News / National
Controversial $450 million deal to rescue Zim govt row
05 Dec 2011 at 08:17hrs | Views
An explosive row has erupted between the RBZ, Saudi Arabian mineral and jewellery dealer Sulaim Al Othaim and local tycoon David Butau over a controversial $450-million deal designed to rescue government from bankruptcy at the height of the economic meltdown.
The dispute over the 2006 deal has been running for 5 years but has now exploded into the public domain as Al Othaim and Butau demand payment from the RBZ, which is refusing to pay up, saying it was not implemented as originally agreed. There have also been allegations of fraud and betrayal.
In terms of the agreement, Al Othaim was supposed to buy gold from the RBZ for its factories in Riyadh, the Saudi capital.
There was also a plan to create a strategic partnership between Al Othaim, which also owns shopping malls, retail outlets and colleges, and the RBZ's subsidiary Aurex Jewellery.
Al Othaim was supposed to provide the RBZ with a multi-draw letter of credit for the delivery of 200 000 ounces of gold, a cash deposit for 315 000 ounces and a bank guarantee for $150-million.
The Central Bank was supposed to supply 515 000 ounces of gold within nine to 12 months at London Metal Exchange-fixed prices and at a 34% discount. In total, the deal was valued at $450-million.
Butau was involved as facilitator through Dande Capital Holdings where he is executive chairman.
SA's Rand Merchant Bank was to provide structured finance, including handling cash deposits and cash guarantees. Local bank CBZ, together with its clients, Dande Capital, played a facilitation role and was to be paid for that.
It was agreed that any disputes would be dealt with in accordance with the laws of the UK, Switzerland and Netherlands, not Zimbabwe or Saudi Arabia.
Some parties involved in the deal now claim it was "a scandal wholly prejudicial to government". Documents show there are allegations of fraud and siphoning-off of gold proceeds.
To exacerbate the situation, Butau has been demanding $1.5 million from the RBZ in "facilitation fees".
In a letter dated February 16 to RBZ governor Gideon Gono, Butau demanded $800 000. The RBZ paid him $200 000. However, in another letter dated November 2, Butau demanded his balance of $1.3 million, threatening legal action to recover the money.
The RBZ is also in another dispute with Al Othaim over a $1.6 million debt. But on Friday Gono's office hit back, saying those claiming fraud and demanding payments were misrepresenting facts and had hidden agendas "bordering on extortion and rent-seeking."
The dispute over the 2006 deal has been running for 5 years but has now exploded into the public domain as Al Othaim and Butau demand payment from the RBZ, which is refusing to pay up, saying it was not implemented as originally agreed. There have also been allegations of fraud and betrayal.
In terms of the agreement, Al Othaim was supposed to buy gold from the RBZ for its factories in Riyadh, the Saudi capital.
There was also a plan to create a strategic partnership between Al Othaim, which also owns shopping malls, retail outlets and colleges, and the RBZ's subsidiary Aurex Jewellery.
Al Othaim was supposed to provide the RBZ with a multi-draw letter of credit for the delivery of 200 000 ounces of gold, a cash deposit for 315 000 ounces and a bank guarantee for $150-million.
The Central Bank was supposed to supply 515 000 ounces of gold within nine to 12 months at London Metal Exchange-fixed prices and at a 34% discount. In total, the deal was valued at $450-million.
Butau was involved as facilitator through Dande Capital Holdings where he is executive chairman.
SA's Rand Merchant Bank was to provide structured finance, including handling cash deposits and cash guarantees. Local bank CBZ, together with its clients, Dande Capital, played a facilitation role and was to be paid for that.
It was agreed that any disputes would be dealt with in accordance with the laws of the UK, Switzerland and Netherlands, not Zimbabwe or Saudi Arabia.
Some parties involved in the deal now claim it was "a scandal wholly prejudicial to government". Documents show there are allegations of fraud and siphoning-off of gold proceeds.
To exacerbate the situation, Butau has been demanding $1.5 million from the RBZ in "facilitation fees".
In a letter dated February 16 to RBZ governor Gideon Gono, Butau demanded $800 000. The RBZ paid him $200 000. However, in another letter dated November 2, Butau demanded his balance of $1.3 million, threatening legal action to recover the money.
The RBZ is also in another dispute with Al Othaim over a $1.6 million debt. But on Friday Gono's office hit back, saying those claiming fraud and demanding payments were misrepresenting facts and had hidden agendas "bordering on extortion and rent-seeking."
Source - Sunday Times
