Business / Companies
Old Mutual gets 7 days to submit acceptable empowerment plan
06 Sep 2011 at 23:30hrs | Views
OLD Mutual has come under fire for failing to fulfil the indigenisation plan it tabled last year amid revelations that the country's largest insurer's major shareholders are now opposed to the initial proposal.
Government has now moved in and has given Old Mutual seven days to present an acceptable plan or risk unspecified action.
The latest development comes at a time when Government has agreed to defer cancellation of Murowa Diamonds' operating licence after the mine made a commitment on Monday to resubmit its plans within the next two weeks.
Last year, Old Mutual, one of the biggest participants on the Zimbabwe Stock Exchange with huge blocks of shares in several quoted companies, had offered to offload 27 percent shareholding to employees, 17 percent to local pension funds and 7 percent to the National Indigenisation Trust Fund.
This was lauded as a plausible move by a foreign-owned insurance firm at a time when some companies showed resistance.
In a letter addressed to Old Mutual chief executive Mr Luke Ngwerume dated September 1, 2011, Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere appeared to have lost patience with the insurance firm.
"I refer to my letter dated June 23 2011 requesting you to provide me with an update on the progress towards implementation of the approved Indigenisation Implementation Plan for Old Mutual Zimbabwe Limited and the submission of IDG-04 form and Deed of Trust for the Employee and Management Share Ownership Schemes. I note with regret, that you have not yet responded to my request.
"In the circumstances, you are required to provide me with the progress report within seven days of receipt of this letter, failure of which no further indulgence shall be granted," said Minister Kasukuwere.
Efforts to get a comment from Old Mutual were unsuccessful as Mr Ngwerume was said to be in a meeting.
The latest development comes a few weeks after Government issued a similar ultimatum to Barclays Bank, Standard Chartered and some mining firms to make fresh proposals that are consistent with the country's empowerment laws.
The affected mining companies include Zimbabwe Platinum Mines, Mimosa, Duration Gold Mine, Blanket Mine and Murowa Diamonds.
British American Tobacco, Nestle Zimbabwe and cotton processor Cargill were given the same period to come up with acceptable plans.
Murowa, however, got a reprieve this week after the diamond firm agreed to submit a new plan.
"Murowa Diamonds undertook to resubmit its plan within 14 days that recognises the 51 percent indigenous shareholding requirement in that law and also recognises the value of the minerals," read part of a joint statement dated September 5 signed by Minister Kasukuwere and Murowa managing director Mr Nick Kristensen.
" . . . the Honourable Minister has agreed to suspend the cancellation of Murowa Diamonds operating licence pending the submission of a compliant indigenisation implementation plan."
Recently, Minister Kasukuwere indicated that about 700 foreign-owned companies had submitted their plans.
Of these companies, 175 were mining companies, which had proposed to fulfil part of the indigenisation thresholds using empowerment credits.
These have since been rejected with communities where these companies operate now expected to get direct equity.
Mining companies had proposed to directly localise 26 percent stake with 25 percent being covered under credits from social investments.
Government has now moved in and has given Old Mutual seven days to present an acceptable plan or risk unspecified action.
The latest development comes at a time when Government has agreed to defer cancellation of Murowa Diamonds' operating licence after the mine made a commitment on Monday to resubmit its plans within the next two weeks.
Last year, Old Mutual, one of the biggest participants on the Zimbabwe Stock Exchange with huge blocks of shares in several quoted companies, had offered to offload 27 percent shareholding to employees, 17 percent to local pension funds and 7 percent to the National Indigenisation Trust Fund.
This was lauded as a plausible move by a foreign-owned insurance firm at a time when some companies showed resistance.
In a letter addressed to Old Mutual chief executive Mr Luke Ngwerume dated September 1, 2011, Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere appeared to have lost patience with the insurance firm.
"I refer to my letter dated June 23 2011 requesting you to provide me with an update on the progress towards implementation of the approved Indigenisation Implementation Plan for Old Mutual Zimbabwe Limited and the submission of IDG-04 form and Deed of Trust for the Employee and Management Share Ownership Schemes. I note with regret, that you have not yet responded to my request.
"In the circumstances, you are required to provide me with the progress report within seven days of receipt of this letter, failure of which no further indulgence shall be granted," said Minister Kasukuwere.
Efforts to get a comment from Old Mutual were unsuccessful as Mr Ngwerume was said to be in a meeting.
The latest development comes a few weeks after Government issued a similar ultimatum to Barclays Bank, Standard Chartered and some mining firms to make fresh proposals that are consistent with the country's empowerment laws.
The affected mining companies include Zimbabwe Platinum Mines, Mimosa, Duration Gold Mine, Blanket Mine and Murowa Diamonds.
British American Tobacco, Nestle Zimbabwe and cotton processor Cargill were given the same period to come up with acceptable plans.
Murowa, however, got a reprieve this week after the diamond firm agreed to submit a new plan.
"Murowa Diamonds undertook to resubmit its plan within 14 days that recognises the 51 percent indigenous shareholding requirement in that law and also recognises the value of the minerals," read part of a joint statement dated September 5 signed by Minister Kasukuwere and Murowa managing director Mr Nick Kristensen.
" . . . the Honourable Minister has agreed to suspend the cancellation of Murowa Diamonds operating licence pending the submission of a compliant indigenisation implementation plan."
Recently, Minister Kasukuwere indicated that about 700 foreign-owned companies had submitted their plans.
Of these companies, 175 were mining companies, which had proposed to fulfil part of the indigenisation thresholds using empowerment credits.
These have since been rejected with communities where these companies operate now expected to get direct equity.
Mining companies had proposed to directly localise 26 percent stake with 25 percent being covered under credits from social investments.
Source - Zimpapers
