Van Hoog seizes control of CFI

Published: 15 December 2017

British tycoon Nicholas Van Hoogstraten seems to have won the battle for the control of CFI Holdings after coming to the rescue of Shingirayi Chibhanguza this week with 52% of the group's shareholders voting against the removal of the director from the board.

This also comes after CFI directors Ephraim Chawoneka and Doug Mamvura quit last Tuesday ahead of an extraordinary general meeting (EGM) called by Van Hoogstraten to remove them from the board for their alleged involvement in the sale of Langford Estates to Fidelity Life, an accusation they deny.

Grace Muradzikwa had also stepped down from the position of chairperson ahead of another EGM to remove her last month as the battle to control CFI hotted up.

In a letter dated December 5 2017 to CFI Holdings company secretary Panganayi Hare, Mamvura and Chawoneka said they could no longer continue to professionally and diligently perform their fiduciary duties as directors given what they said were "spurious and unfounded" grounds of dismissal.

The duo said the transaction Van Hoogstraten is disputing was approved by the Zimbabwe Stock Exchange (ZSE), adding the company had issued a circular in line with the bourse rules on September 23 2015, long before they joined the board.

Chibanguza, who stands accused of abusing his position at CFI, survived the dismissal when 52,1% of the shareholders voted against the motion to remove him at an EGM held on Wednesday in the capital. Rudland resigned ahead of the meeting.

In a statement to the meeting, Chibanguza said Stalap and Zimre Holdings were responsible for the collapse of CFI, saying they had stripped the company under the guise of saving it from collapse though their associate companies.
Chibhanguza claims there were fraudulent activities at all Stalap and Zimre holdings-related entities with the latest being the registering of a US$5 million mortgage bond over a company property to Tefco, insisting they had run down the company.

Rudland says charges against him were false.

In the wake of resignations by Muradzikwa, acting CE Tim Nyika and non-executive directors Doug Mamvura and Ephraim Chawoneka, Rudland said Van Hoogstraten would have unregulated control of the company.

"Van Hoogstraten is acting and attacking with impunity and disrespecting the regulator as well as exploiting the loopholes in the laws of doing business in Zimbabwe. The methods used by this shareholder and his associates undermine the integrity of capital markets and have caused damage to the entire stock exchange, not only at CFI, by creating uncertainties for investors and minority shareholders," he said.

Chibanguza said he was going to block these transactions among other reasons which include the setting up of a "kangaroo tribunal" to preside over his case and other land related issues aligned to Stalap and Zimre.

This comes after a disciplinary hearing into charges of corporate governance deficiencies at the group found Chibhanguza, deputy chief executive, guilty of unilaterally inventing a new cash collection system to pay amounts running into hundreds of thousands to a company he once worked for, a charge he dismisses.

Tefco, a microfinance company Rudland has an interest in, provided working capital finance to CFI's subsidiaries on arm's length basis.

"Recently it has also come to my attention that after my suspension Stalap/Zimre directors perpetrated another fraud by registering a US$5 million mortgage bond over company property to Tefco, a company owned by one of the Stalap/Zimre directors. Stalap/Zimre needed me out of CFI so I would not stand in the way and block this transaction. This is the latest illegal attempt to strip the company's assets as I have no doubt that under the control of Stalap/Zimre, the borrower was going to default on the set conditions of the loan. The list of fraud is endless," he said.

Chibanguza said Stalap/Zimre has always come through their associate companies to strip CFI under the guise of saving it from collapse.

"This is how Fidelity Life came in and perpetrated the Langford's estates fraud and steps have commenced to reverse this transition which prejudiced all CFI shareholders, in 2012 another piece of land measuring 330 hectares has been sold to fidelity life by CFI at a price of US$1 per square metre when market prices share at least five times that amount the stands where then after service sold at US$60 per square metre,the only beneficiaries of this transaction were Stalap and Zimre at the expense of every CFI shareholder," he said.

He added that the biggest attempt to defraud CFI shareholders was the "fraudulent" Zimre rights issue of June 2015 which would have resulted in Stalap having over 75% shareholding in CFI had it succeeded .

Concerning accusations levelled against him at CFI subsidiary Farm & City, Chibanguza said he had no doubt that a non-corrupt tribunal would have found him not guilty.

"I must add that through this whole period Stalap/Zimre controlled as they had the majority. Only a Stalap resolution could pass. This is how they managed to set up a kangaroo tribunal with a predetermined verdict by their cronies over my executive authority to have allowed the setting up of a consignment arraignment at Farm & City with our suppliers. The key witnesses who were on the board of Farm and City were intimidated from testifying in the case," he said.

The resignation of Rudland and other independent directors sees Van Hoogstraten controlling CFI through his associates.

- zim ind