HARARE – The Empowerment Corporation of Zimbabwe (EC) has lost its main focus of empowering a broad range of indigenous groups because it has been taken over by a few individuals, the Affirmative Action Group (AAG) has said.
The AAG – which held a 9 percent stake in EC at its formation – says shareholder wrangles within the corporation were partly to blame for the troubles facing the country’s second largest mobile telecommunications services provider, Telecel Zimbabwe.
AAG chief executive officer Dr Davison Gomo said lack of focus and professional discipline on the part of EC turned Telecel into a full-scale economic battle ground.
“Empowerment Corporation was slowly taken over by individuals, making the realisation of broad-based economic empowerment not only impossible but a nullity. The idea was to make sure that the ordinary farmers, small scale miners, women, war veterans and the ordinary members of the public affiliated to member organisations would benefit if and when Telecel declared dividends these member organisations would receive and thus create a fund that would benefit the majority of the ordinary members of these organisations,” said Dr Gomo.
“This was a pipe dream as ordinary members were driven out of sight and the leadership of these organisations arrogated to themselves the benefits that came with this new found wealth.
“In some cases, the shareholding of some groups is alleged to have been sold to one James Makamba by leaders of the respective groups while some groups are alleged to have failed to meet the conditions of share subscriptions and they forfeited their rights and the shares found their way into hands of one dominant personality on basis and principles that have been the source of disagreements and various legal actions.”
EC was established by businessman Dr James Makamba under the banner of the Zimbabwe Wealth Creation Council in 1996. At its formation it was made up of a consortium of small scale indigenous organisations which included the War Veterans Association, the National Miners Association, the Zimbabwe Farmers Union and the Indigenous Business Women Organisation led by Mrs Jane Mutasa.
According to information put before Parliament by Mrs Mutasa in 2011, when EC was issued with a telecommunications licence, shareholding was structured as follows: Kestrel (a 15 percent stake), Integrated Engineering Group (10 percent), ZFU (9 percent), Indigenous Business Women Organisation (9 percent), National Miners Association (9 percent), AAG (9 percent), War Veteran Association (9 percent) and warehoused shares amounted to 30 percent.
But in 2013 a share wrangle begun within EC when the War Veterans Association accused former chairman Dr James Makamba of swindling them of their shares in December 2000. The War Veterans Association eventually pulled out of the consortium.
Last month EC and Telecel Zimbabwe board chair Dr Makamba basically admitted that the EC share wrangle was at the centre of Telecel’s current problems, but claimed these had been brought about by the need to raise capital.
“The shareholding of EC went through various re-organisations during the formative years of Telecel due to the need for EC to raise funding for its contribution to the capital requirements of the project. It is these re-organisations within the shareholding of EC that have formed the unfortunate basis for the current disputes,” he said.
The AAG claims that the EC shareholder squabbles opened avenues for Telecel’s international investors to “strip” the company.
“On the international investors’ side, the company changed leaders three times and my take is that each group of international investors made sure that they extracted all value upfront through a badly crafted management contract and the purchasing policy that ensured that services and goods of any sort were bought from companies carefully selected by the international investor with the possibility that these could have been companies closely allied to the international investors,” said Dr Gomo.
“Telecel failed to comply with the indigenisation law and perhaps very deliberately, so that the perpetuation of non-compliance ensured that confusion would create the right conditions for stripping the company of its resources.
“Some have speculated that Telecel International partners may have been advised wrongly that there was going to be change of government and that hopefully, the situation would at least, eliminate the need for compliance with the indigenisation law.”