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Mugabe using 'political muscle' in Telecel bid
Shakeman Mugari, The Independent (Zimbabwe)
May 24, 2007

http://www.theindependent.co.zw/viewinfo.cfm?id=10592&siteid=1&archive=1

THE battle for Telecel Zimbabwe (Pvt) has intensified with allegations that Leo Mugabe might be trying to use his political influence to wrest control of the mobile phone company.

Mugabe, in his capacity as chairman of the Parliamentary Portfolio Committee on Transport and Communications, has in the past grilled Telecel directors over the company's shareholding structure and the release of additional new lines.

He accused Telecel directors of releasing lines when the network was congested. Last week Mugabe questioned the shareholding structure of the company again and accused one of the Telecel directors, Jane Mutasa, of taking shares belonging to the Indigenous Business Women's Organisation (IBWO). But Mugabe has at the same time been trying to buy 11% of Telecel through the backdoor. Mugabe has been fighting to control Telecel Zimbabwe for the past five years.

IBWO has a minority interest in Telecel by virtue of its shares in Empowerment Corporation (EC), a group of indigenous businesspeople that owns 40% in the mobile company.

The other 60% is owned by Telecel International but Telecel Zimbabwe's operating licence is owned by EC. Other shareholders in EC include runaway businessman, James Makamba, who has the majority stake through his company, Kestrel Corporation and Selpon Investments, a company owned by Jane Mutasa.

The National Miners Association also has a minority stake.

Mugabe's renewed fight could have been triggered by information that Telecel International will next month sell 11% of its shareholding to EC to comply with government regulations.

Regulations stipulate that no foreign investor is supposed to own a controlling stake in a local telecommunications company.

Telecel International has until June to sell 11% to EC to comply with the regulations or Telecel Zimbabwe will lose its operating licence. Mugabe claims that he is part of EC and should therefore be given preemptive rights to buy the shares from Telecel International.

In July last year Mugabe wrote a letter to the then interim chief executive of Telecel International, Jim Bailey, saying he had EC's permission to buy the shares through his company, Integrated Engineering Group (Pvt) Ltd.

In the that letter Mugabe offered US$3 million for the stake and reminded Telecel International that it was in their interests to rectify the anomaly in the shareholding structure because government was planning to cancel the licence.

That bid hit the rocks when EC wrote to Telecel International disowning Mugabe's initiative. In their response Telecel International told Mugabe that: "We are surprised that IEG has been asked by EC to purchase the stake."

After failing to get the shares Mugabe called the directors of EC and told them that he had a "presidential directive" to make sure that the shareholding structure is corrected. He said he was given the directive by President Robert Mugabe. The members of EC responded through their lawyers by requesting a copy of the "presidential directive".

"Our client strongly believe that, had it been that the president wanted to give a certain directive as regards the share structure of the corporation, he would have called all the interested parties and informed them of the perceived share structure," said the letter from EC's lawyers.

"Further, our client nurses great doubts as to whether the president would have given a "directive" which seeks to ignore the present shareholders and to ignore their contributions which made the corporation to be where it is right now."

In an interview this week Mutasa, who is currently the acting chairperson of Telecel Zimbabwe, said Leo Mugabe was never part of EC.

She said Mugabe had not subscribed to the shares when government invited indigenous groups to do so after setting up EC.

"Mugabe (Leo) is abusing his position in the parliamentary portfolio committee to harass EC so that we can allow him to buy the shares from Telecel International," Mutasa said.

"I for one have endured Mugabe's harassment for the past four years. My crime is that I happen to own some shares in EC. He wants my shares."

A 1999 letter written to EC by their bankers, CBZ Bank, shows that Mugabe's $140 000 cheque meant for the subscription was rejected.

"Please note that the cheque belonging to Mr Leo Mugabe was referred back to the drawer," reads part of the letter.

Mugabe however insists that there was never a time when members of EC were required to subscribe to the shares because the licence was given by government for free.

When contacted for comment this week Mugabe said Mutasa was trying to avoid the key issues at stake. "Ask her (Mutasa) whether women in IBWO know what happened to their shares. That is what you must do if you want your story to be objective," Mugabe said.

But Mutasa said she had every right to own the shares. "When government invited us to subscribe I got a loan from the bank and put my house worth $2,5million as collateral. What did Leo Mugabe put to buy the shares," Mutasa said.

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