29 July 2020 ECONET SHAREHOLDERS REIGN IN YOUR MAFIA ENTERPRIZE. To: • Old Mutual Investment Group (Pty) Ltd • Rudnick Family • Austin Eco Holdings Ltd. • Northunberland Investments (Pty) Ltd. • Douglas Mboweni • BlackRock Fund Advisors • Sanlam Investment Management (Pty) Ltd. Two weeks ago the Zimbabwean government issued a long overdue search and seizure warrant for Econet Wireless (Pty) Limited (hereafter referred to interchangeably as EWL or Econet) documents to investigate allegations of money laundering, illegal foreign currency trading and externalization by the company. As a civil society organization, we believe that the time has come for us as concerned Zimbabweans to inform you, the shareholders of Econet, Cassava and appendages like Liquid Telecom, on the genesis of what can only be described as Econet organized crime and how this malfeasance has been entrenched in the Econet ecosystem by its founder Mr. Strive Masiyiwa, who has been at the epicenter of this corrupt mob. Introduction. It is common cause that Econet Wireless (Pty) Limited was listed on the Zimbabwe Stock Exchange in 1998. The facts are clear that EWL’s controlling shareholder, TS Masiyiwa Holdings Limited (TSM), was a Zimbabwean registered company in which Mr. Masiyiwa and his wife fraudulently allotted to themselves 67.5% of the company’s issued share capital. It is not in dispute that TSM was issued 60% of the capital in Econet [EWL] pursuant to the capitalization of foreign imported equipment that at all material times did not belong to TSM. You may not be in possession of a report in relation to the investigations into the affairs of First Mutual Life, a Zimbabwean insurance company that fraudulently invested Z$180 million in EWL in the Initial Public Offering (IPO) of the company’s shares and debentures. If need be that report can be availed to you on request. The report contains allegations that Mr. Masiyiwa had constructive knowledge of the fraud in EWL’s listing, however, they are yet to be openly and transparently addressed by him. After failing to interdict the publication of the said report in the High and Supreme Courts of Zimbabwe in 1999, Strive Masiyiwa skipped the country on rumors of pending arrest and has not returned to the country since. Notwithstanding, he has chosen to misrepresent the true reason why he left Zimbabwe in a huff as being linked to the late President Mugabe’s dictatorial and anti-business policy stance. Nonetheless, the question is now that President Mugabe is gone, why has he still not returned to his country of birth and the territory generating the bulk of his wealth? Background. The struggles of Econet start from its inception, which is captured succinctly by statements made by former funder and shareholder Daniel Shumba who asserts that: After Econet had lost the bid for Zimbabwe’s second cellular network license in 1998, senior members of government (names of the then Vice President Joshua Nkomo and Edison Zvobgo have been thrown around) selectively leaked classified information to Strive [only] on how the bid adjudication had been undertaken for Econet and five other companies to lose out on the license. 1) Strive who was running a one-man show then with foreign partners Telecel International, would then go ahead and use this information to launch a court challenge of the license awarded to Telecel. 2) Insiders say Telecel was awarded the license due to its broad based black empowerment profile which encompassed women, war veterans, black farmers, black mine workers, business people, empowerment activists and a diverse cross section of society, in line with government’s black empowerment drive. 3) It also turns out that unlike Econet, Telecel had telecommunications engineers like Leo Mugabe and Chemist Siziba to bolster its credentials. 4) The court challenge was received by a politicized court headed by a former white Rhodesian judge by the name of Anthony Gabbay who was partial to colonial capitalist values. As a result the court cancelled Telecel’s license without instructing POTRAZ (Postal And Telecommunications Regulatory Authority Of Zimbabwe) to institute a new bid. 5) Irrespective of the judgment, the Zimbabwean government went ahead and issued the second license to Telecel, in pursuit of its political aims of social redress, racial economic transformation and broad based black empowerment that was being championed earnestly by Strive’s own IBDC. History Of Cellular Technology And Indigenization In Zimbabwe. 6) What is ironic about the whole affair is, Strive Masiyiwa as the Secretary General of black economic empowerment group IBDC (Indigenous Business Development Center), was a huge beneficiary of affirmative action, preferential procurement and nepotism as a relative of Minister Joseph Musika and close family friend of Vice President Joshua Nkomo. All of which led to his and Stanley Goredema’s company Retrofit being awarded several preferential contracts to: a. install electricity in pay booths at the National Sports Stadium in Harare, b. electrifying President Mugabe’s Zvimba rural home and c. electrifying the Reserve Bank of Zimbabwe building in 1996, all without experience in that arena because of connections and the construction industry targeted indigenization Set Aside Program. 7) Consequently, Retrofit, lacking experience, would botch up the jobs at President Mugabe’s home and the Reserve Bank, putting Strive into bankruptcy and at loggerheads with Mugabe according to a number of people close to the affair. 8) Strive’s position in IBDC, the organization’s drive to increase black ownership of the economy, would give him, politicians and other leading black entrepreneurs a front row seat in the rolling out of cellular technology in Zimbabwe. 9) It is said by involved parties that this front row seat would lead to Leo Mugabe, a telecommunications engineer bringing a demo cellular network base station to a telecoms exhibition held at the Sheraton in 1996. 10) From this exhibition, Leo petitioned then Minister of Communications Mrs Chitepo for a cellular license and she advised him to partner with Chemist Siziba the Chairman of IBDC who had also formed his own cellular company. 11) Leo and Chemist then came together and formed Cosmos Communication. Soon after that, the government issued the first cellular license to Netone, a cellular subsidiary of Parastatal PTC. 12) Leo and Chemist began to lobby for the support of IBDC in a bid for the second cellular network license, at which point the two engineers in the field introduced Strive Masiyiwa, an electrical engineer specializing in air conditioning, to the cellular business. 13) The introduction led to Leo drafting a document on cellular networking and an agreement between him, Chemist and Strive to form a network partnership was struck. 14) To initiate the project, a fact-finding mission to Telecel Zaire, one of the first networks on the continent, was organized for five members of IBDC. 15) On the advice of Joshua Nkomo, Leo as a Mugabe, was advised to stay behind, while Chemist and Strive went for the trip on his behalf to avoid bringing too much attention to the affair. 16) It’s said that when Strive got to Zaire he began to negotiate for Miko Rwaitare of Telecel to partner him to form an entity that excludes Leo and Chemist. 17) Of particular advantage to Strive and other black entrepreneurs in black empowerment groups at the time, was the fact that Zimbabwe’s Indigenization [affirmative action] policies, effectively shut out international cellular networks from direct participation in Zimbabwe’s cellular license bid, unless they came in as technical partners supporting Zimbabweans who were the only ones allegeable to tender for licenses. 18) Relying on the same pro-black Zimbabwean affirmative action regulations, Strive asked Telecel International to be his technical partner even though Telecel International were already in bed with the consortium forming Telecel Zimbabwe. 19) On his return from Zaire, Strive immediately approached the courts to force government to issue a second license because government was leaning towards maintaining it’s monopoly in communication, by having PTC control the fixed network and its cellular subsidiary Netone. 20) In the court challenge by Strive to force government to issue another license, the court ruled that government should conduct a tender for the second cellular license that was subsequently awarded to Telecel. 21) The problem with Econet was its structure was not broad based as Telecel Zimbabwe because it was a one-man show led by a broke man who had just been sequestrated after Retrofit failed to complete the electrification of the RBZ Building. As a result, as indicated above, Telecel was awarded the second license in a tender contested by six other companies. 22) After, the government proceeded to give Telecel the second license, Strive and his funder Daniel Shumba launched another court application in the high court to contest their constitutional right to communicate, with the intention of advancing the argument that Zimbabwe had enough spectrum to issue a third cellular license to Econet since it had been prejudiced in the adjudication of the second license. 23) They lost in the High Court but succeeded in the Supreme Court where an irrevocable decision to grant them the third license without requesting a rebid was made by Justice Sandura. An extraordinary decision to say the least. 24) Daniel sheds light on the events by saying that his investment in the [Econet] business was used to hire renowned American Telco lawyer Judith O’Neal to not only represent them in court against the government of Zimbabwe, but, more importantly, to bribe judges such as Justice Anthony Gabbay, Wilson Sandura, Godfrey Chidyausiku, McNally and others in the Supreme Court to lubricate them to overstep their authority and unilaterally award a third cellular network license to Econet, without a competitive bid against the other five bidders.