The Sunday Mail
Darlington Musarurwa
Assistant Editor
National Social Security Authority (NSSA)’s decision to sell its stake in ZB Financial Holdings Limited (ZBFHL) to Datvest Nominees Pvt Ltd in a share swap deal has put the Government-brokered settlement agreement between Transnational Holdings Limited (THL) — an investment vehicle owned by banker Mr Nicholas Vingirai — and ZBFHL in jeopardy after it emerged the two parties had “reciprocal rights of pre-emption over each other’s shares in ZB”.
THL currently holds 24,65 percent of the envisaged shareholding of 33 percent in the banking group following a May 2016 agreement forged after the Government ordered the return of Intermarket Holdings Limited (IHL) — which was acquired by ZBFHL in 2006 through buying off equity held by the RBZ in Intermarket — to Mr Vingirai.
Sources told The Sunday Mail Business that while the Government had duly transferred its shareholding of approximately 22,7 percent to THL by August last year, the NSSA transaction makes it seemingly impossible to cede the remaining 11 percent.
“The Minister of Finance (and Economic Development) and the Minister of Labour (and Social Welfare) were in the middle of discussions on the 11 percent share transfer to Transnational when, strangely, NSSA sold its entire ZB shareholding to an unidentified buyer. Given the reciprocal pre-emption agreement that was part of the 2016 Settlement Agreement, it is hard to understand how the NSSA sale was allowed to proceed despite its critical importance to the completion of the 2016 Government-sponsored agreement.”
“As it appears, Government/RBZ (Reserve Bank of Zimbabwe) will now not be able to meet their obligations under the agreement,” said a source privy to the goings-on.
It is believed that although THL wanted a bigger shareholding commensurate to the assets IHL contributed to ZB Financial Holdings, it only conditionally accepted the 26 percent offer in 2016 subject to a composite agreement that, in addition to guaranteeing board and management appointments, also gave Transnational and NSSA reciprocal rights of pre-emption over each other’s shares in ZB.
Hardly a year after the settlement agreement, the deal hit troubled waters after NSSA — a major shareholder then with 37,8 percent — doggedly resisted the proposed allocation of a further 6 percent to 10 percent to THL.
It forced the removal of three THL nominees to the group and the appointment of all independent directors. Restoration of THL rights in Intermarket and by extension ZBFHL — through an agreement made on May 31, 2016 — was supposed to herald the appointment of nominees such as Mr Michael Mahachi, Professor Zororo Muranda and Mr Mike Manyika to the group, including the return of Mr Nicholas Vingirai as a non-executive director.
But NSSA blocked the appointments and also voted for a resolution to instruct THL to repay a US$658 699 dividend that it had received from ZB on January 23, 2017.
According to the source, “Mr Vingirai was disappointed, but not surprised by these events, viewing them as the hidden manoeuvres of individuals who had been behind the controversial take-over of his businesses in the first place.”
The current top five shareholders in the banking group include Datvest Nominees (34 percent), THL (24,65 percent), ZB Financial Holdings Ltd (10,08 percent), Old Mutual Life Assurance Zimbabwe (4,15 percent) and Quant Africa Wealth Management (3,97 percent).
Skulduggery
The Government took the decision to restore Mr Vingirai’s assets after an investigation absolved him of externalisation and breaching exchange-control regulations, which lay at the heart of the challenges his business faced in 2004. In a letter addressed to Mr Tawanda Nyambirai, Mr Vingirai’s lawyer, on October 1, 2012, then RBZ Governor Dr Gideon Gono indicated that the veteran international banker and former Commonwealth Secretariat money market field expert “was a victim of some elaborate skulduggery which is now a common feature against successful black businesspeople”.
“The Reserve Bank of Zimbabwe has been aware of Mr Vingirai’s efforts to recover his assets since his return back home in November 2011. To this end, he has held several meetings with me and my team at the central bank,” said Dr Gono in the letter.
“Mr Vingirai has clarified the circumstances surrounding his staying out of the country during the period 2004 to late 2011 and especially the fact that he initially left on business at the request of the Intermarket Board. He did not flee the country as was then popularly thought. He was a victim of some elaborate skulduggery which is now a common feature against successful black businesspeople.
“On scrutinising Mr Vingirai’s activities and Intermarket transactions, the RBZ can confirm that there is no indication of deliberate “externalisation” or Exchange Control-related issues against him as was initially preferred . . .
“To this end, we have no hesitation in requesting you and his legal counsel to do everything legal and possible to get him to recover his assets and most urgently the farm since the rain season is upon us.”
However, it has turned out to be a five-year odyssey for the veteran banker, as the disagreements between NSSA and THL forced the latter to push for the separation of ZBFHL and IHL.
All parties to the dispute eventually agreed to this in writing, and RBZ in their January 2018 letter advised the appointment of Grant Thornton as advisors to lead the Intermarket-ZB demerger process. But separation meant ZB had to restore Intermarket to its early 2006 position.
This meant restoring all the Intermarket branches countrywide, of which Intermarket Building Society alone had no less than 45 fully operational branches at the time.
Realising the potential that this could have on ZB, the central bank reportedly began pushing for a deal.
Added the source: “RBZ again began to try to push the “remain together” route to which (Mr) Vingirai is said to again have compromised and agreed but at an enhanced 38,87 percent that had been calculated by RBZ’s own advisers . . .
“This shareholding was to be achieved by Government transferring its shareholding in ZB to Transnational. Government had indeed transferred its ZB shareholding of approximately 22,7 percent to Transnational by August 2020. The balance of about 11 percent to bring Transnational to the agreed 33 percent was to be transferred from NSSA at an agreed price.”
Uncertainty
The NSSA deal, however, makes it impossible to consummate the transaction, and this makes the future of ZBFHL uncertain.
THL previously insisted that separation of the entities could be “straightforward” and “quick” as the businesses are separately licensed and have different administrative structures.
“I can neither deny nor confirm that,” said Mr Vingirai in a terse response to The Sunday Mail Business about the latest developments.
An official from Grant Thornton referred queries to “the principals”.
“Unfortunately, we cannot comment on the matter, we will have to direct you to the principals.”
Repeated efforts to get a comment from the RBZ were fruitless by the time of going to print.
