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Masiyiwa fights defamatory suits in South Africa

Telecommunication magnate, Strive Masiyiwa is embroiled in a legal suit, after dragging three compatriot for defamation in a matter relating to the origins of Econet Zimbabwe and its relationship with TS Masiyiwa Holdings (Private) Limited.

Masiyiwa, a London based Zimbabwean businessman and the founder and Executive Chairman of diversified international telecommunications, media and technology group Econet Wireless, on the 13th May 2019 filed an application with South African High Court, Gauteng local Division, Johannesburg with Econet South Africa as the First Applicant, Econet Wireless Zimbabwe Limited as Second Applicant, Econet Global PTY LTD (Mauritius) as Third Applicant and Strive Masiyiwa himself as the Fourth Applicant.

The matter cites Rutendo Benson Matinyarare as the First Respondent, Mutumwa Dziva Mawere as second while third is Pardon Gambakwe. The application seeks an order in the following terms:
5.1 The respondent be indicted from publishing in any form, any defamatory matter, including innuendo, and any injurious falsehoods of and concerning the Applicants, their business and/ or any of the Applicants’ products or services (collectively “defamatory matter,”

5.2 The respondent immediately remove from publication all and any forms of defamatory matter including without limitation from publication via video posts, comments or statements of any media or internet site/s including but not limited to www.youtube, www.gambakwe.com and www.facebook.com (collectively “all media”); and 5.3 The Respondents be ordered to refrain from publishing whether directly or indirectly, all and any defamatory matter on all media.

In his affidavit signed on 24th April 2019 at Sandton Police Client Service Center in South Africa, Dr Kuzozvirava Shumba said this matter involves a factual and legal dispute in relation to the origins of a company called, Enhanced Communications Networks (Private) Limited (Econet Zimbabwe), and its relationship with a company called TS Masiyiwa Holdings (Private) Limited (TSM), a company in which he (Shumba) was represented as a shareholder holding 2.4 percent of its issued share capital per Prospectus, a copy which was attached.

Shumba also reiterate that it is significant that Strive Masiyiwa who is fixed with the knowledge about the issues in dispute chose to hide behind Douglas Mboweni (CEO Econet Wireless Zimbabwe Limited) who purports to have been authorized to represent him in this matter by virtue of a confirmatory affidavit. Shumba also said it is his contention that this application fits into Masiyiwa’s known strategy of hiding his fraud using parties that have no knowledge of the facts that they put before the courts.

Douglas Mboweni on behalf of the Applicants alleges that the following constitute defamatory statements in relation to the affairs of the applicants;
“Mutumwa Zviva Mawewere (Second Respondent) claims that Strive Masiyiwa’s court application to interdict the investigations that Mr. Mawere was heading in relation to corruption allegations that some officers working for First Mutual Life (FML) especially in respect of an unauthorized investment of Z$180 million that resulted in 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.”

“The article clearly suggest that material falsehoods were included in the relevant prospectus and it is clear from the article as a whole that the allegation is being levelled that the process was tainted and designed to defraud”.  Shumba as a financier of the pre- IPO Econet argues that he has personal knowledge which Mr Mboweni does not possess since he was not involved at all at the material period.

“Accordingly, it is part of my complaint that Mr. Mboweni knowingly and wittingly misrepresented facts before the South African Court that the version that Mr. Masiyiwa who associated himself with the application is false and that a careful reading of the prospectus when juxtaposed with the true nature of the facts of this matter will confirm a crime of perjury and defeating the ends of justice.

This application constitutes abuse an abuse of the SA justice system because the correct version is known to Mr. Masiyiwa that his purported shareholding in TSM was based on the fact that TSM, a Zimbabwean registered company that was subject to exchange control limitations was the lawful owner of the equipment that was purportedly acquired by Econet at the IPO stage”.

Daniel Shumba said Mr. Mboweni knew and ought to have known that the basis of this application is based on manufactured facts that are not supported by any reality. “The allegation is made that the fourth applicant (Masiyiwa)’s family company improperly benefited as the result of an “international fraud,” which “resulted in an unjust and corrupt enrichment of the Masiyiwa family and related shareholders of TSM.”

Shumba said the evidence and facts at his disposal confirm that in truth and fact, Mr. Masiyiwa was a driving behind and fraudulent scheme that resulted in gaining the control of a company that he helped fund and more significantly the purported equipment that TSM swapped for shares in Econet was not owned by TSM and in any event TSM had no capacity to procure the equipment in question.

“It is my contention that Messrs. Mbeweni and Masiyiwa knew and ought to have known that the whole IPO was tainted with fraud.” On paragraph 1 of the affidavit Mr. Masiyiwa represents before a Court that he was the majority shareholder of TS Masiyiwa Holdings (Private) Limited (TSM) which he erroneously misrepresented as MASCOM fully knowing that MASCOM was a separate company in which Shumba was a purportedly 25% shareholder at the material time.

“I only become aware of this affidavit a few weeks ago. At all material times, I was made to believe that TSM was a company that was the vehicle of owning the shares in Econet at IPO stage or during 1998. Until then, my understanding was that Mascom was the sole shareholder of Econet yet in this affidavit, Mr. Masiyiwa represents otherwise.

On paragraph 4 Mr. Masiyiwa also misrepresented that Mascom, a company which Daniel Shumba was a shareholder, was a successor to Retrofit (Pvt.) Limited. However, in terms of company law and practice, there is no such thing as a successor of a juristic or entity. “I also draw your attention to a copy of judgement under Case Number SC251/96 in which the Learned Judge Gubbay CJ, stated as follows; TS Masiyiwa (Private) Limited (Mascom) owns the entire share capital in Econet.”

The deponent Daniel Shumba said Masiyiwa is no longer within the reach of the Zimbabwean justice system and wants to abuse the SA system to perpetuate a lie. It is important that the proper facts relating to this matter are investigated properly so that the delayed justice and equity in this matter can be known and ventilated.

The second Respondent Mutumwa Zviva Mawewere also argues that Civil Procedure and the common law in South Africa require that before a party may sue in Court of law, it must prove that it has title to sue. In this case, Mr. Mboweni must prove that he is the right person to sue and depose to factual matters in the cause and also that he has ability or capacity to substitute the fourth applicant.

In this matter, there are no averments made as to how Mr. Mboweni purports to act in relation to the applicants other than the bold assertion that he is CEO of the second applicant, a company that is domiciled in Zimbabwe, while at the same time acknowledging that the other three applicants are situated outside the jurisdiction of Zimbabwe.

A letter authored by the National Merchant Bank of Zimbabwe Limited on 22nd January, 1998 with ref: Exchange Control Application for TS Masiyiwa Investments in Mascom Botswana (Pty) Limited reads;
“This is to confirm that we, National Merchant Bank Zimbabwe Limited, bankers to TS Masiyiwa Holdings (Pvt.) Limited, will obtain Exchange Control Approval from Reserve Bank of Zimbabwe in respect of our client’s investments in Botswana.

We further confirm that our client’s application meets the normal criteria for such approvals from the Reserve Bank. We therefore have no doubt that the Reserve Bank of Zimbabwe will grant Exchange Control Approval for this investment.” The letter was signed by PF Timba Assistant General Manager, Corporate Finance Division.

In the High Court of Botswana Held at Lobatse on the 30th October 1998, in the shareholders dispute DECI Holdings (PTY) LTD 1st Applicant, Portugal Telecom Internacional, SGPS, SA 2nd Applicant and DECI Investment (PTY) Limited 3rd Applicant had dragged Strive Masiyiwa and Mascom Wireless Botswana (PTY) Limited before the court.

Judge Lesetedi had ruled that Mascom is a holder of one of only two cell network licenses issued by the Botswana Telecommunications Authority in the country. The shareholding Mascom and the relationship of the shareholders is governed by a consortium agreement entered into by the shareholders on the 11th day of August 1997 at Harare. This was before Mascom was awarded the licence.

Under the consortium agreement, the shareholding was as follows: (DECI – 36%, PTI – 25% and TSM- 14%). On the remaining 25%, 15% of the ordinary share capital was to be offered to institutional investors of Botswana origin, 5% to Southern African Enterprise Development Fund. At the time of this litigation, the aforementioned twenty- five per centum shareholding had not yet been taken up. The consortium agreement was to be an interim governing agreement pending the signing of a shareholder’s agreement, otherwise it was to lapse in the event of Mascom not being granted a licence.

Lesetedi said the governing contractual instrument is the consortium agreement has been cancelled on the basis inter alia that TSM has not paid its share call. Neither has TSM paid its contribution to DECI Holdings to make its own contribution to Mascom. TSM admits that it has not paid its share call although it now says the funds are available.

“It appears to me that if PTI had a prima facie right to cancel the agreement, then it appears to me that due to the public interest in Mascom, it is very important that an order be granted for the two companies to run with some semblance of normality in the interim pending the final determination of this matter.

Mascom was the first mobile telecom company Masiyiwa founded. He founded the company 21 years ago, few months before he established Econet Wireless in Zimbabwe. It is Botswana’s largest mobile operator with a reported 1. 7 million subscribers. Earlier in March, Econet Group spent $300 million acquiring a 53% stake in Mascom from MTN Group, thereby increasing its stake from 7% to 60%. The deal is expected to be concluded anytime soon as regulatory approval is at its final stages.

Earlier this year during his visit to Botswana and hosted by President Mokgweetsi Masisi Zimbabwe’s richest man, announced that his company, Econet Group, will list Botswana mobile network operator, Mascom, on the nation’s stock exchange later this year.

Speaking at a press conference in Gaborone, Masiyiwa said that by October this year, he intends to list some of Econet’s Mascom shares on the Botswana Stock Exchange in what he believes will be one of the biggest flotations on the bourse. “This is what I have always wanted to do …I have never held enough shareholding to push it through,” he told reporters.

On his Facebook page, Masiyiwa said that anyone who can raise $10 should be able to buy shares in Mascom. “In what I hope will be the biggest public listing ever undertaken in Botswana, I want to sell shares to anyone who can raise about 100 pula ($9.36),” Masiyiwa said.

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Mowana Mine to open, pay employees millions

18th January 2022
Mowana Mine

Mowana Copper Mine in Dukwi will finally pay its former employees a total amount of P23, 789, 984.00 end of this month. For over three years Mowana Copper Mine has been under judicial management. Updating members, Botswana Mine Workers Union (BMWU) Executive Secretary Kitso Phiri this week said the High Court issued an order for the implementation of the compromise scheme of December 9, 2021 and this was to be done within 30 days after court order.

“Therefore payment of benefits under the scheme including those owed to Messina Copper Botswana employees should be effected sometime in January latest end of January 2022,” Kitso said. Kitso also explained that cash settlement will be 30 percent of the total Messina Copper Botswana estate and negotiated estate is $3,233,000 (about P35, 563,000).

Messina Copper was placed under liquidation and was thereafter acquired by Leboam Holdings to operate Mowana Mine. Leboam Holdings struck a deal with the Messina Copper’s liquidator who became a shareholder of Leboam Holdings. Leboam Holdings could not service its debts and its creditors placed it under provisional judicial management on December 18, 2018 and in judicial management on February 28, 2019.

A new company Max Power expressed interest to acquire the mining operations. It offered to take over the Mowana Mine from Leboam Holdings, however, the company had to pay the debts of Leboam including monies owed to Messina Copper, being employees benefits and other debts owed to other creditors.

The monies, were agreed to be paid through a scheme of compromise proposed by Max Power, being a negotiated payment schedule, which was subject to the financial ability of the new owners. “On December 9, 2021, Messina Copper liquidator, called a meeting of creditors, which the BMWU on behalf of its members (former Messina Copper employees) attended, to seek mandate from creditors to proceed with a proposed settlement for Messina Copper on the scheme of compromise. It is important to note that employee benefits are regarded as preferential credit, meaning once a scheme is approved they are paid first.”

Negotiated estate is P35, 563,000

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Councilors’ benefits debacle-savingram reveals detail

18th January 2022

A savingram the Ministry of Local Government and Rural Development sent to Town Clerks and Council Secretaries explaining why councilors across the country should not have access to their terminal benefits before end of their term has been revealed.

The contents of the savingram came out in the wake of a war of words between counselors and the Ministry of Local Government and Rural Development. The councilors through the Botswana Association of Local Authorities (BALA) accuse the Ministry of refusing to allow them to have access to their terminal benefits before end of their term.

This has since been denied by the Ministry.  In the savingram to town councils and council secretaries across the country, Permanent Secretary in the Ministry of Local Government and Rural Development Molefi Keaja states that, “Kindly be advised that the terminal benefits budget is made during the final year of term of office for Honorable Councilors.”  Keaja reminded town clerks and council secretaries that, “The nominal budget Councils make each and every financial year is to cater for events where a Councilor’s term of office ends before the statutory time due to death, resignation or any other reason.”

The savingram also goes into detail about why the government had in the past allowed councilors to have access to their terminal benefits before the end of their term.  “Regarding the special dispensation made in the 2014-2019, it should be noted that the advance was granted because at that time there was an approved budget for terminal benefits during the financial year,” explained Keaja.  He added that, “Town Clerks/Council Secretaries made discretions depending on the liquidity position of Councils which attracted a lot of audit queries.”

Keaja also revealed that councils across the country were struggling financially and therefore if they were to grant councilors access to their terminal benefits, this could leave their in a dire financial situation.  Given the fact that Local Authorities currently have cash flow problems and budgetary constraints, it is not advisable to grant terminal benefits advance as it would only serve to compound the liquidity problems of councils.

It is understood that the Ministry was inundated with calls from some Councils as they sought clarification regarding access to their terminal benefits. The Ministry fears that should councils pay out the terminal benefits this would affect their coffers as the government spends a lot on councilors salaries.

Reports show that apart from elected councilors, the government spends at least P6, 577, 746, 00 on nominated councilors across the country as their monthly salaries. Former Assistant Minister of Local Government and Rural Development, Botlogile Tshireletso once told Parliament that in total there are 113 nominated councilors and their salaries per a year add up to P78, 933,16.00. She added that their projected gratuity is P9, 866,646.00.

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Households spending to drive economic recovery

17th January 2022

A surge in consumer spending is expected to be a key driver of Botswana’s economic recovery, according to recent projections by Fitch Solutions. Fitch Solutions said it forecasts household spending in Botswana to grow by a real rate of 5.9% in 2022.

The bullish Fitch Solutions noted that “This is a considerable deceleration from 9.4% growth estimated in 2021, it comes mainly from the base effects of the contraction of 2.5% recorded in 2020,” adding that, “We project total household spending (in real terms) to reach BWP59.9bn (USD8.8bn) in 2022, increasing from BWP56.5bn (USD8.3bn) in 2021.”  According to Fitch Solutions, this is higher than the pre-Covid-19 total household spending (in real terms) of P53.0 billion (USD7.8bn) in 2019 and it indicates a full recovery in consumer spending.

“We forecast real household spending to grow by 5.9% in 2022, decelerating from the estimated growth of 9.4% in 2021. We note that the Covid-19 pandemic and the related restrictions on economic activity resulted in real household spending contracting by 2.5% in 2020, creating a lower base for spending to grow from in 2021 and 2022,” Fitch Solutions says.

Total household spending (in real terms), the agency says, will increase in 2022 when compared to 2021. In 2021 and 2022, total household spending (in real terms) will be above the pre-Covid-19 levels in 2019, indicating a full recovery in consumer spending, says Fitch Solutions.  It says as of December 6 2021 (latest data available), 38.4% of people in Botswana have received at least one vaccine dose, while this is relatively low it is higher than Africa average of 11.3%.

“The emergence of new Covid-19 variants such as Omicron, which was first detected in the country in November 2021, poses a downside risk to our outlook for consumer spending, particularly as a large proportion of the country’s population is unvaccinated and this could result in stricter measures being implemented once again,” says Fitch Solutions.

Growth will ease in 2022, Fitch Solution says. “Our forecast for an improvement in consumer spending in Botswana in 2022 is in line with our Country Risk team’s forecast that the economy will grow by a real rate of 5.3% over 2022, from an estimated 12.5% growth in 2021 as the low base effects from 2020 dissipate,” it says.

Fitch Solutions notes that “Our Country Risk team expects private consumption to be the main driver of Botswana’s economic growth in 2022, as disposable incomes and the labour market continue to recover from the impacts of the Covid-19 pandemic.”
It says Botswana’s tourism sector has been negatively impacted by the Covid-19 pandemic and the related travel restrictions.

According to Fitch Solutions, “The emergence of the Omicron variant, which was first detected in November 2021, has resulted in travel bans being implemented on Southern African countries such as South Africa, Botswana, Lesotho, Namibia, Zimbabwe and Eswatini. This will further delay the recovery of Botswana’s tourism sector in 2021 and early 2022.”  Fitch Solutions, therefore, forecasts Botswana’s tourist arrivals to grow by 81.2% in 2022, from an estimated contraction of 40.3% in 2021.

It notes that the 72.4% contraction in 2020 has created a low base for tourist arrivals to grow from.  “The rollout of vaccines in South Africa and its key source markets will aid the recovery of the tourism sector over the coming months and this bodes well for the employment and incomes of people employed in the hospitality industry, particularly restaurants and hotels as well as recreation and culture businesses,” the report says.

Fitch Solutions further notes that with economies reopening, consumers are demanding products that they had little access to over the previous year. However, manufacturers are facing several problems.  It says supply chain issues and bottlenecks are resulting in consumer goods shortages, feeding through into supply-side inflation.  Fitch Solutions believes the global semiconductor shortage will continue into 2022, putting the pressure on the supply of several consumer goods.

It says the spread of the Delta variant is upending factory production in Asia, disrupting shipping and posing more shocks to the world economy. Similarly, manufacturers are facing shortages of key components and higher raw materials costs, the report says adding that while this is somewhat restricted to consumer goods, there is a high risk that this feeds through into more consumer services over the 2022 year.

“Our global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate a large enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates,” says Fitch Solutions.
Both these factors, it says, will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales.

“As of December 6 2021, 38.4% of people in Botswana have received at least one vaccine dose. While this is low, it is higher than the Africa average of 11.3%. The vaccines being administered in Botswana include Pfizer-BioNTech, Sinovac and Johnson & Johnson. We believe that a successful vaccine rollout will aid the country’s consumer spending recovery,” says Fitch Solutions.  Therefore, the agency says, “Our forecasts account for risks that are highly likely to play out in 2022, including the easing of government support. However, if other risks start to play out, this may lead to forecast revisions.”

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