President Robert Mugabe’s nephew, Leo Mugabe, might have pocketed millions of dollars before turning around to claim shares in a Hwange-based mining venture fronted by a Chinese investor, Southern Eye has learnt.
BY RICHARD CHIDZA
Leo is locked in a dispute for the control of Hwange Coal and Gasification Company (HCGC) and is now reportedly fronting for a Chinese businessman, who holds minority shareholding in Taiyuan Sanxing, HCGC’s parent company.
According to documents at hand and well-placed sources, Leo’s company, Stoat Mining, had been offered 25% shareholding in Taiyuan Sanxing in the process of setting up HCGC for an initial sum of $10 million.
The money was supposed to have been paid before HCGC’s first board meeting on July 29, 2008, but the local partner failed to do so and a new arrangement was crafted.
“Whereas up to July 29, 2008 Stoat has not fulfilled its obligation of investing in the joint venture with Taiyuan Sanxing Economic Company, Stoat has not contributed to its 25% of the investment obligation, i.e., $10 million in the coke oven before the first board meeting. Taiyuan wish(es) to enter into the following understanding with Stoat in respect of the outstanding part of their investment,” part of the agreement seen by Southern Eye reads.
In the new proposal, the Chinese company agreed to pay Stoat a once-off payment for “services rendered” including “preliminary research, feasibility study, market survey, public relations activities,” among others.
Stoat was supposed to pay Taiyuan $8 million after valuing the Zimbabwean company’s contribution towards the setting-up of the project at $2 million. The Chinese proposed to provide a loan to Stoat that would be used to pay for the shares that would then be repaid through a dividend transfer.
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“Stoat ensures that 80% of the dividend they get from the new company will be used in paying back the loan to Taiyuan every year subject to exchange control authority approval to be granted by the Reserve Bank of Zimbabwe,” part of the agreement reads.
The documents also show that Stoat’s failure to pay for the shares had made the initial agreement void.
“Stoat was paid for services rendered and failed to pay for its shares, hence the deal collapsed, but the Chinese went out of their way to pay Leo and his group for their part in setting up the project,” Southern Eye heard.
Stoat chairman Cephas Msipa Jnr rejected the claims. “We were paid nothing. Do I look like someone who was paid a million?”
Leo also disputed claims he had been paid.
“It is a fraud. We never received anything from them and, in fact, that is why we reported them for externalisation of more than $30 million,” he said.
“I would never grab anyone’s company, it is not the way I do things, I am a professional businessman.”
An impeccable source, however, insisted Leo’s company had been handsomely paid for services rendered.
“That money was indeed paid because we had incurred huge costs during the preliminary phases of setting up the project. The issue of shareholding is in dispute though, but it is a fact that we did not raise the required amount to buy the 25% as had been agreed,” the insider.
Leo said he had paid, but would not divulge the sum he paid.
“We paid for the shares, just know that we paid what was required and we are shareholders,” he said.
According to letters written to both the Department of Immigration in Zimbabwe and Hwange Colliery, the Chinese Embassy‘s Economic and Commercial counsellor’s office has been notified of Leo and one Ma Guixi’s latest bid to annex the company.
