It is now bare knuckles as the fight for the ownership of the dormant Zimbabwe Iron and Steel Company (Zisco) mega-million assets last week took an emotional twist, with the board and a business suitor squaring off over a controversial 2017 deal.
Last week, The Standard, working with Information for Development Trust, reported that the Zimbabwean government facilitated a US$225 million deal that would allegedly strip Zisco of its critical assets and transfer them to ZimCoke, a little-known entity based in Harare.
ZimCoke paid ZW$1 in May 2019 as a transaction fee to take over Zisco’s signature coke ovens and an array of other assets from the integrated steelworks.
But Gift Mugano, the current Zisco board chairperson, insisted that the deal needed to be reviewed as it did not follow best corporate governance principles and was thus “null and void”.
Government has been the major shareholder, with an 89% stake in Zisco, that stopped operations about a decade ago due to widespread mismanagement and political interference.
After last week’s revelations, Eddie Cross, a former ZimCoke consultant who now sits on the entity’s board, described Mugano as “irresponsible” and “unprofessional”, saying the Zisco board chairperson’s attitude was very “disappointing”.
ZimCoke is not flustered by the repeated refusal by Mugano’s board to let them in and take over the targeted assets, according to Cross, and there is no way the deal will be reversed.
“This deal was approved in May 2017 and signed by both parties in July 2017,” Cross said.
“It then took us two years to negotiate the assumption of the KfW debt and the final transaction was then approved by the Cabinet in May 2019,” Cross told The Standard.
Government, as the major shareholder, owes KfW, a German bank, more than US$200 million that ZimCoke had proposed to take on as its own liability in the disputed deal.
“Transfer documents were signed in July (2017).
“We are now waiting for a rates clearance certificate and a capital gains tax clearance certificate to be issued to take ownership of the (Zisco) site and then we can start work in earnest,” said Cross.
“All the required work has been completed,” he added, “and this process should be complete in the next few weeks.”
