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NetOne suspends CEO Lazarus Muchenje

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Lazarus Muchenje
Lazarus Muchenje

NetOne’s board of directors has suspended the company’s chief executive officer (CEO) Lazarus Muchenje with immediate effect over alleged gross misconduct relating to the manner he handled expired contracts for nine senior managers.

Mr Lazarus Muchenje’s alleged gross misconduct related to his decision not to renew contracts for nine senior members of management after their expiry, a decision the board of directors claims was taken irregularly and without their knowledge.

But Mr Muchenje has since made an urgent chamber application at the High Court seeking to have the actions of the board of directors to rescind his decision not to renew the expired contracts for the senior managers declared a legal nullity.

NetOne board chairman Peter Chingoka has since written to Mr Lazarus Muchenje advising of his suspension for an indefinite period without full pay and benefits, to facilitate an investigation into the allegations of gross misconduct levelled against him.

During the period of the suspension, Mr Chingoka said, the NetOne chief executive will not be allowed to visit the company’s premises, conduct any company business without the authority of the board of directors.

Mr Muchenje was also directed to return all company assets in his possession.

Mr Chingoka said the gross misconduct charges against Mr Lazarus Muchenje related to drastic action he took on senior management without consulting the board, resistance to and challenging the board’s authority on how to handle the issue relating to senior management and undermining the board’s “authority by escalating issues properly before the board to the ministry of ICT’s”.

“I refer to the aforementioned and wish to inform you of the board’s decision to suspend you from work with immediate effect in terms of the provisions of the Labour (National Employment Code of Conduct) SI 15 of 2006. The suspension is without full pay and benefits. You are therefore hereby suspended on those terms,” he wrote.

Mr Chingoka said the NetOne board will immediately investigate allegations against Mr Muchenje and thereafter advise on the findings of that investigation.

In the urgent chamber application to the High Court case HC7144/18 filed on August 3, 2018, Mr Muchenje cited board members Sydney Nyanungo, Theophilus Damba, Ruth Ncube, Nancy Samuriwo, Georgina Chingonzo and Nyengeterai Mahaka.

The directors whose contracts Mr Muchenje had refused to renew, which were then extended by the board, are Brian Mutandiro, Sibusisiwe Ndlovu, Clever Isaya, Nancy Murove, Innocent Mukanditsama, Jennifer Muketiwa, Raphael Mushanawani, Cleopas Kadzimu and Solomon Manda. They are all cited as respondents in the High Court case.

Also, cited as respondents are Information Communication Technology, Postal and Courier Services Minister Supa Mandiwanzira and the Office of the President and Cabinet, which administers the Corporate Governance and Public Entities Act.

In the certificate of urgency filed at the High Court, Mr Muchenje said he took the decision not to renew contracts for the nine senior managers on July 27, 2018, after which the affected parties were notified and had their final salaries paid out, but the board immediately reversed it.

“On July 28, 2018 one day after the implementation of the aforementioned decision, a purported resolution was passed by first to sixth respondents (board) reinstating the seventh to fifteenth (senior managers) on the strength of a ministerial directive from the sixteenth respondent (Minister of ICT) (requiring seventh to fifteenth respondents reinstatement) employment contracts at a meeting irregularly and called and attended by first to sixth ( NetOne board members),” Mr Lazarus Muchenje said.

He claimed the “irregular and unprocedural” meeting held by the board, with six out of 10 directors present, was called to approve a directive allegedly issued by Minister Mandiwanzira under whose ICT ministry NetOne falls reverse his decision not to renew contracts for the nine senior managers and to reinstate the contracts.
The Herald

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BUSINESS

Zimbabwe agrees to pay $3.5 billion compensation to white farmers

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Zimbabwe White Farmers

Zimbabwe agreed on Wednesday to pay $3.5 billion in compensation to Zimbabwe white farmers whose land was expropriated by the government to resettle black families, moving a step closer to resolving one the most divisive policies of the Robert Mugabe era.

But the southern African nation does not have the money and will issue long term bonds and jointly approach international donors with the farmers to raise funding, according to the compensation agreement.

Two decades ago Mugabe’s government carried out at times violent evictions of 4,500 Zimbabwe white farmers and redistributed the land to around 300,000 Black families, arguing it was redressing colonial land imbalances.

The agreement signed at President Emmerson Mnangagwa’s State House offices in Harare showed white farmers would be compensated for infrastructure on the farms and not the land itself, as per the national constitution.

Details of how much money each farmer, or their descendants, given the time elapsed since the farms were seized, was likely to get were not yet clear, but the government has said it would prioritise the elderly when making the settlements.

Farmers would receive 50% of the compensation after a year and the balance within five years. Finance Minister Mthuli Ncube and acting Agriculture Minister Oppah Muchinguri-Kashiri signed on behalf of the government, while farmers unions and a foreign consortium that undertook valuations also penned the agreement.

“As Zimbabweans, we have chosen to resolve this long-outstanding issue,” said Andrew Pascoe, head of the Commercial Farmers Union representing  Zimbabwe white farmers.

The land seizures were one of Mugabe’s signature policies that soured ties with the West. Mugabe, who was ousted in a coup in 2017 and died last year, accused the West of imposing sanctions on his government as punishment.

The programme still divides public opinion in Zimbabwe as opponents see it as a partisan process that left the country struggling to feed itself. But its supporters say it has empowered landless Black people. Mnangagwa said the land reform could not be reversed but paying of compensation was key to mending ties with the West. Reuters

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Old Mutual’s Share Price Is Focus in Zimbabwe’s Currency War

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Old Mutual Shares Zimbabwe

The share price of one of Africa’s oldest insurers is taking centre stage in Zimbabwe’s battle to bring order to its chaotic foreign-exchange system.
In the latest in a series of attempts to stabilize its currency, the government wants to eradicate the Old Mutual Implied Rate.

The gauge, used by domestic companies to determine the future cost of goods and services, calculates a potential forward rate for the Zimbabwe dollar by measuring the difference between Old Mutual Ltd.’s share prices in Johannesburg, London and Harare.

The indicator is among many “contrived phantom exchange rates” in use that “conspire to defeat fiscal policy,” the government said in a June 26 edict that halted trading on the Zimbabwe Stock Exchange and stopped most mobile-banking transactions.

The OMIR is one of the multiple exchange rates Zimbabweans use daily to navigate the nation’s myriad economic challenges, including annual inflation of almost 800%.

A perennial shortage of cash means anyone who has physical banknotes is able to negotiate exchange rates with brokers who pay the funds onto mobile-money platforms. The brokers can then sell the hard cash at an even higher rate.

That’s resulted in a widening gap between the official rate of 63.7 per U.S. dollar, and the amount at which it trades on the streets of Harare, which is now at 100.

“People have relied on making money from buying and selling Zimbabwe dollars, and not from any real production,” said John Robertson, an independent economist based in Harare. “It’s what has created these distortions.”

The OMIR also feeds into the black-market Zimbabwe dollar rate, which the nation’s bourse uses, along with the official rate, to determine the value of stock prices.

Old Mutual, founded in Cape Town in 1845, is not involved in determining the rate. Market participants take the company’s share prices in South Africa, the U.K. and Zimbabwe, convert each of them into the U.S. dollar, which should typically trade near par.

The finance minister, however, in March restricted trading in the shares of Old Mutual and two other companies by making the stocks no longer fungible or regarded as being equal in value to those traded on other exchanges, in a bid to prevent outflows caused by the dual listings.

Despite the move, investors poured into Old Mutual, using it as a proxy to the U.S. dollar because of its offshore listings, pushing the Zimbabwe-listed stock up 90% since the beginning of May. The shares in Johannesburg and London were little changed, resulting in the implied rate doubling to 122 as the gap between the securities widened.

Zimbabwe’s benchmark industrial index has risen more than sevenfold this year, reaching a record on June 24, and giving the overall bourse a market value of about 229 billion Zimbabwean dollars ($3.6 billion). None of the stocks in the 57-member index has declined this year as Zimbabweans seek a haven from runaway price increases and the weaker currency, which has slumped to 63.7442 per U.S. dollar after a 25:1 peg put in place since March was abandoned.

Suspend Listing
Authorities now want to eliminate the OMIR before allowing any trading to resume on the Zimbabwe Stock Exchange, people familiar with the matter said, asking not to be identified because the talks are private. The OMIR was the focus of various meetings on Monday between members of Zimbabwe’s stockbrokers’ association, the stock exchange, the Securities and Exchange Commission and the Treasury, the people said.

Measures being considered to include suspending Old Mutual’s shares from the Harare-based bourse, having the securities traded only in dollars, or moving the listing to the Victoria Falls Stock Exchange, a market that will only trade in foreign currency once it opens later this year, the people said.
Nick Mangwana, the government’s spokesman, referred queries to the finance ministry. Several calls and text messages sent to Finance Minister Mthuli Ncube and central bank Governor John Mangudya seeking comment weren’t answered.

“There has not been any official communication from authorities in Zimbabwe to Old Mutual,” the Johannesburg-based company said in an email “We have asked our local subsidiary to reach out to our stakeholders in Zimbabwe to try and understand the circumstances around ZSE closure and other related matters.”

Discussions over the halting of trade on the stock exchange are ongoing and the outcome is still uncertain, SEC Chief Executive Officer Tafadzawa Chinamo said by phone. Zimbabwe Stock Exchange CEO Justin Bgoni said on Sunday that the bourse would wait for guidance from regulators.

In comments at a briefing after a cabinet meeting on Tuesday, the finance minister said that stockbrokers should assure their clients that their investments in the stock market are safe and that the bourse will reopen once investigations are complete. Bloomberg

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Zimbabwe government suspends mobile money transactions

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Nick Mangwana

Zimbabwe government has, with immediate effect, suspended all monetary transactions on phone-based mobile money platforms to facilitate investigations that will lead to the arrest and prosecution of people responsible for sabotaging the economy.

In a statement this evening, Secretary for Information, Publicity and Broadcasting Services, Mr Nick Mangwana, said the measures will include the suspension of all trading on the Zimbabwe Stock Exchange.

The suspension will be in place until mobile money platforms have been reformed to their original purpose and when all the present phantom rates have converged into one “genuine rate that is determined by market forces under the foreign currency auction system which was launched by the Reserve Bank of Zimbabwe” on June 23. Operational modalities and details of the envisaged measures will be announced by the relevant monetary, regulatory and law enforcement authorise in the next few days.

The government will ensure that prudent measures are put in place to mitigate and prevent any collateral damage that the interventions may cause to the innocent public that was using the mobile money platforms. The Herald.

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