Robert Mugabe steps in to end bitter Meikles wrangle
The Kingdom Meikles Africa Limited dispute, which embarrassed the Zimbabwean government and spooked foreign investors, has been resolved – partly due to political pressure.\r\n
Investors were alarmed by a government freeze on KMAL’s assets last month, with some interpreting it as creeping nationalisation of the 117-year-old Meikles group.
This week South African retail group Shoprite scrapped a plan to buy OK Bazaars, valued at R375-million on the Zimbabwe Stock Exchange, citing "socioeconomic and political uncertainty".
Shoprite CEO Whitey Basson said that before investing in Zimbabwe, "we need to be sure that the economic climate has stabilised and is showing good growth, and we just don’t think it’s at that stage yet".
Basson said the KMAL saga was not the reason for pulling the plug. It was rather that "the grass in Zimbabwe is not long enough for us to make an investment decision".
"We’re not ruling it out again at all – it sits right next to our SA business after all. We just need more positive indicators," he said.
The offer price also played a role in the failure of the OK deal. Shoprite chairman Christo Wiese said on Friday that "it was simply one of those cases where the buyer and the seller couldn’t agree on terms". However, insiders say Shoprite wanted to pay a discount to OK’s share price, as the stock hardly traded and the market value did not reflect true value.
Ironically, resolution of the KMAL dispute could pave the way for Shoprite rival Pick n Pay to plough more money into Zimbabwe. Pick n Pay owns 25% of TM Supermarkets, which is controlled by KMAL.
John Moxon, whose family owns 43% of KMAL, said: "Pick n Pay have been quite anxious to extend their investment in Zimbabwe. They want to rejuvenate the stores, starting with the equipment, but they didn’t want to go ahead until this was resolved."
Pick n Pay CEO Nick Badminton confirmed he had been in discussions with Meikles about investing more in TM, but gave no details.
The KMAL saga dates from the 2007 merger of the Meikles group, controlled by Moxon, with Kingdom Financial Holdings, controlled by Nigel Chanakira, a former Reserve Bank executive with political clout.
A raging board dispute saw Chanakira convince President Robert Mugabe’s government to "specify" Moxon’s family in January. The specification order was widened to include some of KMAL’s assets last month, including TM Supermarkets. Specification puts assets under the control of government-appointed inspectors.
Investors panicked, and when KMAL was suspended from trading on the ZSE last month its value had plummeted 82% in a year to $90-million.
However, on Thursday night, a "settlement" was reached between Chanakira and Moxon for the orderly "demerger" of Meikles and Kingdom, with the warring parties going their separate ways.
Moxon said it was the end of a "horrific period" in his life, which saw him accused of "externalising" $22.3-million – effectively smuggling cash out of Zimbabwe. Moxon is now in SA, where he fled after being tipped off of his imminent arrest.
Chanakira quit as CEO of KMAL "with immediate effect". His company Valleyfield will regain control of Kingdom, while the Moxon family regains about 50% of Meikles.
Both companies have applied to be separately "relisted" on the ZSE.
Sources close to the deal say political pressure played a role.
Moxon was reluctant to discuss this, but said he suspected government pressure on Chanakira to settle as the wrangle had undermined Mugabe’s push to promote Zimbabwe as an investment destination.
But the deal itself illustrates how Zimbabwe’s government machinery can be manipulated for political and personal ends.
A condition of the settlement is that the specification order will be lifted.
Said Moxon: "The general view after last night’s negotiations was that the specification will be lifted, and fairly soon. But it has to be lifted by the courts."
This implies that government’s accusation that Moxon smuggled currency out of the country was politically motivated to suit Chanakira’s commercial needs in the first place, and can now be simply "lifted" in the wake of the deal.
This appears to confirm Moxon’s claims – in legal papers in South Africa – that the KMAL dispute arose from Chanakira "abusing Zimbabwe’s state machinery to bring police (and) other authorities" down on him.
The Meikles drama was also recently raised at a behind-closed-doors cabinet meeting of the stuttering government of national unity, with Movement for Democratic Change leaders speaking out against alleged victimisation of Moxon.
Sunday Times (SA)