Government says it is going to probe Econet Wireless’ controversial $130 million rights offer approved by its shareholders as it contravenes the Potraz Act, a cabinet minister has said.
This comes as the company’s shareholders recently approved even though the Zimbabwe Stock Exchange had warned them not to go ahead with the transaction.
By Kudakwashe Pembere
ICT, Postal and Courier Services Supra Mandiwanzira responding to questions during a Parliamentary Portfolio Committee on ICT, Postal and Courier Services said Government was not ignorant of the issue.
“What the developments around this issue have done, they have also brought up issues we need to look at as a ministry and also as a regulator,” he said.
“Econet shares owned by a trust that is representing the 51 percent local shareholders are not resident. Those shares are not resident in this country . They were taken out of then country with the authority of the reserve bank of Zimbabwe and the reason they were taken outside the country was because its is a platform be able to raise money outside the country.
“That the reason they were taken outside the country was because it would allow people to put money to Mauritius the Zimbabwe risk was too high. I think it was a genuine expectation by minority shareholders who are local that if the majority shareholding was taken outside the country on the pretext that it would help raise more money surely they should pay.,” said the minister.
“But also one concern I heard was the loan was $130 million was secured by Econet wireless global and econet wireless global had been receiving guarantee fees of 6percent which equates to about $8 million a year for guaranteeing this loan and when the loan is due the purpose of a guarantee is when a loan is due and it can’t be paid the guarantor must pay it.
“And if you have been reaching as the guarantor and it becomes due you cannot go back to the shareholder and say give me money because you have been receiving money form the guarantee,” he said.
With Potraz not a subordinate to RBZ, and taking into consideration the indigenization clause in the Potraz Act the Minister said they would review the rights issue.
“So we felt that those where genuine issues and we are asking the regulator to now look at this issue because the Potraz Act is very clear that 51 percent of any licensee must actually be owned by a Zimbabwean resident in Zimbabwe.
“And the Potraz act is not subservient to the Reserve Bank Act. So therefore is there was authority granted by the reserve bank act, was there authority granted by the Potraz ct to allow for these shares to go? And don’t get me wrong, the purpose of doing what was done I have no doubt it was got intentions. But had those intentions benefited…
“We may need to review that position. and we may review it to leave things as they are or to say well if its not benefiting the country, if the funds were going to be raised by taking these shares outside the country are not coming into the country then maybe lets change the position.
“Im not calling out anything here now except because of interests raised in this issue we are going to look into that matter,” he said.