ECONET Wireless, at the centre of what could be a bruising legal defamation battle with Old Mutual, is throwing the gauntlet at the insurance and pension giant and wants it to decide whether it wants to continue to be a key shareholder in Zimbabwe's largest telecommunications company.
Industry sources this week said Econet, which is bitter its name has been dragged into the mud for allegedly influencing the vote at a recent extraordinary general meeting (EGM), believes its battles with Old Mutual are nothing but corporate jealousy as the company now directly competes with Old Mutual through its direct shareholding in Africa First Reinsurance (Afre), which it acquired after becoming a controlling shareholder in ReNaissance.
Econet is now a major player in the insurance and pension industry in Zimbabwe through Afre, formerly First Mutual Limited, which it acquired through its investment vehicle Econet Wireless Capital, which has been investing in non-core telecommunication assets to diversify the group's revenue streams.
Afre, which competes with Old Mutual head-on in the market, is expanding locally and in the region and wants to become the largest in Zimbabwe.
A source close to Econet told The Financial Gazette that since the acquisition by Econet, Old Mutual had fought the mobile phone operator in every forum possible, and as in this case, Econet is confident its nemesis will come out second best.
Econet believe that Old Mutual's executives have become too emotionally involved and it was probably best for them to exit their shareholding in Econet.
"What we saw the other day (at the EGM) is not good for Zimbabwe's corporate reputation. It was obvious to everyone that Old Mutual had simply come to disrupt the process. In the past when Old Mutual did not like something, they engaged us, and even offered us financing alternatives of their own.
"Now they just come to fight us. We sold our shares in their company when we bought First Mutual. They should do the same if they can't deal with us in a professional manner," an Econet executive said.
Already, Econet lawyers have been working round-the-clock making extensive preparations to battle with Old Mutual and its officers for the role the mobile phone group claims Old Mutual played in damaging its reputation.
Initial anger at what was perceived by Econet as an attempt to tarnish its image and that of its founder and directors, has now given way to calm determined preparations for a legal battle with those it considers responsible for allegations of vote rigging at its recently held EGM.
A local daily, The Herald, has already been sued for a record US$2 billion for publishing what Econet perceived to be an inaccurate story.
A spokesman for Econet confirmed that the matter was going to court and "we don't want to talk about it anymore."
At the heart of the battle is an attempt by Old Mutual Asset Management, to cast a vote at the Econet EGM using shares belonging to some of its clients.
Econet threw out the Old Mutual vote on the basis that the insurance group did not have prior authority from the shareholders to vote on their behalf.
Although the vote cast by Old Mutual would not have made any difference to the actual outcome of the vote, the fight over whether they were entitled to vote or not resulted in a massive controversy at the EGM, and also led to media reports where there were allegations of vote rigging.
Econet directors were particularly aggrieved at the reports, attributed to Old Mutual in the media, in which it was alleged that the latter was taking Econet and its directors to court for vote rigging.
"The fact that it was Old Mutual, making these allegations gave them a lot of credence, when the truth is they had no right to vote with those shares. We now have affidavits and letters from the owners of those shares making it clear, they were not aware that Old Mutual had acted in this way. They simply wanted to tarnish our reputation and we are not going to take it lying down," said the Econet executive.
Old Mutual and Econet have been feuding for several years now.
Last year their feud broke out into an ugly fight when Old Mutual tried in vain to stop the merger of Kingdom Financial Holdings and Meikles Africa Limited.
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