Council, firm in $20m wrangle - Zimbabwe Situation

Council, firm in $20m wrangle

Source: Council, firm in $20m wrangle | The Standard (Local News)

A UKRAINIAN company has accused Harare City Council of using dirty tricks to avoid paying a $20 million debt after the firm was raided by the Zimbabwe Anti-Corruption Commission (Zacc).

BY CHARLES LAITON

Augur Investments, which was contracted to upgrade the airport road in a project that cost $70 million, was involved in several land deals with the local authorities that are now a source of intense disputes.

The company said the recent arrest of its directors was part of a ploy by council officials to avoid paying debts.

“Augur Investments finds it very shocking that instead of waiting for the court process (pending civil matters at the High Court) to be completed, the City of Harare reported the matter as a criminal case,” a company official, who requested anonymity, said.

“Augur Investments denies any criminal activities and states that there is a clear alternative agenda at play.

“The City of Harare owes Augur Investments over $20 million and has not been able to fulfil its partnership responsibilities.”

The official said Zacc officers did not find any evidence that the company was involved in illicit deals during the raid.

He said it was not in dispute that sometime in 2014, Augur Investments entered into a joint business venture where council would provide land for the development of Hopley (Tariro) in return for a cash injection by the Ukrainians.

“However, at some point, the City of Harare decided to cancel the business agreement claiming Augur Investments did not have the capacity to fund the joint venture project but after some deliberations, the decision was rescinded,” the official said.

Minutes of the council’s business committee meeting dated November 5, 2014 confirmed that the decision was arrived at following deliberations between council and Augur Investments.

“Clause 2.1.4 of the shareholders’ agreement required Augur Investments to establish a facility to finance the project contemplated by the agreement, which would be pro rata to its shareholding in the company, being 70% Augur Investments and 30% City of Harare, and this was complied with,” the official added.

After the signing of the joint business venture, council provided land at an agreed value of $191 700 while Augur Investments provided funding on the loan account to the tune of $1 667 510.

The equity was paid for through a cash deposit in December 2015 amounting to $500 000 and an NMB loan secured by $2 640 000 of Augur Investment’s assets.

This brought the total contribution from Augur Investments to $4 817 510 while council provided land valued at $191 700. After a dispute arose, then acting town clerk Josephine Ncube is said to have advised that it must go for arbitration.

Harare mayor Herbert Gomba refused to comment on the matter.

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