Doing business Zimbabwe- style

High Court Judge Ben Hlatshwayo “seized” a commercial farm in Banket in 2002. But First Lady Grace Mugabe liked the farm. It was close to the Mugabe rural home. So she took over the farm in 2009 for her son from her first marriage, Russell.

Hlatshwayo was back in the hunt. He found another farm and demanded the white owner leave. But he received a call from Local Government Minister Ignatius Chombo to leave the farmer alone and look for another.

He did. But this time he got a call from Minister of Lands and Rural Resettlement Herbert Murerwa to leave the farm alone. So he moved on…..

This was how business in Zimbabwe was done according to Kumbirai Katsande, former president of the Confederation of Zimbabwe Industrial and Managing Director of Ariston Holdings which ended up giving Hlatshwayo land.

Katsande was also chairman of Nestle Zimbabwe and he had a harrowing experience when there was an international outcry on why Nestle was buying milk from a farm owned by the first couple.

Full cable:

Viewing cable 10HARARE105, Zimbabwe: Doing Business Zimbabwe-style

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NSC FOR SENIOR AFRICA DIRECTOR MICHELLE GAVIN

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E.O. 12958: DECL: 2020/02/16

TAGS: EINV ECON PREL PGOV ZI

SUBJECT: Zimbabwe: Doing Business Zimbabwe-style

REF: HARARE 116

CLASSIFIED BY: Charles A. Ray, Ambassador, STATE, EXEC; REASON:

1.4(B), (D)

¶1. (SBU) A recent conversation with businessman Kumbirai Katsande

illuminated the difficulties of doing business in Zimbabwe.

Katsande is the past president of the Zimbabwe Business Council and

the current head of the Confederation of Zimbabwean Industries. He

is the Managing Director of Ariston Holdings Ltd., which has major

horticultural and tea interests, and the Chairman of NestlC)

Zimbabwe Ltd.

¶2. (C) Katsande described how Ariston came to give up land to High

Court Judge Ben Hlatshwayo. In 2002, Hlatshwayo, in defiance of an

order from his own Court, seized a white commercial farm in the

agriculturally productive area of Banket, about 100 kilometers

northwest of Harare. The farm was near the Mugabe rural home. In

2009, the farm caught the eye of First Lady Grace Mugabe, who

apparently wanted it for her son from her first marriage. She

ordered Hlatshwayo off the land. He countered with a lawsuit but,

unsurprisingly, no judge was willing to hear the case. The powers

that be persuaded Hlatshwayo to leave his 600-hectare farm and

promised him another. He found another farm and demanded the white

owner leave. He then received a call from Minister of Local

Government, Urban and Rural Development Ignatius Chombo, a patron

of the owner, who told him to desist and look for another. He did.

This time he got a call from Minister of Lands and Rural

Resettlement Herbert Murerwa, who had a relationship with the

owner, Hlatshwayo moved on. He finally came to land owned by

Ariston Holdings which, under pressure, agreed to cede him land.

Katsande said Ariston was a bit miffed that Hlatshwayo’s original

farm was 600 hectares and he demanded 900 from Ariston. They

ultimately negotiated.

¶3. (C) Last year, in the wake of an international outcry, NestlC)

Zimbabwe, which had been buying milk from Grace Mugabe’s dairy

farm, decided to stop. After he and NestlC) workers were

threatened, Katsande contacted President Robert Mugabe’s office.

He was told Mugabe had asked Minister of Industry Welshman Ncube to

handle the matter, and that the government would not interfere with

NestlC). Katsande then learned that Reserve Bank of Zimbabwe

Governor Gideon Gono had frozen NestlC) accounts. He contacted

Gono, who said he was acting on Mugabe’s behalf. Katsande

convinced him to call Mugabe. He did and backed off. Katsande was

subsequently contacted separately by Minister of Youth and

Indigenization Saviour Kasukuwere and Minister of State in the

President’s Office Didymus Mutasa, both of whom threatened him if

he didn’t resume buying milk from the first lady. He told them to

contact Ncube. Ncube convinced them that Mugabe had left the

matter with him, and told them that he (Ncube) was not going to

force NestlC) to buy milk from Grace Mugabe. NestlC) has resumed

operations and is not buying milk from Grace Mugabe.

¶4. (SBU) We talked to Katsande just after Kasukuwere had issued

new indigenization regulations (Ref). He said despite

difficulties, NestlC) had a large investment in Zimbabwe and was

going to invest an additional US$10 to US$15 million. But it was

going to make other major investments in Botswana and Mozambique

which would have been made in Zimbabwe but for the unsettled

political situation.

¶5. (C) Finally, Katsande told us about a legal dispute of Ariston

involving tea estates in Chipinge. War veterans tried to take over

some of Ariston’s land and a legal case ensued. Ultimately, the

Supreme Court, in a decision signed by the Chief Justice, ruled in

Ariston’s favor. But squatting war veterans refused to leave the

estates. When Ariston contacted the police, it was told that farm

invasions were a political matter and the police would therefore

not act. Katsande paid a visit to the local police commissioner in

Chipinge and was told the same thing. Katsande pointed out to the

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police commissioner that the Chief Justice belonged to ZANU-PF and

that the judgment in the legal case was therefore political. He

then threatened to bring an action for contempt against her

personally for defying an order of the Chief Justice if police did

not remove the war veterans within three days. They did.

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COMMENT

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¶6. (C) Katsande’s experiences demonstrate the difficulties of

doing business in Zimbabwe. ZANU-PF’s abuse of power echoes

throughout the economy and the party’s influence will certainly

inhibit economic recovery. Investors not yet active in Zimbabwe

generally understand this and accordingly choose to do business

elsewhere. Foreign companies already here – like NestlC), Chevron,

Implats, and others – will at most hedge their bets in existing

operations but not make major new commitments until Mugabe and the

likes of Kasukuwere have been forced from office. Consider, for

example, the continuing malevolent influence of Reserve Bank

Governor Gideon Gono. Even though the central bank no longer has

the means to disrupt the economy as it did during Zimbabwe’s

hyperinflation, the very fact that Gono is still on the payroll

frightens anyone who might consider a financial commitment that

lasts more than a week. On Zimbabwe’s current trajectory, Katsande

will have more amusing anecdotes for us next year. END COMMENT.

RAY

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