Cheetah Cement coughs up in N$5m market-rigging settlement
The Namibian Competition Commission (NaCC) on Wednesday announced a settlement with Fan Qingmei, Wang Zhongke, Hong Xiang Holdings (HXH) and Whale Rock Cement, the parent company of the Cheetah Cement plant and business just outside Otjiwarongo.
The N$5 million settlement was made a court order by High Court Judge Hannelie Prinsloo yesterday, and the case brought by the NaCC against the accused was struck from the court roll.
In the case, the commission approached the court to order a fine of N$16.368 million against Fan, Wang, HXH and Whale Rock. The competition commission was of the opinion that the court should fine the accused because they didn’t report a purchase transaction between Fan and Wang for the ownership of HXH, adding that details about the transaction were never provided, despite the NaCC reportedly requesting them repeatedly.
According to an affidavit by CEO and secretary Vitalis Ndalikokule, the commission only learnt of the purchase transaction in 2020, despite it already having taken place the year before. The NaCC became aware of the transaction amid an investigation into a purchase transaction between West China Cement and Schwenk Namibia for ownership of Namibia's only other cement plant - Ohorongo Cement. The commission rejected the Ohorongo deal in June 2020.
Ndalikokule said the HXH transaction was confirmed in July 2020 by correspondence from Whale Rock's CEO and 10% shareholder Zedekias Gowaseb, and later in August of the same year by Whale Rock's lawyers Engling, Stritter and Partners.
Family control
Whale Rock Cement was established in 2017 with Gowaseb’s 10% shareholding and 90% owned by Shaanxi Hengyuda Building Materials, which belonged to Fan. That same year, Shaanxi sold its share in Whale Rock to its own subsidiary, HYD Namibia Investment.
HYD subsequently sold 20% to Xian Tiexing Industry and retained 70% of Whale Rock. Xian then sold its 20% to Adament Investment Management.
In October 2018, HYD's remaining 70% was sold to HXH, before the same 70% was sold to Wang in 2019. Details of the latter transaction have not been provided to the NaCC to date.
However, the commission's investigation determined that Fan’s husband is the owner of West China Cement. According to Ndalikokule, the HXH transaction could have been a ploy to hide the family's control of Cheetah Cement during the attempt to buy Ohorongo as well.
"The parties deliberately tried to suppress the investigation," Ndalikokule's statement read.
He also pointed out that Wang, Fan, her husband and her son are all shareholders of Shaanxi. Without the investigation into the West China Cement and Schwenk transaction, the HXH transaction would never have been uncovered by the commission, according to Ndalikokule.
Considering legal action
Ndalikokule's statement was already submitted to the court on 15 October 2022, but in response, a statement by Gowaseb alone was only submitted on 20 February 2024. In it, Gowaseb cast doubt on the fact that the HXH transaction ever even took place, because such a transaction would go against their shareholders' agreement.
"The remaining shareholders and I would have to be entitled to buy the shares," he said, adding that he is now also considering legal action to have such a transaction set aside.
Gowaseb further insisted that neither Fan nor Wang ever lived in Namibia. HXH is registered in Mauritius.
By the end of 2020, Whale Rock Cement boasted a turnover of N$355 million, and assets valued at N$1.48 billion.
The N$5 million settlement was made a court order by High Court Judge Hannelie Prinsloo yesterday, and the case brought by the NaCC against the accused was struck from the court roll.
In the case, the commission approached the court to order a fine of N$16.368 million against Fan, Wang, HXH and Whale Rock. The competition commission was of the opinion that the court should fine the accused because they didn’t report a purchase transaction between Fan and Wang for the ownership of HXH, adding that details about the transaction were never provided, despite the NaCC reportedly requesting them repeatedly.
According to an affidavit by CEO and secretary Vitalis Ndalikokule, the commission only learnt of the purchase transaction in 2020, despite it already having taken place the year before. The NaCC became aware of the transaction amid an investigation into a purchase transaction between West China Cement and Schwenk Namibia for ownership of Namibia's only other cement plant - Ohorongo Cement. The commission rejected the Ohorongo deal in June 2020.
Ndalikokule said the HXH transaction was confirmed in July 2020 by correspondence from Whale Rock's CEO and 10% shareholder Zedekias Gowaseb, and later in August of the same year by Whale Rock's lawyers Engling, Stritter and Partners.
Family control
Whale Rock Cement was established in 2017 with Gowaseb’s 10% shareholding and 90% owned by Shaanxi Hengyuda Building Materials, which belonged to Fan. That same year, Shaanxi sold its share in Whale Rock to its own subsidiary, HYD Namibia Investment.
HYD subsequently sold 20% to Xian Tiexing Industry and retained 70% of Whale Rock. Xian then sold its 20% to Adament Investment Management.
In October 2018, HYD's remaining 70% was sold to HXH, before the same 70% was sold to Wang in 2019. Details of the latter transaction have not been provided to the NaCC to date.
However, the commission's investigation determined that Fan’s husband is the owner of West China Cement. According to Ndalikokule, the HXH transaction could have been a ploy to hide the family's control of Cheetah Cement during the attempt to buy Ohorongo as well.
"The parties deliberately tried to suppress the investigation," Ndalikokule's statement read.
He also pointed out that Wang, Fan, her husband and her son are all shareholders of Shaanxi. Without the investigation into the West China Cement and Schwenk transaction, the HXH transaction would never have been uncovered by the commission, according to Ndalikokule.
Considering legal action
Ndalikokule's statement was already submitted to the court on 15 October 2022, but in response, a statement by Gowaseb alone was only submitted on 20 February 2024. In it, Gowaseb cast doubt on the fact that the HXH transaction ever even took place, because such a transaction would go against their shareholders' agreement.
"The remaining shareholders and I would have to be entitled to buy the shares," he said, adding that he is now also considering legal action to have such a transaction set aside.
Gowaseb further insisted that neither Fan nor Wang ever lived in Namibia. HXH is registered in Mauritius.
By the end of 2020, Whale Rock Cement boasted a turnover of N$355 million, and assets valued at N$1.48 billion.
Comments
Namibian Sun
No comments have been left on this article