Chidhakwa, ZMDC meet as diamond saga deepens

Politics
THE Ministry of Mines and Mining Development last week met executives from the Zimbabwe Mining Development Corporation (ZMDC) to unravel claims by a Ghanaian investor that he had paid a US$6 million bribe to the parastatal’s former chairman, Godwills Masimirembwa.

THE Ministry of Mines and Mining Development last week met executives from the Zimbabwe Mining Development Corporation (ZMDC) to unravel claims by a Ghanaian investor that he had paid a US$6 million bribe to the parastatal’s former chairman, Godwills Masimirembwa.

BY NDAMU SANDU

The meeting, which also looked at the state of ZMDC’s operations and corporate governance issues, comes at a time the corporation has mulled cancelling its diamond partnership with Ghanaian businessman, William Ato Essien for failing to honour his financial obligation.

ZMDC, police and Essien’s Bill Minerals are partners in Gye Nyame Resources (GRN), a diamond producer in Marange.

On Tuesday, President Robert Mugabe accused Masimirembwa of having hounded Essien out of the country, after extorting US$6 million from him.

Mines and Mining Development minister, Walter Chidhakwa told The Standard yesterday he was trying to get a clear picture of what had happened.

“I have sought to listen from different people, including Masi-mirembwa. You have to get a full picture. I am also supposed to meet the Ghanaian investor,” Chidhakwa said yesterday.

The Standard was told yesterday that ZMDC had grown impatient with Essien after the businessman failed to inject capital into the diamond mine.

This has resulted in the mine failing to pay its workers’ salaries for the past six months. It is not operating, as it has no funds to comply with the Environmental Management Agency requirements.

This has led ZMDC to mull the cancellation of the joint venture agreement on the basis that Essien had failed to honour his obligations.

Chidhakwa said ZMDC had told him of the failure by Essien to bring the money into the project.

“In briefings, people say he [Essien] had failed to bring the original investment as per agreement. But you need to talk to the investor and say this is what was agreed, what is the problem?” he said.

As part of the agreement signed November 24 2011, Essien’s Bill Minerals equity contribution was supposed to be US$110,5 million.

It was also supposed to bring a commitment investment amount of US$5 million to be deposited into the joint venture company by January 14 2012.

When the initial US$5 million was exhausted, the joint venture company asked the investor to put more money into the project.

To salvage the situation, the joint venture company then arranged for US$10 million loan with two local banks.

The banks (names supplied) had facilities of US$4 million and US$6 million respectively.

Since banks wanted security, Essien’s associate Itai Munyeza then looked for a local partner, Blessmore Chanakira to provide the security.

“As matters stand, those facilities are secured by properties belonging to those two Zimbabweans and Essien has not brought in any further money into the country,” a close source said.

ZMDC equity contribution in the JV was in the form of cession of its mining rights and ownership of diverse mineral resource in the allocated concessions.

The parties agreed on a resource depletion fee of 2,5% of revenue, payable within seven days after sale of diamonds by the JV company to ZMDC at the same time the management fees were to be paid to the parties.

The JV was also mandated to register a community trust as a vehicle for carrying out its social responsibility programmes funded in terms of the business plan agreed by the parties.

“For the avoidance of doubt, 2% of the Joint Venture company’s net profits shall be allocated for funding of community trust and is subject to change upon approval by the board,” the agreement said.

Clause 21,4 of the JV agreement said termination of the deal should arise when there is a fundamental breach, if “any party materially breaches any provision of the agreement and fails to remedy such breach within 14 working days after receiving written notice requiring such remedy”.

The party aggrieved by such breach “shall be entitled, without prejudice to their other rights in law, including any right to claim damages, to cancel this agreement or to claim immediate specific performance of all the defaulting party’s obligations then due for performance at the time of the breach”.

Questions are being asked how Essien had brought the money in cash considering the global fight against the financing of terrorism and money laundering.

Countries have enforced tighter controls on the movement of hard cash and one requires exchange control approvals from both the exporting and importing destinations.

GNR board chairman Manson Mnaba told our sister paper, NewsDay, that Essien showed him a declaration receipt showing that the Ghanaian had entered the country with cash worth US$5 million.

What were the channels used to bring the money into the country and what explanations were offered to customs and Zimbabwe Revenue Authority (Zimra)?

A banking executive said yesterday the reason Essien could have used was that they were importing cash to improve the liquidity situation. However, the executive said the money has to be recorded in money supply statistics.

“The central bank is critical in this and the question is: Was it aware that loads of cash were entering the country? For Zimra, the fact that one was bringing lots of money in cash should have warranted an investigation,” the executive said.

Calls to central bank governor Gideon Gono went unanswered yesterday.

Essien told The Standard yesterday: “I would rather not comment on that.” WHO IS WILLIAM ATO ESSIEN?

The businessman is the founder of First Capital Plus (FCP), a wholly-owned Ghanaian Savings and Loans company that was established in 2009.

According to his profile on FCP’s website, Essien is “an astute entrepreneur with a wealth of experience in micro-financing and business financing structuring”.

He is the founder of the William Ato Essien Foundation, which was established in June 2011 “to provide financial support for educational and health purposes and also to impact the society in general”.