Brainworks makes U-turn

Published: 08 May 2014

BRAINWORKS Capital, the advisory firm that courted public outcry after clinching a deal to advise the State in an empowerment transaction involving platinum mining giant, Zimplats Holdings, says it will still invoice the parties to the transaction upon completion of the deal. The $971 million Zimplats empowerment deal was completed last year in terms of its term sheets, but it ran into trouble after government tried to force the mining firm to pay for Brainworks' consultancy services.

In a recent interview, Brainworks director George Manyere, who had previously invoiced Zimplats for the work done, sprung a U-turn, claiming that his Pan African advisory firm would only be paid after completing the job. He did not say why the invoice had been generated in the first place if work was still outstanding. Government contracted Brainworks to undertake financial advisory work in the $971 million Zimplats indigenisation deal last year.

Brainworks was also earmarked to undertake consultancy work for targeted foreign-owned mining firms, including Mimosa Mining Company and Unki. Manyere's outfit encountered headwinds after Zimplats rejected the invoice. A clause in its agreement with government states that the State would be compelled to foot all expenses rejected by the mining firms.

Manyere told the Financial Gazette that they have not given up on pursuing payment.

"We don't get paid if the deal is not concluded," he said Financial Gazette after attending a function to unveil his latest mega deal, the multimillion dollar investment into BancABC by a firm led by former Barclays PLC boss, Bob Diamond.

"If the government asks us to complete the project that is when we get payment," he said.

"What you are saying is like asking an auditor to audit your books and pay him without completing," he said.

While he emphasised that Brainworks will still bill the indigenised companies he admitted that things don't always go according to plan.

"Not all deals are successful," said Manyere, an investment banker.

"But if one of the deals is successful, like this one (the Bob Diamond deal), then I can afford to go on holiday for the rest of the year," Manyere said.

The BancABC deal also courted international outcry, with The Telegraph of England claiming that Diamond was working with someone involved in deals in which the government had attempted to expropriate private assets. In February last year, Zimplats chief executive officer, Alex Mhembere said it was not proper that the company and its South African shareholders, Impala Platinum Holdings Limited, foot the Brainworks transaction.

This was after the National Indigenisation and Economic Empowerment Board (NIEEB) had written to Zimplats directing them to pay Brainworks. Zimplats said the demand was akin to a technical payment of dividends "to one shareholder without extending the same to other shareholders".

"In this instance it only leaves Implats, the counterparts in the negotiations, to possibly settle the bill," Mhembere said.

"We accordingly forwarded the invoice for their attention, but regrettably they advised that they are not in a position to honour the payment on the basis that Brainworks Capital was engaged by NIEEB and was acting for and advising NIEEB/the government in the negotiations between NIEEB/the government and Implats," he added.

Zimplats complied with the indigenisation law last year after Implats agreed to cede a 51 percent stake in the business to locals. Thirty one percent shareholding of Zimplats was given to NIEEB, 10 percent to employees and the other 10 percent was taken over by the Ngezi-Zvimba Community Share Ownership Trust.
- fingaz