Old Mutual under pressure to divest from Zimpapers

Insurance giant Old Mutual, which is listed in Harare, London and Johannesburg, among others, came under fire for its 18 percent stake in Zimbabwe Newspapers (Zimpapers), in which the government is the majority shareholder.

Zimpapers is the largest newspaper publisher in Zimbabwe and currently produces four dailies and two Sunday papers.

It also owns commercial printing presses.

Human rights organisations and trade unions in South Africa accused Old Mutual of “directly supporting the Mugabe regime”.

Old Mutual’s holding in Zimpapers dates back to before independence when the firm held shares in the Rhodesian Printing and Publishing Company.

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Viewing cable 09HARARE901, ZIM NOTES 11-16-2009

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SUBJECT: ZIM NOTES 11-16-2009

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¶1. SUMMARY

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Topics of the week:

Bennett’s Lawyers Challenge Judge’s Impartiality…

Magistrate Who Jailed Prosecutor Forced Out…

Outreach Campaign Focuses on Child Protection…

Prison Guards Deny Medical Treatment to Abductee…

MDC-T MP Acquitted of Rape Charges…

Court Throws Out Charges Against ZCTU Leaders…

Grain Marketing Board Tries to Borrow…

Watchdog Unearths Massive Looting of State Assets…

Old Mutual Slammed for Stake in Zimpapers…

Loan from Meikles Saves Kingdom Bank…

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On the Political and Social Front

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¶2. Bennett’s Lawyers Challenge Judge’s Impartiality… On November

12, the trial of Roy Bennett was further delayed as his lawyers

filed a motion challenging Judge Bhunu’s impartiality in handling

the case. Bennett’s lawyers argued that while hearing the bail

application of Bennett’s alleged coconspirator Peter Hitschmann’s

May 2006, Bhunu remarked that the evidence against Hitschmann was

“overwhelming. Judge Bhunu will decide on November 16 if he will

recuse himself. Harrison Nkomo, a member of Bennett’s defense team,

believes Bhunu will jump at the opportunity to avoid dealing with

the politically-sensitive case. Hitschmann was acquitted and the

prosecution now wants him to testify against Bennett on the basis of

a confession which state security agents allegedly extracted through

torture.

¶3. Magistrate Who Jailed Prosecutor Forced Out… Chioniso

Mutongi, the magistrate who jailed prosecutor Andrew Kumire for

contempt of court during the trial of human rights lawyer Alec

Muchadehama, has been forced to resign. The Herald reported that

Mutongi resigned on November 3, citing interference and intimidation

by the Attorney General. Mutongi said that subsequent to her ruling

she “had a torrid time and was entirely abused and harassed” by

the prosecution, but did not receive any protection from the Chief

Magistrate, Hlekani Mwayera.

¶4. Outreach Campaign Focuses on Child Protection… Over two

million Zimbabwean children country-wide will benefit from a

multi-media awareness campaign on child protection put together by

Children First, in partnership with Population Services

International (PSI) and USAID. The campaign will feature a weekly

radio-drama program broadcast on Radio Zimbabwe as its centerpiece.

Broadcast over 26 weeks, the radio program will focus on children’s

rights and what they can do if their rights are violated. The radio

drama will be complemented by distribution of exercise packs that

educators can use to guide discussions with children’s groups. The

program was unveiled in two phases: The first was on October 21 in

Harare and the second was on November 5 near Bulawayo. Programming

will be in both Shona and Ndebele.

¶5. Prison Guards Deny Medical Treatment to Abductee… MDC-T

Transport Manager Pascal Gwezere has still not received his

QTransport Manager Pascal Gwezere has still not received his

court-ordered medical treatment because of resistance by prison

officials. Gwezere was abducted by state security agents on October

27, and according to his lawyers, has been subjected to severe

torture during his ongoing detention.

¶6. MDC-T MP Acquitted of Rape Charges… The MDC-T MP for Kwekwe,

Blessing Chebundo, was acquitted this week of charges that he had

raped a 14-year old girl. The MDC had argued that ZANU-PF was

politically persecuting a number of its members, including Chebundo,

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on trumped-up charges. Chebundo defeated the notorious Defense

Minister Emmerson Mnangagwa (ZANU-PF) in the March 2008 elections.

Separately, Thamsanqa Mahlangu (MDC-T), an MP serving as the Deputy

Minister of Youth, was acquitted of charges that he stole the cell

phone of war veteran’s leader, Joseph Chinotimba.

¶7. Court Throws Out Charges Against ZCTU Leaders… On November

12, Victoria Falls-based magistrate Richard Ramaboea threw out

charges against Zimbabwe Congress of Trade Unions President Lovemore

Matombo and four staffers. The five labor leaders were arrested by

the police on November 8 for violating the Public Order and Security

Act (POSA) by not notifying the police of their intention to hold a

public meeting. The police detained the unionists for four days,

before eventually charging them on November 12. Magistrate Ramaboea

berated the police and reminded them that the law did not cover

trade unions.

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On the Economic and Business Front

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¶8. Grain Marketing Board Tries to Borrow… In an attempt to raise

USD 2.5 million to purchase grain, the GOZ’s former grain monopoly

is trying to borrow directly from the market by auctioning

three-month bills. Bankers have told us they expect little demand

for GMB paper, mainly because the state-owned enterprise is broke

and does not have a business plan that makes sense. An implicit GOZ

guarantee behind GMB bills probably will not help much, since the

GOZ is also broke. The GMB currently quotes prices for corn that

are significantly above world market prices. After years of buying

high and selling low, the GMB can no longer pay its employees or its

creditors.

¶9. Watchdog Unearths Massive Looting of State Assets… In a

special report for the first quarter of the 2009 financial year,

Zimbabwe’s Comptroller and Auditor General (CAG) highlighted massive

looting of state assets across a number of ministries. The report

notes the recruitment of 10,277 youths who were added to government

payroll in 2008 without following proper procedures, costing the

state large amounts of money in wages. The CAG also found that about

44 motor vehicles out of a large pool donated by Reserve Bank

Governor Gono disappeared with top level officials in various

ministries under unclear circumstances because of lack of

documentation. The same happened with regard to computers, laptops,

and fax machines bought by Gono in a clear case of patronage.

¶10. Old Mutual Slammed for Stake in Zimpapers… Old Mutual

Zimbabwe, the local arm of South Africa’s insurance and finance

giant, has come under fire for its 18 percent stake in Zimpapers,

the GOZ-controlled publisher of The Herald and other Mugabe-friendly

publications. From what we see in the press, the controversy began

in South Africa, where human-rights organizations and trade unions

have accused Old Mutual of “directly supporting the Mugabe regime.”

Qhave accused Old Mutual of “directly supporting the Mugabe regime.”

Old Mutual’s holding in Zimpapers date back to before independence,

when the firm held shares in the Rhodesian Printing and Publishing

Company.

¶11. Loan from Meikles Saves Kingdom Bank… The recent demerger of

Kingdom Financial Holdings (KFH) from Kingdom Meikles Africa Limited

has potentially negative consequences for Kingdom Bank in the medium

to long term. A managing director of one of the subsidiaries of KFH

told us that the group only managed to satisfy the Reserve Bank of

Zimbabwe’s minimum capital requirements courtesy of a loan from

Meikles Africa. Apart from mobile telecom leader Econet Wireless

and Meikles Africa, which moved their accounts out of the KFH group,

the bank had reportedly not experienced any massive outflow in

deposits. But following the resignation of eight executives this

month, clients may start moving their money out, which could trigger

a run on the bank.

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Quote of the Week

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¶12. “Mutambara and the MDC-M are an extension of ZANU-PF. What

kind of party president would fail to garner more than 300 votes

during last year’s elections in Chitungwiza? He is not worthy to be

deputy prime minister.” MDC-T Secretary General Tendai Biti

addressing a rally at Chibuku Stadium in Chitungwiza on November 8.

RAY

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