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Mugabe ready to seize foreign companies

Zimbabwean President Robert Mugabe's government is preparing to seize majority shares in all of the nation's foreign-owned businesses and mines, a move that economists warn would be as damaging as the widespread land seizures in the country.

Top of the list of companies expected to be targeted are London- listed mining groups such as Rio Tinto and Anglo American, though recent remarks by Zimbabwean ministers suggested banks such as Standard Chartered and Barclays could also be hit.

One minister said "imperialist companies" would be targeted as they had been operating with what the president called a "sinister, regime-change agenda," reports said.

On Sunday, a senior source at a British company with a presence in Zimbabwe said any such move would "confirm Mugabe as operating what is, to all intents and purposes, a terrorist regime."

Mugabe's Cabinet has approved proposed legislation to force all foreign-owned companies to cede 51 percent of their shares to black Zimbabweans. The empowerment bill is going through a final drafting before it is presented to parliament, top government officials said.

The Mugabe government has already drafted an amendment to the Mining Act, which requires all foreign-owned mines to have 51 percent of their shares owned by "indigenous" Zimbabweans.

In both proposed bills it is widely understood that the new black Zimbabwean shareholders would have to be closely tied to Mugabe's ruling party, Zanu-PF. Officials have said that if companies cannot find acceptable indigenous Zimbabweans, then the government can make suggestions.

Economists warn the actions would severely hurt Zimbabwe's already battered economy, which is suffering 3,700 percent inflation, the world's highest. Zimbabwe's economy has shrunk by 50 percent since 1999, an unprecedented contraction in a country not at war, World Bank figures show.

The seizure of majority stakes in businesses and mines would increase inefficiency, mismanagement and corruption, said many business executives, who point to the disastrous land seizures. Once a food exporter, Zimbabwe has been reliant on international food aid for six consecutive years.

Independent analysts say the new moves are simply the latest example of Mugabe's plundering of the economy.

"Mugabe operates on a patronage system and he is running out of farms to give away to his supporters," the independent Harare economist John Robertson said. "Now he is looking for new areas of the economy to hand over. If this legislation becomes law, it will be like legalizing theft. It will be a death knell to many companies."

Cabinet approval of corporate seizure legislation has been widely anticipated by many multinational groups. British American Tobacco once counted Zimbabwe among its lead growers but has dramatically scaled down operations in the country. Rio Tinto sold off its gold and nickel mining operations to locally owned Rio Zim in 2003.

Barclays and Standard Chartered, which each employ almost 1,000 staff in Zimbabwe, have received criticism from Mugabe's opponents for their continued commitment to the country. On Sunday Barclays issued a statement saying: "We are assessing the potential impact of the proposed legislation on our business in Zimbabwe. It is early days and the proposed bill may not become law."
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