Hornet Re-Insurance PVT LTD
- Pearl Pension Fund Management
- 25 % Clan Holdings Limited
- 15 % Zimpapers
- Allied Conveyor Belts PVT LTD
- Real Estate including (Anastasia Court, Belgravia House, Thaine Building)
- Various Listed ZSE Listed shares
- Treasury Bills
- GMB Bills
- Cargill Commercial Paper
- $ 4 billion - Alliance Capital Debenture (representing 123 million First Mutual Life shares)
- 23 Million First Mutual Life shares
The installation of RTGS immediately allowed the Authorities to trace which Institutions were the biggest movers of money and the money market. The authorities were alarmed to learn that ENG (an unknown firm to them) and which didn?t have a political ?Godfather? was allowed to control such resources. A further study was made to trace the political inclination of the shareholders and directors. ENG was not well represented in the political ladders. The belief was that any independent financial resources could be used and was being used to clandestinely support the opposition or politicians deemed undesirable. In addition business owners were supposed to show gratitude by donating and financing the political set up. Any meaningful business group was supposed to be well known and its owners be vetted by the authorities? political process. Any business which didn?t fit that bill had to be either closed, nationalized or shareholding restructured. (By any means necessary).
Through extra-judicial and judicial measures pressure was brought to bear on selected individuals and institutions by the state machinery with the sole objective of punishing the designated persons. The allegations were that ENG Asset Management (PVT) LTD and not the directors had failed to pay Z$61 billion allegedly owed to investors.
Clearly if such amount was due and payable to creditors or investors, there were other legal remedies available to such investors but in the interests of political expediency, the state arrogated to itself the role of custodian investor with no legal foundation and proceeded to attempt to assert purported rights of private sector investors. The ENG matter was extensively covered in the media and careers were destroyed as thriving institutions controlled and managed by indigenous business people were systematically targeted. The same media has failed to follow up and highlight that in fact ENG has managed to repay creditors and investors despite assets being looted .
Banks and Asset management companies because of huge profits were generally reported to be the source of the problems in the financial services industry and causing economic meltdown facing the nation.
Against this background, there was a need to identify and punish the alleged culprits and ENG provided a convenient scapegoat, visible and the high profile victim needed to capture the imagination of the general public that Zimbabwe had a new no-nonsense boss in RBZ Governor Dr Gono. Dr Gono blamed Financial Institutions for fueling inflation and currency depreciation Dr.Gono closed down or nationalized the following institutions ; Trust Bank, Royal Bank, Barbican Bank, Rapid Financial Holdings, Sagit, ENG Capital,Intermarket and many others.
Dr Gono promised the nation that economic recovery was now certain and failure was not an option. Inflation was then at 200% and now its at least 13,4 billion %.Zimbabwe dollar was exchanging at Z$6000 = US$ 1,and now its Z$ 4,000,000,000,000 for each US$. Shops are empty.
Banks have no cash. Parliament has no running water .Harare has no water .No electricity. This is despite all the fanfare that came with the anti-graft crusade that all will be perfect and well if we get rid of profiteering Banks and Financial Institutions. This just proves scapegoat mentality does not solve national problems. What is required is a national vision that taps into all Zimbabweans? best talent and ability rather than some party or patronage based allocation of responsibilities not matched by ability to deliver .
In 2002, ENG Capital applied for a banking license. The application was quickly dismissed .Due to this failure, in April 2003 ENG acquired Century Discount house as a strategy to enter the Banking sector. A cash consideration was paid. ENG then applied to the Registrar of Banks for the approval of change of shareholding structure. The approval was denied .On further enquiring about the approval denial the Registrar?s officers mentioned that the approval will not be for the coming mainly because of ENG Directors age and unknown political background and views. They advised us to restructure our shareholding to accommodate politically acceptable individuals in addition to start being active in funding political activities that would maintain the status quo. This situation spelled a disaster for ENG as I was of the view that we should not be part of any arrangement that could compromise our reputation, image and market perceptions.
In the meantime the seller (Century Holdings) of Century Discount House was not in a position to refund ENG Capital of the purchase price paid. This forced ENG Capital to acquire a controlling stake in Century Holdings, which was listed on the Zimbabwe Sock Exchange. This at least limited the potential loss since the purchase of Century Discount House was now an inter-company transaction. Obviously the refusal to restructure the shareholding to accommodate those politically correct and the refusal to being active in funding political activity didn?t please those who felt it was their God given right to receive support from any and all companies operating in the country. This independence was viewed as being lack of gratitude.
On 31 December 2003 at the instigation of the RBZ (using military and security officers), ENG Capital was placed under voluntary liquidation to secure and repay investors and creditors. Although the creditors and investors, whose rights the government sought to assert without their consent, have now been fully repaid the media has not covered this aspect of the story .Covering the full repayment exposes the hypocrisy of the RBZ and the unwarranted and draconian actions that against private individuals in a manner that violates their constitutional rights. On July 31 2006 more than two and half years after the arrest my co-accused who remained in Zimbabwe was removed from remand and the clerk of court ordered to return his $ 150 million bail and $ 700 million surety.
The media including but not limited to the state media ran grossly inaccurate and biased attack articles on my character and reputation.
Articles without any back up of facts were printed deliberately understating ENG assets simultaneously magnifying liabilities . Many articles misrepresented ENG financial position and activities .Most newspapers refused to publish a rebuttals or give them equal exposure as their initial, false and malicious articles .
This is the kind of hostile environment that faces a normal business in the current Zimbabwe. How can foreign investors come if the local ones are routinely victimized as a matter of policy? Given the above facts and order of events it is small wonder that the country has been experiencing unprecedented levels of capital flight and brain drain.
Considering the wide media publicity the ENG Capital matter received one would think the same media would have followed up and highlighted the fact that ENG Capital managed to repay all creditors and investors. The lack of such reporting only serves to show how far Zimbabwe has to go in terms of creating level business playing field and fair media coverage of critical events affecting the nation .
Gilbert Muponda is a Zimbabwe born Entrepreneur; he can be reached at gilbert@gilbertmuponda.com
I had to respond .I will try to limit response to the immediate business case of the Group the politics of the matter will be subject of another writing .It should be noted ENG Capital Group was placed into liquidation at the request of the Directors as a way to secure the firm?s creditors and investors. ENG has fully repaid all claims against it. All the creditors and investors have been fully repaid .This can be confirmed with the Liquidators at CAMELSA .Based on independent valuations and estimates ENG had assets of Z$ 180 billion against liabilities of $ Z 85 billion. ENG was a solid business model and had a strong asset position and this point has been proven beyond any doubt given that All creditors have been fully repaid despite ENG assets being looted and deliberately undervalued.
The direct role of the RBZ led by Dr Gono was in creating a smoke screen and an atmosphere that paved the way for the elimination and externalization of all persons deemed to be undesirable by the government of Zimbabwe in the quest to silence all existing and potential pockets of resistance to bad policies which Gono was about to implement. Dr Gono was appointed with a specific political mandate to deal with the financial services industry that was perceived at the time to undermine the regime and hitherto the government had no specific strategy to intimidate the private sector into compliance with bad policy formulation strategies. The belief then and now was that the financial sector should be a tool for the ruling party and any participant un-affiliated with the ruling party has to be closed down or cowed into submission.
There is need to understand ENG Capital?s ability to mobilize Zimbabwe dollars. At its peak ENG was peerless and unrivalled in the Zimbabwean financial market in its ability to raise and access Zimbabwe dollars.
The ENG Capital Group treasury was made up of the following individual units Century Bank, Century Asset Management, Century Discount House, Leasing Company of Zimbabwe, ENG Asset Management and Hybri Micro-Finance Institution. ENG Capital group had a market capitalization of US$ 175 million, just before the RBZ descended on the Institution. This made ENG one of the single biggest combined treasury units in the Zimbabwe Financial market.
Below is a brief ENG Group Structure
ENG HOLDINGS GROUP STRUCTURE
- SUBSIDIARIES
- ENG CAPITAL INVESTMENTS PVT LTD
- ENG ASSET MANAGEMENT PVT LTD
- ENG REAL ESTATE
- ENG NOMINEES PVT LTD
- ENG PRIVATE EQUITY (PVT) LTD
- ENG CAPITAL ADVISORY SERVICES
- ENG STRUCTURED FINANCE
ADDITIONAL MAJOR ASSETS OWNED
- Century Bank Holdings (now CFX bank)
- Leasing Company of Zimbabwe, Century Asset Managers)
- Century Discount House
- Hybri Micro-Finance Institution
- Care Insurance PVT LTD
- RestCel Insurance PVT LTD
- Amalgamated Health Services ? (Harare West Hospital )
- 15% of OK Zimbabwe Limited
- 15% of Zimplow Holdings Limited
- 20% Medtech Holdings Limited
- Hornet Re-Insurance PVT LTD
- Pearl Pension Fund Management
- 25 % Clan Holdings Limited
- 15 % Zimpapers
- Allied Conveyor Belts PVT LTD
- Real Estate including (Anastasia Court, Belgravia House, Thaine Building)
- Various Listed ZSE Listed shares
- Treasury Bills
- GMB Bills
- Cargill Commercial Paper
- $ 4 billion - Alliance Capital Debenture (representing 123 million First Mutual Life shares)
- 23 Million First Mutual Life shares
The installation of RTGS immediately allowed the Authorities to trace which Institutions were the biggest movers of money and the money market. The authorities were alarmed to learn that ENG (an unknown firm to them) and which didn?t have a political ?Godfather? was allowed to control such resources. A further study was made to trace the political inclination of the shareholders and directors. ENG was not well represented in the political ladders. The belief was that any independent financial resources could be used and was being used to clandestinely support the opposition or politicians deemed undesirable. In addition business owners were supposed to show gratitude by donating and financing the political set up. Any meaningful business group was supposed to be well known and its owners be vetted by the authorities? political process. Any business which didn?t fit that bill had to be either closed, nationalized or shareholding restructured. (By any means necessary).
Through extra-judicial and judicial measures pressure was brought to bear on selected individuals and institutions by the state machinery with the sole objective of punishing the designated persons. The allegations were that ENG Asset Management (PVT) LTD and not the directors had failed to pay Z$61 billion allegedly owed to investors.
Clearly if such amount was due and payable to creditors or investors, there were other legal remedies available to such investors but in the interests of political expediency, the state arrogated to itself the role of custodian investor with no legal foundation and proceeded to attempt to assert purported rights of private sector investors. The ENG matter was extensively covered in the media and careers were destroyed as thriving institutions controlled and managed by indigenous business people were systematically targeted. The same media has failed to follow up and highlight that in fact ENG has managed to repay creditors and investors despite assets being looted .
Banks and Asset management companies because of huge profits were generally reported to be the source of the problems in the financial services industry and causing economic meltdown facing the nation.
Against this background, there was a need to identify and punish the alleged culprits and ENG provided a convenient scapegoat, visible and the high profile victim needed to capture the imagination of the general public that Zimbabwe had a new no-nonsense boss in RBZ Governor Dr Gono. Dr Gono blamed Financial Institutions for fueling inflation and currency depreciation Dr.Gono closed down or nationalized the following institutions ; Trust Bank, Royal Bank, Barbican Bank, Rapid Financial Holdings, Sagit, ENG Capital,Intermarket and many others.
Dr Gono promised the nation that economic recovery was now certain and failure was not an option. Inflation was then at 200% and now its at least 13,4 billion %.Zimbabwe dollar was exchanging at Z$6000 = US$ 1,and now its Z$ 4,000,000,000,000 for each US$. Shops are empty.
Banks have no cash. Parliament has no running water .Harare has no water .No electricity. This is despite all the fanfare that came with the anti-graft crusade that all will be perfect and well if we get rid of profiteering Banks and Financial Institutions. This just proves scapegoat mentality does not solve national problems. What is required is a national vision that taps into all Zimbabweans? best talent and ability rather than some party or patronage based allocation of responsibilities not matched by ability to deliver .
In 2002, ENG Capital applied for a banking license. The application was quickly dismissed .Due to this failure, in April 2003 ENG acquired Century Discount house as a strategy to enter the Banking sector. A cash consideration was paid. ENG then applied to the Registrar of Banks for the approval of change of shareholding structure. The approval was denied .On further enquiring about the approval denial the Registrar?s officers mentioned that the approval will not be for the coming mainly because of ENG Directors age and unknown political background and views. They advised us to restructure our shareholding to accommodate politically acceptable individuals in addition to start being active in funding political activities that would maintain the status quo. This situation spelled a disaster for ENG as I was of the view that we should not be part of any arrangement that could compromise our reputation, image and market perceptions.
In the meantime the seller (Century Holdings) of Century Discount House was not in a position to refund ENG Capital of the purchase price paid. This forced ENG Capital to acquire a controlling stake in Century Holdings, which was listed on the Zimbabwe Sock Exchange. This at least limited the potential loss since the purchase of Century Discount House was now an inter-company transaction. Obviously the refusal to restructure the shareholding to accommodate those politically correct and the refusal to being active in funding political activity didn?t please those who felt it was their God given right to receive support from any and all companies operating in the country. This independence was viewed as being lack of gratitude.
On 31 December 2003 at the instigation of the RBZ (using military and security officers), ENG Capital was placed under voluntary liquidation to secure and repay investors and creditors. Although the creditors and investors, whose rights the government sought to assert without their consent, have now been fully repaid the media has not covered this aspect of the story .Covering the full repayment exposes the hypocrisy of the RBZ and the unwarranted and draconian actions that against private individuals in a manner that violates their constitutional rights. On July 31 2006 more than two and half years after the arrest my co-accused who remained in Zimbabwe was removed from remand and the clerk of court ordered to return his $ 150 million bail and $ 700 million surety.
The media including but not limited to the state media ran grossly inaccurate and biased attack articles on my character and reputation.
Articles without any back up of facts were printed deliberately understating ENG assets simultaneously magnifying liabilities . Many articles misrepresented ENG financial position and activities .Most newspapers refused to publish a rebuttals or give them equal exposure as their initial, false and malicious articles .
This is the kind of hostile environment that faces a normal business in the current Zimbabwe. How can foreign investors come if the local ones are routinely victimized as a matter of policy? Given the above facts and order of events it is small wonder that the country has been experiencing unprecedented levels of capital flight and brain drain.
Considering the wide media publicity the ENG Capital matter received one would think the same media would have followed up and highlighted the fact that ENG Capital managed to repay all creditors and investors. The lack of such reporting only serves to show how far Zimbabwe has to go in terms of creating level business playing field and fair media coverage of critical events affecting the nation .
Gilbert Muponda is a Zimbabwe born Entrepreneur; he can be reached at gilbert@gilbertmuponda.com
Monday, December 8, 2008
Trust Bank, Gono and Financial crisis
There has been a general simplistic view that Banks have been fuelling inflation and as such deserve to be closed or punished. One such case was that of Trust Bank which was said to have bought all bricks and cars in the country .As part of the 2003-4 Financial crisis series I will clarify some of the grey areas about the “buying all bricks” myth. Trust Bank was on the most wanted list after their reported meddling in political activities. Specifically Trust was accused of having donated more funds to the opposition and a smaller amount to ZANU .Rumors, research, investigation and intelligence all indicated that Trust donated $ 10 million to Zanu towards the ZANU congress in Masvingo in October/November 2003.Mugabe reportedly hit the roof when he learnt that whilst Trust had given ZANU $10 million they had in the same period given MDC $13 million.
Trust Holdings and all firms linked to them became enemies of ZANU which somehow believes ZANU equals the state. Every transaction attracted serious state attention as it was viewed suspiciously. It must be noted that it is the responsibility of the bank lend its customers money and have collateral of its choice for as long as it an asset of value. It does not have to be land and buildings only. The security can include moving and immovable assets under what in banking terms is generally referred to as an NGCB (Notarial General Covering Bond).This is results with the Bank having a lien over the borrowers assets which may include bricks, cars and other stocks.
Trust and motor vehicle maker Willowvale Mazda industries structured a deal wherein they would finance the importation of the car kits for Mazda motor to assemble cars and then use the assembled cars as collateral, such that in the event that if Mazda fails to pay back the loan it will take the cars. And also if a car is sold Mazda will pay back part of the loan and will only retain the profit realized. This is at times referred to as self-liquidating facility in that the facility will be paid directly from the financed asset/activity .This is not illegal and it’s a normal banking practice.
When the government and various individuals acting in the name of the state went to Mazda trying to collect the cars and then pay later, and it was not possible for them to do so because during that time inflation was increasing on daily basis, So government wanted to take all the cars and pay when the money could not buy a tyre. Because of the way the deal was done it was not feasible, when the government and certain individuals realized that it was trust bank behind this it further enhanced Trust’s reputation as anti-government and an enemy of the state.
Government officials have been fond of using state assets as their personal piggy pigs. Those with a long memory will recall the Willow gate Scandal exposed by leading journalist Geoff Nyarota involving the same Willowvale Mazda Industry .Before Trust came up with this product and service if a client needed a car and went to Willowvale Mazda industry you had to pay for your car in full, in advance and it will be delivered to you in six months .What it means is that they will use your money to buy the kits wait for them and then assemble your car ,the deal was done by trust bank. Imagine how many jobs were saved. Obviously Trust Bank made profits from this transaction and that’s what banks are supposed to do.
The same picture was repeated at Will dale Bricks. These companies were facing viability problems and could not finance their stocks due to rampant hyper inflation and it required innovative and risk taking banks to put their capital on the line. So if a bank took a risk to finance brick stocks and inventory it would be normal for them to impose some conditions that made it possible to refinance new stocks. It doesn’t make much business or economic sense to sell stocks at prices that would be inadequate to re-finance new stocks. Any such model will lead to shortages and results in empty shelves. The real problem is there are certain Government linked individuals who would have just wanted to get bricks on credit and cars on credit then delay payments and only repay when this money can’t replace the stocks.
Zimbabwe has always needed outside Forex for it balance of payment support. This came from various sources including donors, aid, and direct foreign investment, supra-national organizations such as World Bank, IFC and exports. These started to dry up about 8 years ago .As Forex became more scarce the black market developed. The Banking industry responded with various products that included forward contracts, swaps and other Forex linked derivatives. This allowed industry to access the Forex at market determined rates.This is so because derivatives allow a premium or discount to factor in the scarcity, the volatility and the uncertainty. Using such instruments the banking system was able to efficiently allocate the scarce resource without letting the exchange rate get out of control. This way the market remained more formalized as banks acted as agents of the RBZ and the RBZ didn’t have to directly release trillions directly to its runners.
As a way to engineer Trust Bank fall Dr Gono and his RBZ team started to make unheard of goal post shifting maneuvers .Firstly the RBZ owed Trust Bank approximately $US 20 million. Trust had sourced this money from its exporting clients at parallel market rates .Dr Gono then unilaterally said the RBZ will repay the Trust Loan in Zimbabwe dollars at the official rate. Trust tried to resist this to no avail. Then a smokescreen was conveniently created that Trust was into buying bricks and cars and all sorts of other-non banking activities. This was merely a smokescreen to cover up the RBZ refusal pay back the loan in either US$ OR the ruling parrarel market rate.
Prior to December 2003 this was the norm. The market players would transact at the going market rates as determined by the forward, swap and other derivative market instruments. These instruments were critical in the price discovery process as they factored most of the known risk variables .This kept the market reasonably stable and allowed RBZ, government and industry to orderly access whatever Forex available. Then suddenly in December 2003 the biggest player in the market decided to unilaterally change pre-agreed rates in all forward, swap and other derivative contracts it had obligations.
This spelt a disaster for the Banking sector. This is so because even if an institution was not a direct participant in the forward or swap contracts if it had exposure to any player who had a contract that was unilaterally re-priced that spelt enough trouble to cause panic which would then trigger a bank run when coupled with other factors. The unilateral re-pricing of contracts ( i.e. changing exchange rates pre-agreed) was and is ruinous to who ever is holding the contract .In short this meant certain institutions were unable to pay for their obligations as their expected cash flow from forward, swap and other derivative contracts were dramatically reduced by the key participant in the Forex market.
It is clear banks have been left with no option but to improvise to remain afloat. They deserve credit for that. They can’t make loans out as the clients have a greater risk of default due to hostile environment. In addition the central bank has Forex runners who by-pass the banks. They can’t trade in Forex as this has all been centralized and generally monopolized to such an extent it’s now a preserve of the central bank. This indicates the need to look beyond individual banks but rather the whole operating environment, regulations and various policy shifts which happen so constantly such that its almost impossible to assess their benefits.
The central bank is now competing with the banks and as such banks have been crowded out of the traditional areas such as provision of market determined loans and Forex transactions. Instead of being the lender of last resort the RBZ has become the lender of first choice. This is partially responsible for eroding the confidence in the banking system and undermining the sector. Obviously there are always scapegoats to heap all blame on and divert public anger and attention .The banking sector has readily provided scapegoats for the last 5 years .It is for this reason that public and parliamentary hearings may help to clarify the nature of the problems facing the country.
Gilbert Muponda is a Canada based entrepreneur. He can be contacted gilbert@gilbertmuponda.com .
Trust Holdings and all firms linked to them became enemies of ZANU which somehow believes ZANU equals the state. Every transaction attracted serious state attention as it was viewed suspiciously. It must be noted that it is the responsibility of the bank lend its customers money and have collateral of its choice for as long as it an asset of value. It does not have to be land and buildings only. The security can include moving and immovable assets under what in banking terms is generally referred to as an NGCB (Notarial General Covering Bond).This is results with the Bank having a lien over the borrowers assets which may include bricks, cars and other stocks.
Trust and motor vehicle maker Willowvale Mazda industries structured a deal wherein they would finance the importation of the car kits for Mazda motor to assemble cars and then use the assembled cars as collateral, such that in the event that if Mazda fails to pay back the loan it will take the cars. And also if a car is sold Mazda will pay back part of the loan and will only retain the profit realized. This is at times referred to as self-liquidating facility in that the facility will be paid directly from the financed asset/activity .This is not illegal and it’s a normal banking practice.
When the government and various individuals acting in the name of the state went to Mazda trying to collect the cars and then pay later, and it was not possible for them to do so because during that time inflation was increasing on daily basis, So government wanted to take all the cars and pay when the money could not buy a tyre. Because of the way the deal was done it was not feasible, when the government and certain individuals realized that it was trust bank behind this it further enhanced Trust’s reputation as anti-government and an enemy of the state.
Government officials have been fond of using state assets as their personal piggy pigs. Those with a long memory will recall the Willow gate Scandal exposed by leading journalist Geoff Nyarota involving the same Willowvale Mazda Industry .Before Trust came up with this product and service if a client needed a car and went to Willowvale Mazda industry you had to pay for your car in full, in advance and it will be delivered to you in six months .What it means is that they will use your money to buy the kits wait for them and then assemble your car ,the deal was done by trust bank. Imagine how many jobs were saved. Obviously Trust Bank made profits from this transaction and that’s what banks are supposed to do.
The same picture was repeated at Will dale Bricks. These companies were facing viability problems and could not finance their stocks due to rampant hyper inflation and it required innovative and risk taking banks to put their capital on the line. So if a bank took a risk to finance brick stocks and inventory it would be normal for them to impose some conditions that made it possible to refinance new stocks. It doesn’t make much business or economic sense to sell stocks at prices that would be inadequate to re-finance new stocks. Any such model will lead to shortages and results in empty shelves. The real problem is there are certain Government linked individuals who would have just wanted to get bricks on credit and cars on credit then delay payments and only repay when this money can’t replace the stocks.
Zimbabwe has always needed outside Forex for it balance of payment support. This came from various sources including donors, aid, and direct foreign investment, supra-national organizations such as World Bank, IFC and exports. These started to dry up about 8 years ago .As Forex became more scarce the black market developed. The Banking industry responded with various products that included forward contracts, swaps and other Forex linked derivatives. This allowed industry to access the Forex at market determined rates.This is so because derivatives allow a premium or discount to factor in the scarcity, the volatility and the uncertainty. Using such instruments the banking system was able to efficiently allocate the scarce resource without letting the exchange rate get out of control. This way the market remained more formalized as banks acted as agents of the RBZ and the RBZ didn’t have to directly release trillions directly to its runners.
As a way to engineer Trust Bank fall Dr Gono and his RBZ team started to make unheard of goal post shifting maneuvers .Firstly the RBZ owed Trust Bank approximately $US 20 million. Trust had sourced this money from its exporting clients at parallel market rates .Dr Gono then unilaterally said the RBZ will repay the Trust Loan in Zimbabwe dollars at the official rate. Trust tried to resist this to no avail. Then a smokescreen was conveniently created that Trust was into buying bricks and cars and all sorts of other-non banking activities. This was merely a smokescreen to cover up the RBZ refusal pay back the loan in either US$ OR the ruling parrarel market rate.
Prior to December 2003 this was the norm. The market players would transact at the going market rates as determined by the forward, swap and other derivative market instruments. These instruments were critical in the price discovery process as they factored most of the known risk variables .This kept the market reasonably stable and allowed RBZ, government and industry to orderly access whatever Forex available. Then suddenly in December 2003 the biggest player in the market decided to unilaterally change pre-agreed rates in all forward, swap and other derivative contracts it had obligations.
This spelt a disaster for the Banking sector. This is so because even if an institution was not a direct participant in the forward or swap contracts if it had exposure to any player who had a contract that was unilaterally re-priced that spelt enough trouble to cause panic which would then trigger a bank run when coupled with other factors. The unilateral re-pricing of contracts ( i.e. changing exchange rates pre-agreed) was and is ruinous to who ever is holding the contract .In short this meant certain institutions were unable to pay for their obligations as their expected cash flow from forward, swap and other derivative contracts were dramatically reduced by the key participant in the Forex market.
It is clear banks have been left with no option but to improvise to remain afloat. They deserve credit for that. They can’t make loans out as the clients have a greater risk of default due to hostile environment. In addition the central bank has Forex runners who by-pass the banks. They can’t trade in Forex as this has all been centralized and generally monopolized to such an extent it’s now a preserve of the central bank. This indicates the need to look beyond individual banks but rather the whole operating environment, regulations and various policy shifts which happen so constantly such that its almost impossible to assess their benefits.
The central bank is now competing with the banks and as such banks have been crowded out of the traditional areas such as provision of market determined loans and Forex transactions. Instead of being the lender of last resort the RBZ has become the lender of first choice. This is partially responsible for eroding the confidence in the banking system and undermining the sector. Obviously there are always scapegoats to heap all blame on and divert public anger and attention .The banking sector has readily provided scapegoats for the last 5 years .It is for this reason that public and parliamentary hearings may help to clarify the nature of the problems facing the country.
Gilbert Muponda is a Canada based entrepreneur. He can be contacted gilbert@gilbertmuponda.com .
Saturday, December 6, 2008
Zimbabwe financial crisis require public hearings
By Gilbert Muponda
The first article that I wrote suggesting the need of a public or parliamentary hearings on Zimbabwe‘s regular financial crisis seem to have been misunderstood by many. My belief is by sharing my experience with a wider audience more Zimbabweans will become aware what is happening and will contribute in whatever way they can. This article seeks to clarify the relationship between Gono, ENG and CFX Bank. The way Gono looted ENG assets can not go undocumented. My view is that Zimbabwe’s current problems can’t be left to politicians alone. I am not a politician and I don’t wish to be one. I have chosen the business arena as my theatre of operation .
The ENG Capital (PVT) LTD (ENG) brand is dead and gone in Zimbabwe .ENG (Zimbabwe) has been liquidated and fully paid all claims against it. I have no further financial or other interest in the matter. This article is being published as a matter of public record for the fair tracking of what made up ENG (Zimbabwe) and the controversy surrounding the company and its assets. The hope is to ensure the assets are fully accounted for and those keen on case studies have all relevant facts before making conclusions. The ENG case makes a perfect case study for me as I have accurate information of what transpired and the hope is it will encourage other executives to share their experiences which will aid the development of a more conducive business environment in Zimbabwe.
ENG was the controlling shareholder of Century Holdings Limited a bank holding company listed on the Zimbabwe Stock Exchange. Our responsibility was to fully account for the assets owned by ENG .A very sensational and dramatic view painted was that ENG directors only bought cars and had no "assets" to represent investor funds. One of the biggest assets ENG had was a 52% stake in Century Holdings Limited which was bought for at least $ 35 billion. This was a material amount given the allegation that $61 billion was "missing".Obviously ENG had assets worth way more than the alleged missing funds .According to Directors valuation ENG assets were worth $ 240 billion ( independent valuation $ 185 billion) against claims of $ 80 billion. This explains why ENG has in fact managed to pay off all creditors and investors despite its assets being deliberately under valued and being looted.
At the centre of the ENG assets in dispute is a parcel of 309 million Century Holdings Shares sold to Network Investments and Kwangwari Enterprises which are investment vehicles in which Dr Gono reportedly has interests. The 309 Century Holdings Limited Million shares in dispute were sold on or around 13 May 2004.And within the same week an announcement was then made that CFX Bank is taking over Century Holdings. The shares were sold to Dr Gono’s reported consortium for Z$ 2,9 billion when ENG had spent $ 35 billion to accumulate the shares, thereby prejudicing ENG, Creditors, Investors and contributories of at least Z$ 32,1 billion.
As ENG contributory and shareholder I wrote to the ZSE asking for an investigation because we had agreed with the majority of creditors that the shares should not be sold but rather be swapped with creditors and investors instead of selling them at an unreasonable price. But the 309 million shares were somehow clandestinely sold and that transaction enabled CFX Bank to take over Century Holdings Limited .This allowed the reverse listing of CFX Bank on to the Zimbabwe Stock Exchange .Without those 309 Century Holdings Limited million shares owned by ENG the CFX/Century merger would have never happened. Dr Gono and his proxies became the new controlling shareholder of the new merged bank. Is this by design or accident? Is it not normal to request for hearings when allegations of such a serious nature are being leveled against the Central Bank Governor. Or should he not feel obligated to clear the air by having an independent hearing to verify the allegation?
ENG directors and contributories asked the high court to set aside the sale of the shares and the matter action is still before the courts in Harare.
We asked the ZSE to investigate. They refused. We asked the brokers for the identity of the buyer of our shares. They refused .The brokers indicated they were under serious pressure from individuals they couldn’t identify to maintain total secrecy on the identity of the buyer. We also approached the company secretary and company transfer secretaries .They were all non-co-operative and expressed some fear if they disclosed the principals of the transaction .I would like to take this opportunity to ask your readers (who seem well informed) who was the buyer of those 309 million shares? And why was the deal done as special bargain and not a normal trade?
My intention is not to make allegations but to have ENG assets fully accounted for .As it appears we have the same interest with readers, creditors, investors, staff and business partners in ensuring transparency and accountability. I welcome the assistance of some of your readers who seem informed in confirming the true identity of the buyer of the 309 million shares.
Research and investigation has revealed Dr Gono worked with 3 cabinet ministers to form the Kwangwari Enterprises and Network Investments consortium that was used to take over ENG stake in Century Holdings which was then used in the merger with CFX Bank and the subsequent listing of CFX Bank on the Zimbabwe Stock Exchange. As an effort to launder the transaction a quick merger was consummated with CFX Bank as a way to cover the movements and track of those shares. The company name was quickly changed; rebranded and massive credit lines were immediately availed to the new entity.
The newly created CFX Bank fell into hard times immediately after the merger which was carried out before a proper due diligence since it was a quick transaction meant to launder and hide the ENG shares looted. It must be noted that other Banks such as Trust, Barbican and Royal Bank were taken over for similar circumstances but Dr Gono because of his newly acquired interest in Century /CFX Bank temporarily placed it under curator ship before injecting public funds to safe guard his interest.
Given the publicity of the ENG matter was it prudent for the central Bank Governor to “acquire” ENG related assets or subsidiaries? Would it be acceptable for a person in position of influence to buy an asset for $ 2.9 billion when there is clear evidence that the asset’s market value is much higher and it was purchased at a much higher price of $35 billion? Should the central bank Governor be allowed to invest in the financial sector where he is also in a position to influence policy thereby becoming referee and player?
The above shows the challenges that young entrepreneurs face in their efforts to realize their dreams. Whilst such risks are normal in many emerging markets Zimbabwe is now going into a league of its own. This trend has to be confronted if Zimbabwe is to attract any meaningful investment and stop brain drain. The call for public and parliamentary hearings is not a stunt but a necessity that can go a long way to allow the public to be well informed about how the enemies of the state are manufactured whilst those behind the actions loot assets in the similar manner that productive farms have been disrupted. In the next article I will clarify the latest stunt in which Gono purports to “fire” the CFX Bank management.
Gilbert Muponda is a Canada based entrepreneur. He can be contacted gilbert@gilbertmuponda.com .
The first article that I wrote suggesting the need of a public or parliamentary hearings on Zimbabwe‘s regular financial crisis seem to have been misunderstood by many. My belief is by sharing my experience with a wider audience more Zimbabweans will become aware what is happening and will contribute in whatever way they can. This article seeks to clarify the relationship between Gono, ENG and CFX Bank. The way Gono looted ENG assets can not go undocumented. My view is that Zimbabwe’s current problems can’t be left to politicians alone. I am not a politician and I don’t wish to be one. I have chosen the business arena as my theatre of operation .
The ENG Capital (PVT) LTD (ENG) brand is dead and gone in Zimbabwe .ENG (Zimbabwe) has been liquidated and fully paid all claims against it. I have no further financial or other interest in the matter. This article is being published as a matter of public record for the fair tracking of what made up ENG (Zimbabwe) and the controversy surrounding the company and its assets. The hope is to ensure the assets are fully accounted for and those keen on case studies have all relevant facts before making conclusions. The ENG case makes a perfect case study for me as I have accurate information of what transpired and the hope is it will encourage other executives to share their experiences which will aid the development of a more conducive business environment in Zimbabwe.
ENG was the controlling shareholder of Century Holdings Limited a bank holding company listed on the Zimbabwe Stock Exchange. Our responsibility was to fully account for the assets owned by ENG .A very sensational and dramatic view painted was that ENG directors only bought cars and had no "assets" to represent investor funds. One of the biggest assets ENG had was a 52% stake in Century Holdings Limited which was bought for at least $ 35 billion. This was a material amount given the allegation that $61 billion was "missing".Obviously ENG had assets worth way more than the alleged missing funds .According to Directors valuation ENG assets were worth $ 240 billion ( independent valuation $ 185 billion) against claims of $ 80 billion. This explains why ENG has in fact managed to pay off all creditors and investors despite its assets being deliberately under valued and being looted.
At the centre of the ENG assets in dispute is a parcel of 309 million Century Holdings Shares sold to Network Investments and Kwangwari Enterprises which are investment vehicles in which Dr Gono reportedly has interests. The 309 Century Holdings Limited Million shares in dispute were sold on or around 13 May 2004.And within the same week an announcement was then made that CFX Bank is taking over Century Holdings. The shares were sold to Dr Gono’s reported consortium for Z$ 2,9 billion when ENG had spent $ 35 billion to accumulate the shares, thereby prejudicing ENG, Creditors, Investors and contributories of at least Z$ 32,1 billion.
As ENG contributory and shareholder I wrote to the ZSE asking for an investigation because we had agreed with the majority of creditors that the shares should not be sold but rather be swapped with creditors and investors instead of selling them at an unreasonable price. But the 309 million shares were somehow clandestinely sold and that transaction enabled CFX Bank to take over Century Holdings Limited .This allowed the reverse listing of CFX Bank on to the Zimbabwe Stock Exchange .Without those 309 Century Holdings Limited million shares owned by ENG the CFX/Century merger would have never happened. Dr Gono and his proxies became the new controlling shareholder of the new merged bank. Is this by design or accident? Is it not normal to request for hearings when allegations of such a serious nature are being leveled against the Central Bank Governor. Or should he not feel obligated to clear the air by having an independent hearing to verify the allegation?
ENG directors and contributories asked the high court to set aside the sale of the shares and the matter action is still before the courts in Harare.
We asked the ZSE to investigate. They refused. We asked the brokers for the identity of the buyer of our shares. They refused .The brokers indicated they were under serious pressure from individuals they couldn’t identify to maintain total secrecy on the identity of the buyer. We also approached the company secretary and company transfer secretaries .They were all non-co-operative and expressed some fear if they disclosed the principals of the transaction .I would like to take this opportunity to ask your readers (who seem well informed) who was the buyer of those 309 million shares? And why was the deal done as special bargain and not a normal trade?
My intention is not to make allegations but to have ENG assets fully accounted for .As it appears we have the same interest with readers, creditors, investors, staff and business partners in ensuring transparency and accountability. I welcome the assistance of some of your readers who seem informed in confirming the true identity of the buyer of the 309 million shares.
Research and investigation has revealed Dr Gono worked with 3 cabinet ministers to form the Kwangwari Enterprises and Network Investments consortium that was used to take over ENG stake in Century Holdings which was then used in the merger with CFX Bank and the subsequent listing of CFX Bank on the Zimbabwe Stock Exchange. As an effort to launder the transaction a quick merger was consummated with CFX Bank as a way to cover the movements and track of those shares. The company name was quickly changed; rebranded and massive credit lines were immediately availed to the new entity.
The newly created CFX Bank fell into hard times immediately after the merger which was carried out before a proper due diligence since it was a quick transaction meant to launder and hide the ENG shares looted. It must be noted that other Banks such as Trust, Barbican and Royal Bank were taken over for similar circumstances but Dr Gono because of his newly acquired interest in Century /CFX Bank temporarily placed it under curator ship before injecting public funds to safe guard his interest.
Given the publicity of the ENG matter was it prudent for the central Bank Governor to “acquire” ENG related assets or subsidiaries? Would it be acceptable for a person in position of influence to buy an asset for $ 2.9 billion when there is clear evidence that the asset’s market value is much higher and it was purchased at a much higher price of $35 billion? Should the central bank Governor be allowed to invest in the financial sector where he is also in a position to influence policy thereby becoming referee and player?
The above shows the challenges that young entrepreneurs face in their efforts to realize their dreams. Whilst such risks are normal in many emerging markets Zimbabwe is now going into a league of its own. This trend has to be confronted if Zimbabwe is to attract any meaningful investment and stop brain drain. The call for public and parliamentary hearings is not a stunt but a necessity that can go a long way to allow the public to be well informed about how the enemies of the state are manufactured whilst those behind the actions loot assets in the similar manner that productive farms have been disrupted. In the next article I will clarify the latest stunt in which Gono purports to “fire” the CFX Bank management.
Gilbert Muponda is a Canada based entrepreneur. He can be contacted gilbert@gilbertmuponda.com .
Thursday, December 4, 2008
These frequent financial crisis need public hearings
In any other normal country after the financial crisis such as of 2003-4 it would have been normal to carry out public, congressional or parliamentary hearings to get to the bottoms of the crisis. This would help to understand the problem and devise ways and regulations to avoid such problems. One of the main effects of lack of such hearings has been the haphazard and at times systematic scapegoat and blame shifting .There has been a concerted effort to blame the financial crisis on ENG and individuals such as myself. The crisis did not start at ENG Capital (ENG) nor was it caused by ENG. The RBZ started the crisis by refusing to honor US$ denominated loan from Trust Bank .This spread instability in the market causing widespread panic and a flight of deposits. Five years down the line no hearing has taken place and another financial crisis is upon Zimbabwe.
Trust was on the most wanted list after their reported meddling in political activities. Specifically Trust was accused of having donated more funds to the opposition and a smaller amount to ZANU .Rumors, research, investigation and intelligence all confirmed that Trust donated $ 10 million to Zanu towards the ZANU congress in Masvingo in October/November 2003.Mugabe reportedly hit the roof when he learnt that whilst Trust had given ZANU $10 million they had in the same period given MDC $13 million.
Trust Holdings and all firms linked to them became enemies of the state. Every transaction attracted serious attention. This included the Demutualization of First Mutual Life (FML).Trust and FML devised a complex arrangement which allowed the FML management to take over FML, Trust becoming the major institutional shareholder in FML .Simultaneously Trust at the same time becomes the controlling shareholder of FML through some cross-shareholding- technical-partner agreement which was structured as part of the FML demutualization. Trust was viewed as an unacceptable suitor of FML due to the above. ENG had partially assisted the demutualization process by participating in the private placement and taking up the debenture bond .Rapid Financial Holdings was also part of the consortium. None of these four institutions ENG, Trust, Rapid and FML none survived in their original form. And part of the problem was Trust’s attempt to finance the Opposition whilst trying to placate the ruling part with a smaller donation.
It is also important to state that the government of Zimbabwe has never really come to grips with the empowerment challenges that the country confronts and the version of entrepreneurship that has been accepted by the political elites is the Gono type whose humble background and profile impresses many traditional politicians. During the Masvingo Conference of 2003 the President went to great lengths to thank “ traditional” business man like bus operators and shop owners who had financed and assisted in the liberation war. The new breed of entrepreneurs was not to be trusted he said. And all this was coming from the above background information whereby the ruling party felt particularly betrayed by indigenous entrepreneurs especially those in the Financial services whom it went on to target for various crimes
As a way to engineer Trust Bank fall Dr Gono and his RBZ team started to make unheard of goal post shifting maneuvers .Firstly the RBZ owed Trust Bank approximately $US 20 million. Trust had sourced this money from its exporting clients at parallel market rates .Dr Gono then unilaterally said the RBZ will repay the Trust Loan in Zimbabwe dollars at the official rate. Trust tried to resist this to no avail. Then a smokescreen was conveniently created that Trust was into buying bricks and cars and all sorts of other-non banking activities. This was merely a smokescreen to cover up the RBZ refusal pay back the loan in either US$ OR the ruling parrarel market rate.
Gono has his admirers and supporters who passionately believe in him and the direction that he has taken. It is important that a conversation be pursued on Gono’s role in advancing the interests of the country. We all may not agree and that is normal but to accept to sit on the sidelines will be irresponsible.
This created a hole in Trust Balance sheet since they couldn’t replace the Forex using the official rate. At the time Trust was the biggest bank by assets in Zimbabwe and almost every institution was exposed to them. This caused panic and chaos in the market with widespread fears that money banks would drown as Gono was now refusing to honor all foreign denominated loans granted by local banks.
In a typical fashion, anonymous high-level sources were quoted by the media saying that banks and asset management firms - some of which were allegedly used as conduits for money-laundering activities and speculative investments - were struggling to cope with new regulations ushered in by Gono's recent monetary policy statement. Some of the statements from these nameless and faceless sources were saying that most of the locally-owned banks were facing a serious liquidity crisis and bank managers were reported to be holding emergency meetings, including on Christmas day, to find ways of surviving in the new environment. I am certain the executives at Trust are fully aware why their Bank was squeezed ,scandalized and then nationalized.
It is unfortunate ENG and myself have been credited or discredited with causing the financial meltdown when its clear that the executives at Trust and in many other financial institutions had made a conscious decision to assist a political party they felt offered hope to their country. I hope I will live to see the day when Zimbabwe’s own Oprah Winfrey and Bruce Springstein in the form of Amai Chisamba and Tuku can freely endorse and support a political candidate/party of the choice the same way Oprah and Springstein openly campaigned for Barak Obama .At this stage it must be noted that some Zimbabweans seem to believe good things happen by accident, many have been going to town about the achievements of Barack Obama yet if a business person tries to lend a hand to a politician most will immediately tell you to keep in your domain - business. And you are told to leave politics to politicians, yet the nation building project is beyond capacity of any politician or any single political party.
One must point out that Gono was the CEO of the Commercial Bank of Zimbabwe (CBZ) and was not a significant shareholder of the institution and, therefore, as a person who rates himself highly he must not have been happy to know that people like Nyemba, Sachikonye and others, whose names were not in the President‘s favorite side, were shaking the market without any fully being supportive of the then ruling party. It was natural that Gono had to stop the leveraging that was taking place in the asset ownership business of Zimbabwe whereby indigenous people who would otherwise have no access to acquisition capital now had a new vehicle to access capital for the kind of transformation that has eluded the post colonial government of President Mugabe notwithstanding the empty rhetoric on empowerment and indigenization issues. Gono would publicly claim that CBZ does not make “unpatriotic” profits by trading on the parallel market yet he is a leading player on that market.
President Mugabe was on record at the Masvingo Congress of 2003 castigating the new breed of entrepreneurs who to a large extent had banking experience. Accordingly, when Gono was appointed his first target had to be the banking and asset management industry. ENG was the most aggressive at the time with principals who were fairly young and independent. According to the ZANU-PF way of thinking, companies like ENG, Trust, and FML should have been nipped in the bud because their way of doing things, their age, their capacity to mobilize capital defied what is generally accepted as the liberation way of doing things.
The most improbable things are now expected and predictable in Zimbabwe. History will not judge our generation correctly if we refuse to fully appreciate the depth of the Zimbabwean crisis and the role that people like Gono are playing in making the country sink deeper into hopelessness. It therefore imperative that a conversation takes places about this. No matter how that conversation maybe so uncomfortable for the participants. When people sit and try to do case study of the 2003-4 financial crisis its true roots must be identified and not glossed over to please certain people who control the media.
As Zimbabwe seeks to develop a conducive business environment a cultural shift is necessary .There is a general retrogressive line of thinking that continues to emerge. In fact, the thinking is that if President Mugabe does not know of something then it must be wrong. Equally, if Gono has not benefit from it, seen it and experienced it then it must be criminal. It is common-cause that the President does not trust the market and also people who work in the private sector. He genuinely believes that if a person is smart then he should be under his control after all he can boast that even the likes of Jonathan Moyo, Simba Makoni, and others have been his protégés and there are many more that would die to be considered as cabinet ministers. The President is old fashioned to the extent that he easily takes pride in having a team that lies to him day-in day-out about what is going on despite clear evidence that this trend is ruining the nation.
For too long Zimbabweans have been trusting the wrong messengers of hope when change will only come if the truth is told without fear or prejudice. I doubt that the USA would force into exile Bill Gates and Warren Buffet go to live in Mexico or Canada the same way Zimbabwe has forced Strive Masiyiwa and Mutumwa Mawere to be exiled in South Africa? Should the government of Zimbabwe not be at forefront to ask these entrepreneurs to come back and help develop the country and halt the economic meltdown?
Gilbert Muponda is a Zimbabwe born Entrepreneur; he can be reached at gilbert@gilbertmuponda.com
Trust was on the most wanted list after their reported meddling in political activities. Specifically Trust was accused of having donated more funds to the opposition and a smaller amount to ZANU .Rumors, research, investigation and intelligence all confirmed that Trust donated $ 10 million to Zanu towards the ZANU congress in Masvingo in October/November 2003.Mugabe reportedly hit the roof when he learnt that whilst Trust had given ZANU $10 million they had in the same period given MDC $13 million.
Trust Holdings and all firms linked to them became enemies of the state. Every transaction attracted serious attention. This included the Demutualization of First Mutual Life (FML).Trust and FML devised a complex arrangement which allowed the FML management to take over FML, Trust becoming the major institutional shareholder in FML .Simultaneously Trust at the same time becomes the controlling shareholder of FML through some cross-shareholding- technical-partner agreement which was structured as part of the FML demutualization. Trust was viewed as an unacceptable suitor of FML due to the above. ENG had partially assisted the demutualization process by participating in the private placement and taking up the debenture bond .Rapid Financial Holdings was also part of the consortium. None of these four institutions ENG, Trust, Rapid and FML none survived in their original form. And part of the problem was Trust’s attempt to finance the Opposition whilst trying to placate the ruling part with a smaller donation.
It is also important to state that the government of Zimbabwe has never really come to grips with the empowerment challenges that the country confronts and the version of entrepreneurship that has been accepted by the political elites is the Gono type whose humble background and profile impresses many traditional politicians. During the Masvingo Conference of 2003 the President went to great lengths to thank “ traditional” business man like bus operators and shop owners who had financed and assisted in the liberation war. The new breed of entrepreneurs was not to be trusted he said. And all this was coming from the above background information whereby the ruling party felt particularly betrayed by indigenous entrepreneurs especially those in the Financial services whom it went on to target for various crimes
As a way to engineer Trust Bank fall Dr Gono and his RBZ team started to make unheard of goal post shifting maneuvers .Firstly the RBZ owed Trust Bank approximately $US 20 million. Trust had sourced this money from its exporting clients at parallel market rates .Dr Gono then unilaterally said the RBZ will repay the Trust Loan in Zimbabwe dollars at the official rate. Trust tried to resist this to no avail. Then a smokescreen was conveniently created that Trust was into buying bricks and cars and all sorts of other-non banking activities. This was merely a smokescreen to cover up the RBZ refusal pay back the loan in either US$ OR the ruling parrarel market rate.
Gono has his admirers and supporters who passionately believe in him and the direction that he has taken. It is important that a conversation be pursued on Gono’s role in advancing the interests of the country. We all may not agree and that is normal but to accept to sit on the sidelines will be irresponsible.
This created a hole in Trust Balance sheet since they couldn’t replace the Forex using the official rate. At the time Trust was the biggest bank by assets in Zimbabwe and almost every institution was exposed to them. This caused panic and chaos in the market with widespread fears that money banks would drown as Gono was now refusing to honor all foreign denominated loans granted by local banks.
In a typical fashion, anonymous high-level sources were quoted by the media saying that banks and asset management firms - some of which were allegedly used as conduits for money-laundering activities and speculative investments - were struggling to cope with new regulations ushered in by Gono's recent monetary policy statement. Some of the statements from these nameless and faceless sources were saying that most of the locally-owned banks were facing a serious liquidity crisis and bank managers were reported to be holding emergency meetings, including on Christmas day, to find ways of surviving in the new environment. I am certain the executives at Trust are fully aware why their Bank was squeezed ,scandalized and then nationalized.
It is unfortunate ENG and myself have been credited or discredited with causing the financial meltdown when its clear that the executives at Trust and in many other financial institutions had made a conscious decision to assist a political party they felt offered hope to their country. I hope I will live to see the day when Zimbabwe’s own Oprah Winfrey and Bruce Springstein in the form of Amai Chisamba and Tuku can freely endorse and support a political candidate/party of the choice the same way Oprah and Springstein openly campaigned for Barak Obama .At this stage it must be noted that some Zimbabweans seem to believe good things happen by accident, many have been going to town about the achievements of Barack Obama yet if a business person tries to lend a hand to a politician most will immediately tell you to keep in your domain - business. And you are told to leave politics to politicians, yet the nation building project is beyond capacity of any politician or any single political party.
One must point out that Gono was the CEO of the Commercial Bank of Zimbabwe (CBZ) and was not a significant shareholder of the institution and, therefore, as a person who rates himself highly he must not have been happy to know that people like Nyemba, Sachikonye and others, whose names were not in the President‘s favorite side, were shaking the market without any fully being supportive of the then ruling party. It was natural that Gono had to stop the leveraging that was taking place in the asset ownership business of Zimbabwe whereby indigenous people who would otherwise have no access to acquisition capital now had a new vehicle to access capital for the kind of transformation that has eluded the post colonial government of President Mugabe notwithstanding the empty rhetoric on empowerment and indigenization issues. Gono would publicly claim that CBZ does not make “unpatriotic” profits by trading on the parallel market yet he is a leading player on that market.
President Mugabe was on record at the Masvingo Congress of 2003 castigating the new breed of entrepreneurs who to a large extent had banking experience. Accordingly, when Gono was appointed his first target had to be the banking and asset management industry. ENG was the most aggressive at the time with principals who were fairly young and independent. According to the ZANU-PF way of thinking, companies like ENG, Trust, and FML should have been nipped in the bud because their way of doing things, their age, their capacity to mobilize capital defied what is generally accepted as the liberation way of doing things.
The most improbable things are now expected and predictable in Zimbabwe. History will not judge our generation correctly if we refuse to fully appreciate the depth of the Zimbabwean crisis and the role that people like Gono are playing in making the country sink deeper into hopelessness. It therefore imperative that a conversation takes places about this. No matter how that conversation maybe so uncomfortable for the participants. When people sit and try to do case study of the 2003-4 financial crisis its true roots must be identified and not glossed over to please certain people who control the media.
As Zimbabwe seeks to develop a conducive business environment a cultural shift is necessary .There is a general retrogressive line of thinking that continues to emerge. In fact, the thinking is that if President Mugabe does not know of something then it must be wrong. Equally, if Gono has not benefit from it, seen it and experienced it then it must be criminal. It is common-cause that the President does not trust the market and also people who work in the private sector. He genuinely believes that if a person is smart then he should be under his control after all he can boast that even the likes of Jonathan Moyo, Simba Makoni, and others have been his protégés and there are many more that would die to be considered as cabinet ministers. The President is old fashioned to the extent that he easily takes pride in having a team that lies to him day-in day-out about what is going on despite clear evidence that this trend is ruining the nation.
For too long Zimbabweans have been trusting the wrong messengers of hope when change will only come if the truth is told without fear or prejudice. I doubt that the USA would force into exile Bill Gates and Warren Buffet go to live in Mexico or Canada the same way Zimbabwe has forced Strive Masiyiwa and Mutumwa Mawere to be exiled in South Africa? Should the government of Zimbabwe not be at forefront to ask these entrepreneurs to come back and help develop the country and halt the economic meltdown?
Gilbert Muponda is a Zimbabwe born Entrepreneur; he can be reached at gilbert@gilbertmuponda.com
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