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Rumbidzai Zinyuke Business Reporter
The indigenisation of several mining firms hangs in the balance following revelations that the National Indigenisation and Economic Empowerment Board failed to implement recommendations made by the contracted financial advisory company.

Brainworks Capital were appointed as financial consultants to handle empowerment deals between Zimplats, Mimosa, Unki, PPC and Blanket Mines and Nieeb.

The firm was supposed to pocket up to 2 percent of the value of shares due to Nieeb when the deals were completed.

However, all mining firms except Blanket Mine have not yet concluded their empowerment deals and paid Brainworks for its services.

Giving oral evidence to the Parliamentary Portfolio Committee on Indigenisation yesterday, Brainworks chief executive Mr George Manyere said the deals had been abandoned and Nieeb had not taken into account the submissions made on how the transactions should be handled.

“It is important to note that when we provide a service to client, the client is not obligated to accept our advice. But we are very confident that we came up with the solution to a difficult and complex transaction where ultimately both parties agreed on a 51 percent indigenisation transaction,” he said.

“The challenge which we sought to overcome is that the law, as it is currently, calls for indigenisation transactions to be concluded on commercial terms. So, already you have an imbalance where the specific group that you are trying to empower, you acknowledge that it was previously disadvantaged and doesn’t have the resources, and yet you want it to be empowered through commercial means,” he said.

He said the execution of the Act needs innovative ideas to find ways to achieve empowerment and then gradually hope that the previously disadvantaged groups can build some equity and make more inroads in earning equity in the business.

Mr Manyere said although the 51-49 percent was agreed and term sheets were signed, the substantive agreement were not signed. And this was to be the basis on which the company would be paid for its services.

He said the onus of paying for their services in the event of a successful indigenisation transaction fell on the company that had been indigenised. According to the mandate letter between Brainworks and Nieeb, the advisory company was supposed to be paid up to 2 percent of the total value of shares due to Nieeb on completion of the transaction. If the company fails to comply, Nieeb was supposed to pay Brainworks $500 per every hour spent on the job.

“We never got paid by the companies that were indigenised or by Nieeb for our services. In this particular case the transactions were abandoned so in that context, Nieeb doesn’t owe us because we did not bill them when the transactions were abandoned,” he said.

The deals were collectively worth approximately $1,2 billion, putting Brainworks’ fees in the range of $24 million.