Gono sells 'own' bank to Germany investors in an illegal transaction

Germany investment house ADC recently acquired controlling stake in Zimbabwe’s Premier Finance in a US$6 million transaction that saw the Reserve Bank unilaterally fast-tracking the waiver of the country’s empowerment laws to leave the financial institution in foreign control in a deal that has opened up a pandora’s box exposing how Zanu PF politicians shift goal posts to line up their pockets, taking the vantage point shouting the loudest patriotism charade when it involves others.

The Zimbabwe Mail can reveal that some cabinet Ministers from both the MDC and Zanu PF have decided to take up the matter into the next cabinet meeting.

Finance Minister Tendai Bit has issued a Ministerial directive to investigate the manner into which the deal was concluded, amid reports that the waiver of the Indigenisation and Economic Empowerment Act requirements was carried out by the Central Bank without consulting the relevant Ministries.

Minister of Indigenisation and Economic Empowerment Saviour Kasukuwere is reported to be calling for an immediate police investigation.

The Central Bank itself has a statutory instrument that stipulates a 10 percent foreign ownership in local banks, and Gono has even violated his own laws. 

Sources said the ADC-Premier Bank transaction was fast tracked in secrecy to bit the new Central Bank legislation which is currently going through its last stages of debate in the Senate before it is signed by Robert Mugabe into law. 

Mr. Gono, has been a major shareholder in Premier Bank, together with his close ally and sidekick, the former RBZ’s head of bank licensing, supervision and surveillance chief, Norman Mataruka since the bank started business.

Mataruka and Gono each own 25 perent shareholdings in Premier Bank and Mataruka’s brother in law who is the Chairman of Premier Finance group and holds 3%. So the two Reserve Bank Officials owned Premier Bank before they sold 54% shareholding to Germany investors.

Gono is represented in Premier board by his business associate and partner Blazio Tafireyi who sits on the weekly Financial Gazette board.

Sources said the pair are also linked to the latest big deal in town in which top business lawyer Tawanda Nyambira of TN Financial Holdings has acquired Zimbabwe’s largest furniture company, Tedco Limited.

Tedco is comprised of Tedco Retail (Private) Limited, Springmaster Corporation Limited, TN Bank, TN Medical, including Radio Limited, Nyore Nyore and Sleep Eezzy.

Norman Mataruka also has 20 percent stake in NDH Bank Limited (NDH Ltd) – against standing bank regulation and general corporate governance rules.

He has been a key associate and enforcer of central bank governor Gideon Gono, who sank many “an institution” in the tumultuous 2003-2004 period over what they called “irresponsible banking and unbalanced institutions” caused by weak governance, and monitoring structures.

Zimbabwe’s Banking Act expressly discourages and prohibits RBZ officials from owning shares in allied businesses, which are subject to their routine scrutiny or checks for fear of subjective views on appraisals and other operational issues.

Among those banks culled or said to have been plagued by poor to non-existent oversight structures and mechanisms were Barbican Bank, ENG Capital, Guardian Asset Management, Nicholas Ingrain’s Aftermarket Banking Corporation, Rapid Financial Holdings, Royal, Sagit Finance House, Trust Banking Corporation and a host of other small institutions such as asset management companies.

Questions are now asked as to how the pair sanctioned and approved such a transaction violating the country’s Indigenisation and Economic Empowerment legislation while they are also key shareholders with huge financial interests in Premier Bank.

The deal saw PFG and the Frankfurt Stock Exchange-listed ADC obtain a waiver on Harare’s stringent banking and empowerment policies to allow foreign investors a controlling 54 percent stake in order to facilitate recapitalisation of Zimbabwe’s financial services sector.

The southern African country’s indigenisation laws restrict foreign companies to a maximum of 49 percent stake of a business with the remainder reserved for Zimbabweans while the country’s central bank has put in place policies to make sure that no single investor will own more than 10 percent shareholding of a financial institution.

But ADC chief executive officer Dirk Harbecke said these policies were waived after they presented their plan for Zimbabwe, detailing a long term road map which will see PFG expanding into the region following consolidation in Zimbabwe.

“We have confidence in the new team at PFG and in the potential of the group to grow,” he said.

“We are not looking in the past (but) there is a need for change. We will make sure we restructure and build a successful financial institution.

That is our aim in Zimbabwe and that is the aim of the team here. We will partner with PFG, restructure it and expand, possibly in the region. The next phase will be to put in place a substantive team to drive the institution,” Harbecke said.

The issue has caused a huge fall-out at the Affirmative Action Group between the empowerment group’s president, Mr Supa Mandiwanzira, and AAG chairman for Harare Mr Charles Nyachowe over the acquisition of a 54 percent stake in Premier Bank by foreign investors. 

Mr Mandiwanzira, is arguing that despite the acquisition, the bank will continue to be run by Zimbabweans and the deal will benefit many indigenous businesspeople that will be able to access lines of credit.

On the other hand, Mr Nyachowe is insisting that the holding of the significant chunk by the Germans in the bank is in stark contrast with the country’s Indigenisation and Economic Empowerment Act that limits foreigners to 49 percent shareholding in any local company.

Mr Mandiwanzira said AAG is always concerned where issues of empowerment are concerned.

The former TV presenter and the Central Bank Governor are both related to the First lady Grace Mugabe. Both have huge influence at the weekly Financial Gazett owned by Mr Gono.

Sources close to the deal said, the First Family are heavily involved and they want to use the bank in diamond trade transactions abroad.

The plan also is to use Germany investors to persuade the Germany money printing company Giesecke & Devreint to restore its services to the Reserve Bank of Zimbabwe as Robert Mugabe plan the return of the Zimbabwe dollar.

In 2008 Giesecke & Devrient GmbH, decided to cease delivering banknote paper to the Reserve Bank of Zimbabwe citing political tensions.

Supa Mandiwanzira said, “Our position is that we have raised issues with Premier Bank officials and we engaged them to get an understanding of the nature of the transaction and we were given assurances by the officials that part of the sale agreement of the equity to foreigners allows indigenous people to buy back majority shareholding within three to five years.

“We have also been assured that the bank will continue to be run by a Zimbabwean management team and board.
“Understanding all this we are satisfied that this is a good deal for the bank and for Zimbabweans.

“This is good in the sense that Premier Bank will access cheaper lines of credit and meet minimum capital requirements prescribed by the RBZ.

“It is clear that Zimbabweans will be benefiting from this deal.

“These investors have sunk in money to save the bank. In the deal ADC owns a 46 percent shareholding. KMQ Enterprises, a Mauritius domiciled company, owns 8 percent equity. The Germans do not own 54 percent in Premier,” explained Mr Mandiwanzira who is believed to be one of the local shareholders.

When contacted for comment on the matter, Mr Nyachowe said: “My position is very clear on the matter. That Premier Bank deal is illegal and it contravenes the Indigenisation and Empowerment Act. How can foreigners hold more than 49 percent in a local financial institution?

“Hatisi kuwirirana mu AAG (we are not in agreement at the AAG) over the approach that some of our members want to employ towards Premier, and that must not be down played.

“The law is clear on the quantum of equity that foreigners can and cannot hold. That deal must be investigated and reversed. This is where I differ with Supa.

“They want to be diplomatic on the matter and have it swept under the carpet when it is very clear that the law was breached in that deal. I will stand up for what I believe and will not be cowed into silence. ”

Reports say TA Holdings, which is among the top 10 stock picks on the Zimbabwe Stock Exchange (ZSE), had expressed interest to secure shares in Premier Financial Group Limited.

It is understood that last month, a group of foreign investors led by a German financial services company, African Development Corporation (ADC), acquired a 54 percent shareholding in Premier Finance Group Limited in a US$6 million transaction

Of the remaining shareholding, 28 percent is held by a local consortium and the balance by other local investors and an employee share trust.

The local consortium which holds 28 percent in Premier is made up of Mr George Manyere, Mr Walter Kambwanji and Mr Douglas Mamvura.

ADC, which manages more than US$1 billion worth of assets in both developed and emerging markets, has investments in commercial banking, asset management and insurance and has been in African in the past three years.

It is controlled by the Altira Group, one of Germany’s leading independent asset managers and has spread its tentacles to Rwanda, Mauritius and Guinea.

The group is planning to make the troubled southern African country the hub for its investments into the region.

“In Africa, we are investing in countries with strong prospects for growth,” Harbecke said.

“We are planning to make Zimbabwe the hub for our investments in southern Africa,” the ADC chief said, rejecting claims that the investment climate in Zimbabwe was still volatile.

“That statement is not true. The environment has changed dramatically in the past 12 months. We have been screening the market since last year. We think this is the right time to invest. We might be the first to invest in Zimbabwe but investor perception has changed and more investors are coming because of the stable currency situation.

“Because of the unity government, there has been a lot of improvement in the economy. It (the economic crisis) is going to be solved. How fast we don’t know but the prospects are good. You will find that step by step, other investors will begin to come. This is a small problem, sooner or later, recovery will be achieved,” he said.