The Zimbabwe flag. Picture. 1233RF/NATANAEL ALFREDO NEMANITA GINTING
The Zimbabwe flag. Picture. 1233RF/NATANAEL ALFREDO NEMANITA GINTING

Zimbabwe’s government says it was given a stake in Kuvimba Mining House worth $250m to help compensate white farmers for the seizure of their land two decades ago.

The announcement of the donation will deepen controversy around Kuvimba, the ownership of which is disputed. Only two weeks ago, the government said it controlled the firm after buying its assets from a company linked to a tycoon sanctioned by the US.

Kuvimba has been shrouded in controversy since finance minister Mthuli Ncube announced its formation. He said in January the company’s revenue would be used to help pay everything from compensation for evicted white farmers to state worker pensions.

Its assets are the same as those held until at least late 2020 by Sotic International, a company linked to Kudakwashe Tagwirei, an adviser to Zimbabwean President Emmerson Mnangagwa. Tagwirei was sanctioned by the US treasury in 2020 because of allegations he bribed government officials and used political influence to win lucrative state deals.

“On December 18 2020 government secured $250m towards the compensation process through the donation of a shareholding in equal value in a mining asset — Kuvimba Mining House, to a special purpose vehicle specifically created to raise funds for the global compensation agreement,” Zimbabwe’s Treasury said in a statement released at 2.42am local time.

It didn’t say who donated the stake.

The announcement ascribes a value of $2bn to Kuvimba, the assets of which include gold mines and a stake in a platinum project, as the government has previously said the special-purpose vehicle owns 12.5% of the company. In June, the government paid a $1m dividend to white farmers based on that shareholding.

The statement comes after Bloomberg reported on a trove of e-mails, documents and WhatsApp messages that delineated the links between Tagwirei and Sotic, and the Financial Times and The Sentry followed with reports giving details of the relationship earlier in July.

Documents and communication seen by Bloomberg showed his participation in company decision-making and demonstrated that Tagwirei at least partially controlled Sotic. On July 6, Kuvimba denied Tagwirei was a shareholder of Kuvimba or was involved in its activities.

David Brown, a former CEO of SA’s Impala Platinum, is the CEO of both Kuvimba and Sotic. He has said he plans to step down, without giving a date.

Zimbabwe’s government has said it directly owns 21.5% of Kuvimba and smaller shares are held by an array of state companies, bringing state control to 65%. Ncube has repeatedly declined to say who owns the rest. No details of how much was paid or how the assets were acquired from Sotic have been given.

Unclear valuation

The Commercial Farmers Union, with which the government has signed a $3.5bn compensation agreement, isn’t aware of how the valuation was reached.

“They are telling us that it’s $250m,” CFU president Andrew Pascoe said in an interview. “We were not involved. It’s something that the government will have to provide clarity on.”

In its statement, the treasury said it appointed Newstate Partners to help it raise money to meet the compensation agreement. Newstate is a London-based company that has “acted as financial advisers to more than 30 governments across all geographic regions of the world over the past three decades,” according to its website.

The company will explore the raising of funds through domestic and international bond sales, “listed and unlisted equity and quasi-equity instruments,” the treasury said.

The deadline for the first payment as part of the agreement has been extended by a year to July 31 2022, the treasury said.

Bloomberg News. More stories like this are available on bloomberg.com

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