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Foreign investors lose millions in sham deals

IN a fraudulent case which may dent Zimbabwe’s investment profile, a Netherlands Liquid Petroleum Gas (LPG) equipment manufacturing giant Euro LPG BV lost millions of United States dollars to a consortium of local businesspeople.

The fight over the investment has turned nasty with counter-legal actions playing out in this case, which has now been reported to President Emmerson Mnangagwa’s office.

This botched investment project was exposed in a hard-hitting letter written to Mnangagwa by Euro LPG BV managing director Wahaab Abdallah, detailing how his firm lost a fortune in a failed ambitious gas deal.

Mnangagwa has displayed passion to attract foreign investors although there are several attendant issues that need redress to clean up Zimbabwe’s image. Red-tape, corruption and policy inconsistencies are some of Mnangagwa administration’s greatest undoing.

Abdallah, a Netherlands-based millionaire investor in the energy sector, wrote to Mnangagwa on November 11, 2022, raising fraud allegations against his local partner, Francis Xavier Chitanda and his company Inter-continent Energy.

Mnangagwa has not responded to the Abdallah’s complaint.

A formal complaint has already been filed at the police’s commercial crimes unit (CCU). Police spokesman Paul Nyathi could not be reached for comment yesterday.

However, according to documents in our possession, Euro LPG BV entered into a joint venture with a local Inter-continental Energy Limited (IEL) headed by Chitanda. They formed Integrated Gas Distribution Infrastructure (Pvt) Ltd (IGDI) in 2019.

The firm was formed to provide clean energy storage and infrastructure in Zimbabwe.

Abdallah accused Chitanda, a minority shareholder, of staging a hostile takeover.

Efforts to get a comment from Presidential spokesman George Caramba and the Secretary to the President and Cabinet Misheck Sibanda were futile yesterday.

But in part, the Dutch investor’s letter reads: “Despite Euro LPG BV having invested various capital LPG equipment into the JV including modular LPG storage and filling stations, LPG storage tanks and LPG road tanker transport equipment, the business had not seen any profits/returns since its inception in 2019.

“Throughout this period in 2019-2021, IEL/FXC continued to utilise/abusing IGDI company assets without providing any returns to the JV or its main investor; Euro LPG B.V. whilst IEL is growing and benefiting from the business.

“Although it was becoming clear that IEL/FXC intentions were fraudulent, ELPG continuously exercised maximum restraint to find an amicable solution/way forward for the JV to continue ELPG investment into the Zimbabwean LPG/energy sector even attempting to keep IEL/FXC involved, which unfortunately was all being frustrated/sabotaged.”

Abdallah said he was forced to take over the management of the joint venture company in the last quarter of 2021 only to discover that half of the IGDI assets were unprocedurally disposed by Chitanda.

“Upon attempting to safeguard remaining IGDI company assets, IEL/FXC showed his true criminal face stealing remaining company assets which IGDI had reported to the Zimbabwean Republic Police – CID Commercial Crimes Unit (CCU) under case No. CC2294/R/21 in December 2021, which led CCU’s investigations,” the letter reads.

“On October 28, 2022, we were shocked by an unlawful raid by the High Court Sheriff accompanied by the ZRP along with multiple crane trucks with a seizure warrant for all IGDI company assets.”

Abdallah said the seizure warrant was issued even though IGDI had no knowledge of any cases against it.

“The company and/or its owners/ principals that sought the seizure warrant, Forgives Traders (Pvt) Ltd #3903/2021, is completely unknown to IGDI and it has been discovered to be a ghost company.

“IGDI nor its general manager or directors have not been lawfully served for any cases against it nor has there any seizure notice been given by the High Court Sheriff or the ZRP,” the letter further reads.

The European investor alleged that Chitanda had used unorthodox means to fight him.

“Despite having filed legal counteraction against these unlawful actions, the High Court Sheriff did not reveal the location of the unlawfully seized assets and continues as of date to even seize an asset not belonging to IGDI apart from looking similar,” wrote Abdallah to Mnangagwa.

The European investor pleaded with Mnangagwa to restore property rights and prove that indeed “Zimbabwe is open for business”.

Contacted for comment, Chitanda declined to discuss the mater.

“I cannot comment at the moment because I am facing trial on some of the issues being raised,” he said.

However, late yesterday, Chitanda claimed that the Dutch businessman had “only invested about US$45 000 in the business”.

But Abdallah rubbished Chitanda’s US$45 000 investment claim, saying he would not fight for “pocket money”.

“I poured a lot of money into the business. I have all the documentary evidence to that effect and I will get my investment back,” he told the Independent last night.

In another investor clash case, a Chinese-owned company, Hwange Coal Gasification Company (Private) Limited (HCGC) is on the cusp of losing property worth millions of United States dollars to businessman, Shephard Tundiya.

This follows a recent ruling by the High Court in Bulawayo ordering the Hwange-based coke processing entity to pay about US$2,8 million to Tundiya’s Philcool Investment.

Hwange Coal Gasification is a joint venture between Hwange Colliery Company and Taiyuan Sanxing of China. The two entered into a six-year transportation deal with Philcool Investment in October 2017 to transport 2 000 tonnes of coal.

The HCGC was established under a bilateral protection agreement signed between Zimbabwe and China in May 1996.

According to minutes of an extraordinary meeting held in Harare in July this year, HCGC denied any “breach, wrongdoing, actual or negligence” in the contract signed between the two companies on September 14, 2017.

“The company denied ever signing the contract provided by Philcool Investment (Pvt) Limited. The company will accordingly deny any claims by Philcool Investments (Pvt) Limited.”

The board of directors had authorised Guo Qiyue, as the HCGC director, to represent the company in the case.

It has, however, emerged in an urgent court application by Guo that the default judgement was issued without the HCGC’s knowledge.

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