THE Kingdom Meikles Africa Ltd (KMAL) wrangle pitting Kingdom Bank Ltd founder Nigel Chanakira and specified former group chairman John Moxon has intensified after the two men failed to reach a deal at a meeting to iron out their differences in South Africa last month, documents in our possession suggest.
This was after Chanakira set tough conditions for Moxon as a way forward.
At the meeting held on March 2, Moxon demanded the demerger of KMAL as soon as possible, the appointment of directors to the Meikles Africa Ltd (MAL) board and the lifting of his specification.
But Chanakira urged him to consider returning home and face the music, which could mean imprisonment.
Chanakira, however, described the meeting, at the Mount Nelson Hotel in Cape Town, as “useful, frank and constructive”.
Moxon demanded that theÂ KMAL board should instigate a demerger of KMAL into Meikles Africa Ltd and Kingdom Financial Holdings (KFHL) as soon as possible.
After the demerger, Moxon demanded that all “ex-MAL” directors resign from the KFHL board and vice-versa.
In a letter dated March 5, Chanakira wrote to Moxon: “As a way forward for KMAL, you (Moxon) suggested the following: Meikles family companies would like and would vote for the demerger of KMAL into Meikles Africa Ltd (MAL) and KFHL.”
Chanakira said he was agreeable to the proposal but suggested that Moxon first return to “engage the authorities” or meet with investigators in South Africa.
Chanakira said should the demerger occur, Moxon could lose more in the event of MAL getting entangled in government indigenisation schemes.
“A demerger of KFHL from KMAL albeit MAL would be extremely vulnerable to indigenisation laws, particularly Tanganda which you concurred would require a separate ownership structure,” Chanakira said.
The documents to hand do not say, although Chanakira seems to believe, the farmland owned by Tanganda might be seized by the state. It is also not clear what ownership structure Moxon had proposed for the tea-maker to make it vulnerable to a takeover.
MAL controlled Tanganda Ltd, formerly a listed agricultural business.
Moxon’s other demands were that the MAL board be “reconstructed” since it would now be smaller after a spate of resignations and retirements.
He urged Chanakira to refrain from legal attacks and issuing press statements.
Should the need to deal with the press arise, he suggested, “only joint statements be released”.
Chanakira proposed that Moxon engage the authorities by either returning to Zimbabwe or meeting with investigators in South Africa, thus placing Moxon between a rock and a hard place.
Chanakira has demanded, among other things, that the Cape Grace Hotel be sold to MoxonÂ family companies Mentor Africa or Cool Bay at a valueÂ to be approved by unrelated shareholders.
Â In addition, Chanakira wants a settlement for indigenisation option rights held by Valley Field of up to 51% of KMAL, all outstanding salaries and benefits which the banker had not been paid since the inception of KMAL, and the return of US$22 million held at the RBZ from KFHL to MAL.
Chanakira said he had nothing to do with Moxon’s specification.
“I do however feel it appropriate to emphasise once again that notwithstanding any belief you may hold to the contrary, it is simply not within my power to ‘revoke’ the specification order granted against you.
In the context of a settlement I would be prepared to recommend to KMAL that it make appropriate
submissions to the relevant authorities with a view to having that order removed (subject of course to your full co-operation with the investigators),” said Chanakira.
Chanakira said in light of Moxon’s reluctance to return to Zimbabwe for fear of imprisonment, he (Chanakira) agreed to meet Zimbabwean authorities to pave a way forward.
“I (or in retrospect now, KMAL board, and you or your lawyers/representatives) meet with Zimbabwean authorities to negotiate a way forward. KMAL board negotiates for the recovery of funds from Cool Bay and Mentor Africa in shares and cash,” added Chanakira.
Chanakira also wants KML to recover a R60 million loan to Cape Grace and its outstanding management fees amounting to R2 million.
Chanakira says in the letter that: “Any agreement that you and I may ultimately conclude in relation to our shareholding, would have to be in the best interests of KMAL and not, merely be convenient to us.”
He promised to take a draft MOU, a truce from Moxon, to the board and seek guidance.
Â The dispute between Moxon and Chanakira marks the end of a long business relationship and eventual marriage between KFHL, who in the past have depended on their partner’s huge cash resources to finance key capitalisation concerns, and Meikles Africa Ltd in December 2007.
The merger sailed through last year resulting in the birth of KMAL.
Moxon and Chanakira first clashed after the former tried to unilaterally sell off the group’s prestigious Cape Grace Hotel at the V&A Waterfront in Cape Town.
After Chanakira led resistance to the sale of the asset, Moxon declared war on him and called for an EGM to have the banker, industrialist Callisto Jokonya and Rugare Chidembo, removed from the KMAL board.
Chanakira then accused Moxon of externalising US$18,6 million and R21, 2 million and alerted police to possible fraudulent conduct, which led to Moxon’s specification.
BY CHRIS MURONZI