via Russian tycoon risks losing key Zim assets December 13, 2013 By Chris Muronzi Zimbabwe Independent
RUSSIAN billionaire Mikhail Prokhorov’s Renaissance Capital stands to lose financial and fixed assets in Zimbabwe after its former country boss Terence Mukupe dragged the investment group to the High Court seeking an order to garnish and attach the group’s financial and fixed assets due to its failure to pay agreed transactional fees relating to, among others, empowerment compliance deals.
Mukupe cited Renaissance Group Limited, Renaissance Africa Mauritius, Renaissance Capital, Zimbabwe Platinum Holdings and Mimosa Mining Company, as first, second, third, fourth and fifth respondents respectively. In his founding affidavit, Mukupe said he was keen on attaching Renaissance Group, Renaissance Mauritius and Renaissance Capital’s property.
Mukupe, who was employed by Renaissance Group in August 2010, entered an agreement to terminate his employment with his employer in May 2012.
The transactional fees relate to funds owing to Renaissance Group and its subsidiaries from Zimplats and Mimosa empowerment deals. Mukupe structured these transactions on behalf of his employer.
As part of his severance package, Renaissance Africa Mauritius Ltd agreed to pay 10% of the net fee owing to Mukupe in the two empowerment transactions.
“Due to the fact that the money due to the first, second and third respondents from the fourth and fifth respondents, is within the jurisdiction of this honourable court and, by the time of instituting proceedings with regards this matter, the money will have left this jurisdiction, leaving me with the financial hurdle of following the first, second and third respondents to its domiciled offices outside of Zimbabwe,” reads Mukupe’s affidavit.
“I completed the assignments I was mandated to carry out and in terms of the agreement annexed as B and C, I was entitled to the 10% of the net fees raised thereof. Such fees are my legal entitlement in terms of this agreement for which I have been made to understand the fees will be paid to the third respondent (Renaissance Capital) and due to the fact that the third respondent is no longer part of the Renaissance Group. It has clearly indicated that it does not have the obligation to pay fees, notwithstanding the fact that at the time of signing the agreement, the third respondent was part of the Renaissance Group and stands to benefit directly from the work I undertook.”
Mukupe says the transaction fees are “fruits of his labour.”
Prokhorov’s Onexim Group took control of Renaissance Capital late last year. Although the investment bank did not change its name, the acquisition ushered in a new era for RenCap, which co-owner Stephen Jennings set up in Moscow 17 years ago.
Prokhorov indirectly owns 100% of Renaissance Capital, as well as 89% of Renaissance Credit, a Russia-focused consumer finance lender until now another part of Jennings’s Renaissance Group. Under that agreement, Jennings retained management control of RenCap as Renaissance Group maintained 50% plus one share of the voting rights.
“I am advised by my legal practitioners of record (Innocent musimbe of IEG Musimbe and Partners), for which advice I believe true, that I am entitled to institute legal proceedings for unjust enrichment against the second and third respondents as well as specific performance of the contract I entered into against first, second and third respondents with an alternative of damages thereof and respectively,” the affidavit reads.
“I am also advised by my legal practitioners of record that agreements and obligations entered into and due by companies do not terminate merely because of a change of shareholding in such companies.”
Mukupe says Zimplats has paid US$5 million to Renaissance Capital, but he did not receive 10% of the payment as agreed.
He wants the court to grant an order to attach the money.
“My legal practitioners of record advise me, for which I further believe to be true, that money available in books of accounts is a form of property that can be made subject of attachment.
“More so the amount that I am entitled to without attaching any excess amount thereto,” Mukupe’s affidavit further reads.
Mukupe is claiming US$1 million owing to Renaissance Group as part of his fees.
According to the exhibit, Mukupe signed a termination of employment and departure arrangements and an additional fee and transaction side letter.
An e-mail dated April 11 2013, sent by Renaissance Capital legal department director Haydn Main to Mukupe reads: “We are now starting work in earnest on recovering the Mimosa fee. To that end, would you please be available to do a similar debriefing exercise with Herbert Smith as you do for Zimplats on terms of providing them with your recollection of events?”
Another e-mail dated December 2 2013 from Robert Reid, Zambia and Zimbabwe head, reads: “Our lawyers have reviewed the documents and you are right that the signatory is RAML. The side letter states (at paragraph 2 and 3) that: ‘the fee shall only become due and payable when monies have actually been received by (RAML)…’
“RAML has not received any fee and has no idea if such fees have been paid. We would suggest you take up the matter up with the investment bank.”
“Regarding your questions, the entity for the Essar and Zimplats mandates was Renaissance Capital (Kenya) Limited, our Kenyan entity, and the entity for the Mimosa mandate was renCap Securities (pvt) Limited, our South African entity. Neither is part of the Renaissance Group, both are a part of Renaissance Capital.”