The Sunday Mail
:Alleged plot to oust CEO Moxon : Pseudo-indigenisation plan in offing
Darlington Musarurwa Business Editor —
DARK clouds are hanging over the Meikles Group after details emerged of an alleged plot to oust Mr John Moxon from the business and replace him with a former Lornho executive by engineering a dispute between Government and the businessman over the US$35 million debt originally owed by the Reserve Bank of Zimbabwe.
It is understood that the plan, which is already underway, is expected to culminate in purported local control of a business whose investments straddle retail, agriculture, financial services, hospitality, mining and private security.
Insiders say the bid to oust Mr Moxon is premised on creating a wedge between Government and the business over the debt issue. Those opposed to Mr Moxon’s continued tenure will use the stand-off to push the executive chairman out and pave way for appointment of former Lonhro executive Mr Benjamin Ward to take over.
The Finance and Economic Development Ministry last month wrote to Meikles saying the latter should repay US$29 million to Government as it had been overpaid for the 1998 debt.
In 1998 Meikles was instructed to place a special deposit of US$42,6 million with the RBZ, earning an interest rate of 4,68 percent. Between 1999 and 2001, the company withdrew more than US$21,8 million, leaving a balance of US$35 million, which the RBZ converted to its own use.
As Meikles sought to recover the money, there were differences between the RBZ and company in validating the debt. While the business claimed Government owed it US$90 million — which includes interest on the principal debt and lost opportunity costs — subsequent negotiations seem to have settled on a figure of US$78,6 million.
To liquidate the debt, Government issued a Treasury Bond on June 10, 2015, followed by further issuances on December 23 and December 31, 2015.
But the recent validation of the debt by the Public Debt Management Office, which falls under the Finance Ministry, indicate that Government could have overpaid on the debt by US$29 million.
In a letter dated October 19, 2016, Finance Minister Patrick Chinamasa said to Meikles that the interest rate of eight percent been used by the RBZ to calculate the debt was no longer applicable since the RBZ Debt Assumption Act stipulated an interest rate of five percent for all creditors.
“According to the RBZ letter dated June 13, 2013, and taking into account opportunity cost considerations, the interest rate was doubled to eight percent per annum backdated to February 2009.
“However, with the promulgation of the RBZ Debt Assumption Act on 7th August 2015, Section 3(d) stipulates that an interest rate of five percent is applied to all creditors under the Act. Based on this computation, the outstanding amount stood at US$49 645 665,02 by May 31, 2014. A Treasury Bond was issued to Meikles on June 10, 2015 thereby liquidating all documented debts owed to Meikles.
“However, subsequent issuances were made on December 23, 2014 and 31 December, 2015, bringing the total amount of TBs issued to US$78 631 134,97. This implies an over-issuance of US$28 985 469,95 . . .
“I encourage you to engage our Public Debt Management Office to discuss modalities to pay back to Treasury the amount by which Meikles has been overpaid, namely US$28 985 469,95,” reads part of the letter.
Therein lies Mr Moxon’s problem.
Sources privy to the details say a downward review of the debt could have a negative and material impact on the company’s balance sheet. In a statement on July 12 this year, Meikles announced that its financial results for the year ended March 31, 2016 would be delayed as it waited for official documents to support the agreement between Government and the company on the debt.
When the results were subsequently announced, Meikles reported that its loss had narrowed to US$19,3 million from US$34,5 million in the same period a year earlier.
The credibility of the group’s financials had earlier been questioned by shareholders and the regulatory authorities. In February 2015, the Securities and Exchange Commission of Zimbabwe temporarily suspended Meikles from trading on the Zimbabwe Stock Exchange on allegations that the business overstated the RBZ debt.
The suspension was lifted on February 24, 2016 after the group threatened legal action, but not without collateral damage to Mr Moxon. Some shareholders are understood to be plotting to get rid of Mr Moxon over the manner in which the debt issue has been handled under his watch.
A bigger plot
But sources say the debt issue is a smokescreen being used by ambitious shareholders — aided and abetted by some pliant officials at Treasury — who are angling to wrest the business from Mr Moxon.
It is claimed that the plan, which is understood to have received buy-in from equally ambitious and influential businesspersons and politicians (names withheld), centres on a former CEO of Lornho’s agricultural unit, Mr Benjamin Ward.
The British-born and South African-educated businessman, who was appointed the CEO of Lornho’s agribusiness division on October 9, 2012, is believed to have established links with some key local figures, as he tries to wrest control of the business from Mr Moxon.
It is claimed that after engineering a fallout between Government and Meikles on the debt, the plotters will rope in Mr Ward to steer the group out of the financial mess.
Interestingly, Messrs Moxon and Ward had fairly close ties until the alleged plot emerged. As a Trojan horse, Mr Ward will use his links to recapitalise the business and deliver “an indigenisation package” acceptable to some local political bigwigs and their business friends.
Mr Ward, sources say, is interested in controlling certain Meikles’ assets, particularly tea estate Tanganda, financial services company MFS, and Victoria Falls Hotel.
The businessman is currently in Zimbabwe trying to secure a work permit, but Government sources he is “unlikely” to succeed. Information gathered by The Sunday Mail Business shows that Mr Ward has already been seconded for appointment to the Meikles board.
Last week, he however dismissed any links to both the board appointment and plans of a hostile takeover.
“That is absolutely untrue. John Moxon and I are friends, and he has invited me to a couple of board meetings because they (Meikles) have been having some financial challenges.
“But I absolutely don’t have any fiduciary links to Meikles. I am a businessman; I am self-employed. I live in Cape Town, my family is in Cape Town and I am only here on business. I know when I came to Zimbabwe, a lot of people have been uncomfortable and have been circulating a lot of untrue information about myself. It is absolutely untrue. There is not even an ounce of truth in that,” said Mr Ward.
He also denied applying for a temporary employment permit, though The Sunday Mail Business is in possession of evidence to the contrary. The Department of Immigration last week said it had not received any such request from the company, adding that in any case such information is confidential.
In a terse response on questions about the Government debt and the alleged plot to remove him from Meikles, Mr Moxon said: “There is no dispute with Government.”
There is suspicion that there some Finance Ministry officials are being used to further the designs of the clique fighting Mr Moxon. Information gathered by The Sunday Mail Business indicates that Mr Moxon in fact received two letters purportedly from the Finance Ministry over the debt issue. One was brought by a Mr Mike Ndoro, while the other was delivered to his office on October 28.
Mr Ndoro’s letter was supposedly copied to the Chief Secretary to the President and Cabinet Dr Misheck Sibanda, RBZ Governor Dr John Mangudya and Secretary for Finance Mr Willard Manungo. Mr Moxon was advised that his formal copy would be delivered “soon”.
That formal copy came on October 28, but this one was not copied to any of the other three senior State officials, and unlike official communications from Government, was in an A4 envelope that was handwritten in an untidy and non-formal manner.
Further, the first letter did not have a reference number while the second one did. Mr Moxon has since raised the anomalies with Minister Chinamasa, and efforts to establish from the Finance Ministry which – if any – of the two letters was genuine were fruitless at the time of writing.
A marked man
The recent are not the first time Mr Moxon has been targeted. Last year there was reportedly shareholder unease over corporate governance issues, especially over US$12 million owed to Meikles by Gondor Capital and Coolbay, companies linked to the businessman.
There are also questions surrounding the investment in Mentor Africa, a South African firm. Meikles acquired a 35 percent stake in the company in 2008 by combining the business with Cape Grace Hotel – a unit of Meikles – and converting cash held by the hospitality concern into equity.
A further US$22 million was also transferred to South Africa as part of the group’s expansion plans. The investments were supposed to mobilise more than US$200 million for capital investments into Zimbabwe.
But shareholders have not reaped any dividends from the investments. On the contrary, the annual results for the year-ended March 31, 2016 show an impairment of investment in Mentor Africa Limited of US$2,9 million.