RAINBOW Tourism Group (RTG) majority shareholder, Nicholas van Hoogstraten, wants to fire the group’s directors before the hospitality company’s next annual general meeting scheduled for May 28.
Van Hoogstraten (64), who holds 463 million shares in RTG, representing a 34% stake through Banhams Investments (Pvt) Ltd, Messina Investments and Willoughby’s Finance (Pvt) Ltd, said the chairman and directors of RTG should be removed.
Van Hoogstraten alleged that the chairman and directors did not did not know how to run his company and therefore should leave”.
A letter to RTG dated March 11Â and addressed to RTG company secretary Aldoh Musemburi by Banhams Investments said: “We require the removal of the chairman and directors on or before the 2009 annual general meeting. Please ensure that the relevant resolutions are tabled for the annual general meeting. Please provide us with the proposed date for the 2009 annual general meeting to enable us, in consultation with other large shareholders, to put forward our nominations for the appointment of a new chairman and directors.”
Banhams is the largest shareholder in RTG with a 23,6% shareholding and holds about 388 million shares.Van Hoogstraten —— the single largest investor on the Zimbabwe Stock Exchange —— has an 8,6% stake in NMB, 20% in Hwange Colliery and an influential shareholding in CFI Holdings.
He has proposed that Grace Muradzikwa be removed as chairperson of RTG. He is also proposing that seven directors be removed. The seven are Pascal Changunda (group finance director), Cannan Dube, Charmaine Daniels, Godfrey Manhambara, Yardim Mariuma, Elliot Nyoni and Chipo Mtasa, the chief executive officer.
Contacted for comment yesterday, Changunda said he was “waiting for the outcome of the AGM” and so could not comment further.
RTG company secretary Musemburi said they had responded to Van Hoogstraten’s letter and advised company shareholders.
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“It seems he (Van Hoogstraten) has already taken a side with regard to the whole issue, we will have to wait for the AGM like what happened in 2006,” Musemburi told businessdigest yesterday.
Market analysts however questioned if Van Hoogstraten had “enough support from shareholders” to move his proposal to fire the entire board.
“The board is appointed by shareholders at a general meeting. It is really not the decision of one shareholder but a collective decision of all shareholders including minority shareholders,” a stockbroker said yesterday.
“The rules on nominations and appointments vary from company to company but are regulated by the company’s memorandum and articles of association. This will define who gets appointed, who appoints the chairman and other appointments,” he said.
“Broadly though, the rule of thumb is that every 10% shareholding deserves a board seat. The appointment of a member though must then be at an AGM in line with the specific provisions of the company’s articles,” added the stockbroker.
An analyst said it was not going to be easy for Van Hoogstraten to fire the directors as they have different interests and had not explained in detail why he wanted all of them fired.
RTG yesterday said Van Hoogstraten’s proposal suffered from “certain legal deficiencies which have been partially remedied in subsequent communication between Banhams Investments and the company”.
RTG said in a statement advising its shareholders that the board had resolved to amend the AGM notice issued to shareholders and contained in the annual report of the company to allow due and unfettered determination of the proposed resolution by Banhams Investments in the public domain and in order to comply with good corporate governance policy and procedures.
RTG said the amended notice was issued and included the specific resolutions as proposed by Banhams in correspondence with the company.
“It is a point of fact that the major shareholders have been unhappy for some time with the way the company has been run by a group of persons with little or no knowledge of business or in particular the hospitality business and by persons with no financial substance or with any personal financial stake in the company,” RTG said in the statement.
RTG said the removal of directors as proposed by Van Hoogstraten required a “special notice, in terms of the Companies Act and the articles of association of RTG”.
“The resolution, for it to be legal, must be passed by members holding not less than 51% of the issued share capital of the company present in person or by proxy at AGM,” said the RTG.
It said the removal of directors must be dealt with on a person by person basis.
“It is incumbent upon the board to advise members that the Companies Act requires that any company in Zimbabwe must, at all times, have a minimum of two directors and further, that it is not in the best interest of the board or the company for the entire board of a public company to be removed without being replaced or otherwise re-organised,” the RTG said.
This is not the first time that Van Hoogstraten has threatened to fire the RTG board. In what could have turned out to be the biggest boardroom coup ever staged on a tourism counter in 2006, he vowed to fire influential RTG directors citing “fraud and misconduct” in the previous year’s then $80 billion rights issue.
Van Hoogstraten emerged as the largest shareholder in the RTG after the hospitality giant’s rights offer in September 2005.
Documents at hand indicate that the first shots of the impasse were fired on March 20 when van Hoogstraten wrote to RTG: “My intention to remove all the directors that were in office at the time of the rights issue is not solely related to their illegal action over the share allocations. I have no confidence in the board and they have no future with the company.
“In particular there is a clear conflict of interest between the board and Mr Dube and the shareholders, it cannot be right that shareholder funds are being used to defend the illegal actions of the board and their advisors. The contents of this fax may be disclosed to the second major shareholder group but not to the board members that we intend to remove,” said Van Hoogstraten in the fax letter dated March 20 2006.
The dispute was referred to an arbitrator where the outcome was not in Van Hoogstraten’s favour.
Van Hoogstraten is no stranger to controversy. The property tycoon was in 1968 reportedly Britain’s youngest millionaire (aged 23) with a portfolio of over 300 properties, but the same year he began serving a four-year sentence in prison for paying a gang to throw a grenade into the house of Rev Braunstein, a Jewish leader whose eldest son owed him £2 000. Of the incident he has said: “It seems a bit distasteful to me now,” he says, “but back then when I was young . . . these weren’t anarchists, they were businessmen, respectable people.”
He was also jailed on eight counts of handling stolen goods and in 1972 was given a further 15 months for bribing prison officers to smuggle him luxuries. “I ran Wormwood Scrubs when I was in there,” he has said. By 1980 he owned over 2 000 properties. He later sold the majority of his housing, investing in other fields outside Britain, including mining interests in Nigeria and later Zimbabwe.
He first bought an estate in Zimbabwe in 1964 when he was 19. At around the same time he became friends with Tiny Rowland, who was then in charge of the London and Rhodesian Mining Company.
He has been a close associate of Presient Robert Mugabe who he describes as “100% decent and incorruptible”.
BY PAUL NYAKAZEYA
