Chanakira Vs Moxon – Corporate governance should prevail not terror tactics

ANALYSIS – BATTLE lines have been drawn at Kingdom Meikles Africa Limited (KMAL). The convening shareholders led by chairman Mr John Moxon are determined to oust KMAL group chief executive Mr Nigel Chanakira at the forthcoming Extraordinary General Meeting (EGM) slated for the 23rd of this month.

Econet Wireless group chief executive Mr Strive Masiyiwa has also joined in the KMAL fight in support of his long time friend and ally- Nigel Chanakira.

Last week he summoned Econet Wireless chief executive and non-executive director Mr Douglas Mboweni and Rugare Chidembo respectively to his Johannesburg headquarters to brief them on his position on the KMAL saga ahead of the EGM. Econet Wireless holds 11 percent equity in KMAL.

The indigenous mobile communications firm has two seats in the KMAL board and is represented by Mr Mboweni and also to be ousted at the EGM is Mr Chidembo.

Zimbabwe is among the first countries in Africa to liberalise its financial sector and allow for indigenous people to be key players in the economy.

This development saw a number of indigenous people start their own banks, which were a force to reckon with in the region and internationally.

Kingdom Bank was one of such banks.

Then came the Indigenisation and Economic Empowerment Act, which seeks to create an enabling environment that will result in increased participation of indigenous people in Zimbabwe in the economic activities of the country.

However, the recent attempted palace coup at KAML through an EGM in an attempt to pass a vote of no confidence in Mr Chanakira "undermines the gains of indigenisation".

KMAL is one of the largest groups in Zimbabwe with interests in the hotel, retail stores, financial services, tea and cotton processing sectors that was born out of a successful merger of Kingdom Bank, Tanganda Tea, Cotton Printers and Meikles Africa Limited.

The official position on the rationale of the merger was that it would result in the enlarged group meeting the provisions of the Economic Empowerment Act that requires that at least 51 percent of Zimbabwean companies are held by indigenous Zimbabweans.

Mr John Moxon leads a cluster of investment vehicles holding up to 42,9 percent equity in KMAL.

He has since stepped down citing conflict of interest in the on-going wrangle till the proposed EGM on the 23rd of this month.

Resolution 5 of the EGM will see the appointment of Marilyn Hugill, Moxon’s sister, as a director, while another the appointment of four South African-based directors comprise resolutions 6-9.

These are Ashwin Mancha of Afrifocus Securities, Jack Mitchell, a partner in Alan Gray for 12 years, Fiona Silcock of FPS Investments, and Carl Stein of lawyers Bownan & Gilfillan.

"It is quite obvious from the goings on at KMAL that indigenisation as a Government policy is in danger. There are far reaching implications if Mr Moxon’s agenda to oust Chanakira comes into fruition.

"There are other corporates that incorporated indigenous business people into their companies who may want to take a cue from KMAL and reverse the gains of indigenisation.

"This whole saga is ill-timed and ill-conceived and may potentially result in a brutal backlash from other quarters who may want to protect the country’s indigenisation policy.

"The merger of indigenously owned Kingdom Bank and Meikles Africa Limited was one of the most notable and key developments in the history of mergers and acquisitions in the corporate world in Zimbabwe. If the bid to oust Chanakira and other black directors from KMAL succeeds, this will put a dent and affect potential future deals," explained an analyst.

Affirmative Action Group (AAG) honorary President Mr Phillip Chiyangwa has described the planned ouster of Nigel Chanakira as "of concern and very disturbing to the black business community".

Another analyst said the development at KMAL does not in anyway scuttle the gains of indigenisation.

"Happenings at KMAL are purely corporate governance issues and really have nothing to do with race. Being ‘black’ or ‘white’ in the KMAL issue is neither here nor there because at the end of the day both Moxon and Chanakira are still Zimbabwean citizens.

"Sadly, Nigel Chanakira is riding high on the "race card" and this is not in the best interests of potential foreign investors. All this is simply doing is sending a wrong sentiment to foreigners that if you partner with a Zimbabwean and at any one time seek to fire them as a shareholder you cannot because they are black.

"What people need to understand is that the convening shareholders seek to fire Nigel Chanakira as a director in the company and not as a shareholder.

"If as a shareholder, Chanakira still wants to influence policy direction within KMAL he can still do so like any other shareholder by calling for an EGM. From what is happening at KMAL, corporate governance has not yet matured to levels beyond race. This sets a bad tone for foreigners coming to invest in Zimbabwe.

"On the other hand Mr Moxon has shown lack of wisdom in handling the matter by clearly wanting to replace three black directors with five white directors from South Africa.

"Both Nigel Chanakira and John Moxon are running on extreme viewpoints. The KMAL issue will not in any way reverse the gains of indigenisation or put indigenisation in danger. Simply put, two barbarians met at the corporate gate and both want to drive the same car with the other one on the steering wheel and the other stepping on the brakes," explained an analyst with a local investment bank.

However, some market watchers argue that the KMAL issue is a race issue clouded by corporate governance.

They further argue that the allegations of externalisation that Mr Chanakira is levelling against Mr Moxon are purely corporate governance issues.

"To say that Nigel Chanakira is riding on the race card is myopic as he has not issued such a statement.

"All we know is his affidavit to the Central Bank and CID Serious Fraud squad on the allegations of externalisation of US$18,6 million by Mr Moxon.

"Where has he failed to perform? Indigenisation is in danger if Chanakira is fired on the 23rd for implementing corporate governance at KMAL," explained one analyst.

At the same time, the EGM extraordinary general meeting (EGM) by Mr Moxon could hit a snag as minority shareholders of the conglomerate are set to launch an urgent chamber application at the High Court against attempts to remove the three directors.

The KMAL boardroom squabbles have turned into the chicken and egg scenario as to which came first, the egg or the chicken.

Many are still asking if Moxon called for the EGM solely because Chanakira is failing to perform or called for it after Chanakira made a police report alleging that Mr Moxon externalised US$18,6 million.

The same goes for Mr Chanakira, whether he made the police report after Mr Moxon called for the EGM or before.

With 10 days to go before the much-awaited EGM, the fate of Chanakira,Callisto Jokonya and Chidembo will determine whether or not the KMAL saga undermines indigenisation in Zimbabwe. Or whether it is purely a corporate governance issue. Sunday Mail