Sometimes people overestimate their leverage on the negotiating table, and you must know when to make concessions and demands

By Donovan Chimhandamba

This week on the Brawlers Book Club I would like to share interesting stories as posted by Graham Ndanga over: Staying at the table, even when negotiations fail to keep the relationship alive: out of the book Negotiating The Impossible by Deepak Malhotra.
Also of interest in the same chapter is: Not having done your homework and overestimating your leverage at the negotiating table.

Story One

In 2012 my private equity fund management company, Arkein Capital Partners, I was managing AngloAmerica’s community trust with assets close to $1bn at that time (ZAR9bn and exchange rate was $1:R9).

We eyed Rwanda as a new investment frontier and wanted to be pioneering and take up leading positions in the emerging projects in gas (Rwanda Energy Company in Gisenyi bordering Goma across Lake Kivu), cement (Cimerwa in Bugarama), peat bogs (coal equivalent in districts of Nyanza and Bugesera) and Tin in Rwinkavhu.

Of relevance to this topic about doing homework, we decided to find a local guy who is connected enough to arrange meetings for us with anyone we wished to see in charge of these company’s as our French was near none.

 

 

We were then introduced to this tall scary looking Rwandese by a contact here in SA and told us George is our guy. We never did further homework as we just trusted our guy in SA.

Long story short – George then started blackmailing us saying before you arrive in Rwanda u must pay $10k facilitation fee for all meetings. We had given him our entire meeting wish list two weeks prior to flying to Rwanda.

We didn’t pay anything in advance and so he did not make any meeting arrangements. Myself and my business partner Dr Gill we then said stuff him. Let’s just go and stay at the most expensive hotel and see who drinks there and we arrange our meetings directly.

We arrived at the Serena Hotel and decided to drink in the VIP lounge while our PA back in SA was researching for contacts in the President’s Office, the Rwanda Development Board and Rwanda Energy Company.
As we just sat, guess who rocks up to greet up… George!

He opens up by saying you think you can come to Rwanda and do as u please without talking to me with that straight scary looking face.

 

 

We remained calm and as he kept battering us I summoned courage to respond straight. I said George, you refused to arrange meetings and with that we clearly have no business with you. Rwanda is open for everyone and if Rwanda won’t accept our money, then we are happy to go to Uganda or DRC.

He left and said you will not see anyone in this town until you pay for my services. We said u have not provided any services and we have no contract with you.

That night we feared for our lives. One of the patrons in the bar whom I can’t remember name overhead the fight which lasted almost an hour and noisy sometimes as his English had to be expressive due to the heavy French accent.

The patron then said to us, I overhead your story…. so we narrated everything to him and at the end he says there are many people like George that are running around blocking Rwanda progress and if the President hears this, that will be the last you see of George. The man was a former Rwandese Army General and was in the consortium building the Marriot Hotel next door.

In short he said fear not George and do as you wish. If he harasses you tell him you have been advised from the Presidents office not to entertain him and also to report him.

 

 

So we slept well a bit and he gave us details of the CEO of Rwanda Development Group (Ivan) which under it had Rwanda Energy Company, Cimerwa, and the Peat Development Company.

Ivan today is a close friend and through that association we got PPC to buy Cimerwa….

Coming back to George, after what was almost a productive five days of meeting and traveling in Rwanda, we come back to our hotel one night and found George waiting for us.

So we went and sat in the lounge and said let’s sort this once and for all as we had been ignoring his calls. He knew we saw everyone we wanted without his facilitation.

George then started demanding payment. We then told him the only thing we were willing to pay him is his fuel for coming to the hotel. He declined that.

 

 

I took some Rwandese cash from my back pocket about $100 or so equivalent and put on the table in front of him and I said that’s all I will pay otherwise let’s call President’s office to arbitrate this matter.

The guy threw tantrums and refused the money. I then said very well George, let me take my money back. I took the money and put it back in my pocket and the guy screamed: “Leave the money on the table, we are still negotiating.”

That’s when I realised the true value of George. I then said George there is no more money on the table and we are going to sleep and we stood up to leave.

George then said OK, give me the $100. I looked up to this tall dark scary man then I said, we will only give u if you make guarantees and agree never to meddle with anything we are doing etc. The guy agreed.

He took the money and left. Lesson here was sometimes people overestimate their leverage and when on negotiating table you must know when to make concessions and demands. The guy was hounding us for $10k to set up meetings and he left with $100 as the meetings were done without the guy.

Story 2: The hostile contractor

As we build Nyanza, we hired some highly recommended white civil construction engineer to design our Product Development Centre. The guy was trigger happy when there was a late payment from us.

One time when we now needed to submit drawings to the municipality for building permit approval, he then wrote us copying everyone who he thought mattered in Government and our shareholders saying that he had downed tools and would not give us the drawings.

 

 

We were only 20 or so days late on paying his invoice but the contractor thought once drawings are in he will not have the leverage to demand his payment. We lost another month negotiating with him and then we decided to redo his plans with a friendly contractor and submitted drawings.

When permits came out and approvals two months later he wrote us saying he has been working on getting approvals and he is happy to inform us that our plans have been approved.

We wrote one line to him and said: “Dear Contractor (name withheld): you left the negotiating table and downed your tools. Can you tell us who told you to pick up your tools?”

He tried court etc and failed. The Product Testing Centre was build and is being commissioned without his drawings. Early January he wrote to me wishing me a good 2022 and Prosperous year congratulating us on progress made.

Lesson here is never overestimate your power when negotiating. Be clear that ur opponent might be forced to activate other options u never saw which will render u useless in the equation.

George and Jim thought they had all the keys and negotiated in bad faith. When they woke up to realise we proceeded and succeeded without them they cried foul and were now offering to take 10% or less of their demands which in Jim’s case he got Zero out of R1.5m as his drawings were never used and he can keep them for his grand kids to look at and George got $100 for fuel instead of $10k and potentially some 2.5-5% equity in deals we would close.

Do your home work and never overestimate your value.

Donovan Chimhandamba is the Founder and CEO of Airken Capital Partners, Executive Chairman of DIDG, Founding CEO of Nyanza, and Brawlers Chairman. The views shared are posted in The Brawlers Book Club

 

 

 

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