RTG, Afre suspended

trading in Rainbow Tourism Group and Afre Corporation shares pending investigations into suspected irregular inter-company transactions.
In a joint statement yesterday, Finance Minister Tendai Biti and RBZ Governor Dr Gideon Gono said they had noted with concern notices from the two firms advising on issues that potentially breach sections of the Securities Act.
“The ministry is concerned with the goings on at Afre and RTG. Of late we have seen fliers and notices of rights offers and EGMs, which in our view have potential of breaching Section 85 of the Securities Act,” said Minister Biti.
Minister Biti also directed the Commissioner of Insurance to carry out investigations at Afre subsidiaries, namely First Mutual Life, FMRE, Tristar and Pearl Properties (Private) Limited in the wake of suspected irregular inter-company transactions at Afre and RTG.
“Pending the outcome of these investigations we are suspending the share transactions in RTG and Afre,” said Minister Biti.
The minister also announced that Securities Commis-sion of Zimbabwe board members Ms Martha Tomana and Mr John Chikura have been removed from the SEC board due to possible conflict of interest.
For instance, Mr Chikura sits on the Afre Corporation board, which has interests in RTG.
“You cannot be a regulator and referee at the same time.”
ZSE chief executive Mr Emmanuel Munyukwi said he had not yet received any formal communication from the ministry and RBZ.
Minister Biti said Government strove to create atmosphere in which capital is free to flow about, which certain individuals with “self-preservative” habits and practices had failed to observe.
The suspected irregular inter-company transactions at Afre and RTG have their roots in a US$12 million loan extended by businessman Mr Jayesh Shah to former Afre executive chairman Mr Patterson Timba.
The development comes at a time when Econet Wireless Zimbabwe has expressed interest in acquiring the 12 percent interest held by the National Social Security Authority in the RTG.
Sources said Econet’s interest in RTG was part of its rekindled interest in non-core areas, particularly in the hospitality industry.
This comes at a time when the mobile phone operator is involved in a vicious power struggle with Mr Timba, over the control of assets owned by the former.
If Econet succeeds in acquiring NSSA’s shareholding in RTG, it would increase its direct interest in the hotel group to about 22 percent. It is understood that Econet is seeking a controlling interest in the hotel group.
It was reportedly capitalising on the fallout with Mr Timba to position itself.
The mobile operator has indirect interests in the hotel group through Afre Corporation’s 25 percent stake in RTG. Econet holds a 20 percent stake in Afre.
Econet chairman Mr Tawanda Nyambirai confirmed the interest in RTG, but said no “formal approach” has been made. The matter had not come up for discussion, he said.
Recent reports linked Econet with an alleged purchase of 49 million RTG shares reportedly sold by Mr Timba.
It was not immediately clear why Econet had developed a sudden interest in RTG, but ordinarily the investment makes sense in the face of the group’s potential.
The tourism sector is undoubtedly one of the sectors with good prospects to quickly shake off the effects of the country’s decade-long economic downturn.
Tourist arrivals have been steadily rising since the formation of the inclusive Government and the adoption of the multi-currency system in February 2009.
RTG itself has shown strong potential for growth in turnover and profitability.
Turnover increased 34 percent to US$23,5 million in the 12 months to December 2010, though it suffered a US$1,6 million loss from US$500 000 profit in 2009.
The group reported revenue per available room at US$27 and occupancy at 40 percent weighed down by sluggish performance in most resort areas.