RioZim under probe

Source: RioZim under probe – The Zimbabwe Independent June 24, 2016

The Office of the President and Cabinet (OPC) and the National Economic Conduct Inspectorate (Neci) have instituted a probe into the goings on at RioZim Ltd amid indications the Zimbabwe Stock Exchange (ZSE) will soon issue a corrective order on the mining company.

Chris Muronzi/Bernard Mpofu

Sources this week told businessdigest that the OPC and Neci instituted investigations into the goings on at RioZim with a particular focus on proving whether minority shareholders’ pre-emptive rights were usurped when RZ Murowa, a company controlled by Harpal Randhawa, acquired Murowa Diamonds last year. The acquisition is mired in controversy after the Lovemore Chihota led board did not follow laid down procedures.

RioZim Ltd shareholders were never offered the right to sell their 22% equity stake in Murowa Diamonds at the same terms as Rio Tinto Plc as provided by tag-along right of the shareholders agreement of 2004.

The company announced that the RioZim board waived shareholders pre-emptive rights to Murowa because it could not pay the purchase price. But minority shareholders say the board misdirected itself in the transaction and did not even consider the value of the deal.

“OPC has been in touch with the ZSE trying to understand the issues that are being raised about the pre-emptive rights and tag along rights. Basically the ZSE was told to look at it seriously,” a source said.

A corrective order is said to have been issued on RioZim this week but the matter is being kept under wraps. Secz is said to have demanded to have cite of the order before it is issued.

“Secz is yet to receive the order from the ZSE. But the OPC wants to know if everything was done in line with the articles of association and if the board had those grounds,” a source said.

However, businessdigest has established that RioZim had been ordered to follow laid down procedures in the Murowa transaction. “They had counsel to the effect that they should do the transaction above board in line with the regulations,” said another source.