Fears grow for future of Kingdom Meikles

Early last month the hotel, banking and retail group was accused of violating exchange controls and “specified”, meaning its assets and shares were suspended and two government agents appointed to run its affairs.

Both the opposition Movement for Democratic Change (MDC) and President Robert Mugabe’s Zanu(PF), which have been sharing power since February, were party to the action. But two weeks ago, Giles Mutsekwa, the MDC’s co-minister of home affairs publicly admitted that he had made a blunder.

Mr Mutsekwa has been ordered by the prime minister (and leader of the MDC), Morgan Tsvangirai, to reverse the measure but an MDC official conceded that this could be more difficult than it seems, arguing that there is even uncertainty about who “has the legal mandate to specify or unspecify”.

As of Monday, the company remained in legal limbo, its uncertain status hardly reassuring for potential investors tempted by Zimbabwe’s mineral riches and encouraged by signs of greater economic stability since the local currency – its value rendered worthless by hyperinflation – was replaced by the US dollar and the South African Rand earlier this year.

“The MDC is well aware of the damage that this has caused for the country’s reputation as a destination of investment,” says the MDC official.

And yet for most of the past three decades since Mr Mugabe came to power in 1980, Meikles was allowed to quietly get on with its business. Even during this decade when Mr Mugabe dispossessed thousands of white commercial farmers in a radical land reform, Meikles’s hotel, department stores and supermarkets have remained profitable and something of a Zimbabwean institution.

As recently as 1996, the company raised $75m in an initial public offering in London, the biggest amount raised by a Zimbabwean company, and by 2007, its shares were worth $500m.

John Moxon, the 64-year-old former chairman, whose family owns 43 per cent of the group, claims Meikles’s difficulties began in 2007 when the group merged with Kingdom, a black-owned bank in which it had been building up a stake since the late 1990s.

The link-up had been orchestrated in anticipation of government policies obliging largely white-dominated corporates to cede wealth and control to black business.

Mr Moxon argues relations between the new black chief executive, Nigel Chanakira, the founder of Kingdom, and senior managers at Meikles deteriorated.

Earlier this year, shareholders voted to demerge the group, a move that would have the warring parties at Kingdom and Meikles go their separate ways. That plan, however, seems to have fallen victim to the specification measure.

Two weeks ago, shareholders gathering at the Meikles Hotel to conduct an extraordinary general meeting in order to put that proposal into effect found their way blocked by riot police.

Mr Moxon, who insists that the exchange transfers in question were approved by the central bank, is preparing for a legal fight. But he fears the worst and predicts that the company, which employs 4,500 people, will not “exist in six months’ time”.

Speaking in Johannesburg, where he has lived since last year, he told the Financial Times: “They will get in, pillage and loot the company completely.”

And he is predictably pessimistic about the implications.

“All this really shows is that Zanu(PF) is fully in power and the MDC incapable of influencing things,” he says. “I don’t think the country has changed.”