On 2 January 2019, Mr. Tichatonga Mutyambizi aka Mwanawevhu posted his facebook wall a conversation between him and Mr. Tawanda Nyambirai, a prominent Zimbabwean lawyer and businessman who is closely linked to the Econet story, titled STRIVE MASIYIWA MYTH AND REALITY!, to try to clear the air on what Mr. Nyambirai regards as: “All the noise being generated around Econet shares is mere froth and fume. There is no substance to it.”
I have followed from the terrace as allegations and counter allegations have been made regarding the facts surrounding the origins of Econet and its evolution to a major telecommunications and solutions company beyond the borders of Zimbabwe.
Mr. Masiyiwa left Zimbabwe some 20 years ago and the circumstances that led to his departure from Zimbabwe remain in dispute.
Mr. Mawere claims that Mr. Masiyiwa left Zimbabwe following Mr. Masiyiwa’s court application to interdict the investigations that Mr. Mawere was heading in relation to corruption allegations against some of the officers working for First Mutual Life (FML) especially in respect of an unauthorised investment of Z$180 million that resulted in Mr. Masiyiwa gaining control of Econet on the back of a contribution by TSM Private Limited (TSM), a company in which Mr. Masiyiwa and his wife, Tsitsi, held about 67.5% shares in.
It is represented in the prospectus that:
Ms. Miriam Mutizwa, a human rights activist who has been following this dispute closely has this to say:
“Although it is represented in the prospectus that an amount of Z$43.5 million of Econet’s share capital post-IPO comprising 435 million shares of 10 cents each were issued and paid up by TSM, Mr. Nyambirai confirms that: “The equipment was imported at a time when Econet’s technical partner was Telecel International. The intention was to launch a network using a mobile base station during the Solar Summit that was held at the Sheraton. Around that time, the partnership between Econet and Telecel International terminated. Telecel International had been the guarantor of the facility for the purchase of the equipment. After difficult negotiations, the facility was transferred to Strive’s Family Company, TS Masiyiwa Investments P/L. The value of the equipment was Z$64,720,000.00. Thus, TSM was in turn owed the same value of the equipment by Econet. TSM decided to convert the shareholder loan into equity (shares) at a discount of 32.84% thus for shares worth Z$43,468,000.00 in Econet. This is how TSM came to hold a total 434,679,999 Econet shares in addition to the 320,001 shares that were already in issue.”
This disclosure by Mr. Nyambirai that is not contained in the Prospectus is significant because it implies that difficult negotiations were held resulting in the facility as alleged by Mr. Nyambirai being transferred to Strive’s family company (TSM) being a value of R64,720,000.00.
It is represented in the Prospectus that when Econet was established in 1994, it was a wholly owned subsidiary of TSM as follows:
In terms of the Prospectus, TSM was the sole shareholder of Econet and thus the version presented by Mr. Mutyambizi is factually incorrect that at some stage the investment alluded to by Mr. Nyambirai of $1 million made by Telecel International was converted into shares representing 40% of the pre-IPO Econet.
With respect to the disputed equipment, it is stated in the prospectus as follows:
It cannot be disputed by Mr. Mutyambizi that prior to Friday, the 14th of August 1998, the entire authorized share capital of Econet was issued and alloted to TSM only.
It is significant that although it is stated in black and white that TSM was owed Z$64,720,000 on loan account by Econet, Mr. Nyambirai has represented that this loan account was in respect of the equipment that had been purchased with Telecel International funds.
In terms of Mr. Nyambirai’s version, TSM could not have been credited with a loan asset for equipment that the company did not pay for without the knowledge and consent of Telecel International. It is not clear to me how funds provided by Telecel International mysteriously ended up in the Econet prospectus as an asset of TSM.
I have seen in the exchanges between Mr. Mawere and Mr. Mutyambizi that Mr. Mutyambizi believes that the equipment belonged to Econet which version precludes the TSM loan version.
It is recorded in the prospectus that TSM agreed to cede its loan account of Z$64,720,000 in Econet at a discount of 32.64% to Econet yet Mr. Mutyambizi believes that the equipment never belonged to TSM which makes the version in the Prospectus factually incorrect and legally unsustainable.
It boggles the mind that the same equipment that Econet claimed in court records to be its own was miraculously acquired by TSM resulting in TSM controlling Econet in relation to equipment that was already owned by Econet.
It seems to me that if the equipment belonged to Telecel International, then the version that this same equipment belonged to TSM was intentionally fraudulent in that it resulted in an unjust and corrupt enrichment of the Masiyiwa Family and related shareholders of TSM.
In addition it has been argued that TSM could not have had any nexus with the equipment based on the prevailing exchange control regulations of Zimbabwe at the time as follows:
It is clear that Econet directors were aware of the exchange control regulations that prevented TSM from having any nexus with equipment that was imported into the country without prior exchange control approval.
In relation to TSM, there is no mention in the IPO Prospectus as to how the equipment that had been represented prior to the granting of the licence by the High Court as belonging exclusively to Econet could end up being owned by TSM without any implications as to how the licence was granted to Econet rather than TSM.
I have looked at the shareholders of TSM to establish whether any of them was a non-resident person in terms of the Exchange Control definition, and this is what was represented in the IPO Prospectus:
It is clear that 100% of TSM’s issued share capital was held by resident individual Zimbabwean shareholders.
If this is accepted as a version, it is not clear how TSM could end up holding an asset worth Z$64,720,000 with no financial causa for it.
Obviously for this asset to exist, someone other than the shareholders of TSM would had had to have financed it.
Although this material information is missing in the Prospectus, investors were told that TSM was a solid company holding equipment imported into Zimbabwe without disclosing the party who financed this equipment.
I am reminded by my sister, Tsitsi Masiyiwa, who implored on people like me to seek true justice and avoid being used by other people, to pursue this matter to its logical conclusion. It cannot be in the interests of justice that TSM was issued with legitimate shares in Econet in lieu of an investment in form of assets that clearly could not have belonged to this country or its shareholders.
Who were the directors of Econet at the IPO stage? They were as follows:
It is stated in the Prospectus that: “The Directors whose names are given below collectively and individually accept full responsibility for the information contained in this document. To the best of the knowledge and belief of the directors, who have taken all reasonable care to ensure that such is the case, the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.”
It is trite that the Directors of Econet at the material time had taken all reasonable care to ensure that the information in the Prospectus was true and fact.
To the extent that it was a lie that TSM owned the equipment that it had no nexus with, it follows that the Directors misled the public including FML policyholders who complained about the investment by the company without following the laid down procedures.
It is also represented by the directors that: “The Directors confirm that the listing particulars include all such information within their knowledge as investors and their professional advisors would require and reasonably expect to find for the purpose of making an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the issuer and of the rights attached to the securities to which the listing particulars relate.”
In my worldview, it cannot be acceptable that the purpose of making an informed assessment of the assets and liabilities of Econet and the prospects of the issuer and of the rights attached to the securities to be held by the public was tainted by material concealment as to the true nature of the investment by TSM into Econet.
This is what Mr. Mutyambizi said to Mr. Nyambirai: “Thanks mukoma, that is the kind of narrative that clears the air beyond newspaper articles👏🏾👏🏾👏🏾👏🏾 May I ask what transpired in terms of temporary import permit and duties due? Where did the capital come from mukoma? Were loans taken from NASA and others?”
He also said: “Thanks my bro your engagement has been invaluable, it’s truly much appreciated and the honesty has enhanced further my previous respect for you! Happy New Year in 2019. dialogue is always superior to emotionalism! Keep well my brother.”
I was shocked to read what Mr. Nyambirai had to say about the Mawere Commission of Inquiry into the FML affairs: “A commission of enquiry driven by Mr Mawere was set up. They harassed me quite a bit. I was employed at NMB at the time. We had handled the IPO as financial advisors. Their investigations did not find anyone palpable although we learnt that FML was forced to sell the Econet shares they held. Were it not for that, FML would be holding a stake in Econet and Cassava that would be larger than that held by OM. FML would be much bigger than it is.
All the noise being generated around Econet shares is mere froth and fume. There is no substance to it.”
I am waiting to hear from Mr. Nyambirai against the facts set out above, why he believes that the search for the truth some 20 years could possibly constitute a harassment. We are still nowhere near trying to understand the true facts of the listing of Econet and why Mr. Masiyiwa and Tsitsi ended up with 67.5% of TSM’s issued share capital and who played a part in creating this skewed outcome.”