Hwange Colliery’s triple listings at stake over $6.4m scandal
Hwange Colliery, which is listed on the Zimbabwe Stock Exchange (ZSE), the JSE and the London Stock Exchange (LSE), faces suspension from those bourses in the wake of a messy $6.4m financial scandal that has sucked in the Zimbabwean president and mines minister.
The debt-ridden coal miner is primarily listed in Harare, with secondary listings on the JSE and LSE.
On Monday, Zimbabwe justice, legal and parliamentary affairs minister Ziyambi Ziyambi placed the company under administration in a Government Gazette notice, ostensibly to “allow for reconstruction and return it to profitability”.
The Zimbabwe government owns 36% of Hwange Colliery.
On Thursday board member Edward Tome told a parliamentary committee meeting held to discuss the chaos at the company that Hwange Colliery management was responsible for the mess. There were allegations that the management had engaged in illicit deals to defraud the company.
“We unearthed massive financial irregularities. Money was used without board approval. Management misappropriated $6.4m without our authority and they used the money to pay themselves and selected contractors while the workers went for years without pay,” he said.
At the parliamentary hearing, Hwange board chair Juliana Muskwe blamed management for the rampant corruption, saying even contractors were doing as they pleased at the colliery. She was once intimidated by a contractor who claimed to have been sent by President Emmerson Mnangagwa and mines and mining development minister Winston Chitando, she told the meeting. Prior to his appointment as mines minister, Chitando was the chairman of the Hwange board.
She painted a picture of an all-powerful contractor who had political backing. “Shepherd Tundiya, a contractor who transported coal, caused havoc at the company and he claimed to have been ordered by president Mnangagwa and minister Chitando,” she said.
Calls made to the president’s office and to the minister were not answered.
“Tundiya once summoned me to State House [the official residence and office of the president] and to the minister’s office. At one time, I sat in his office with the minister and he barked orders to me, while the minister did not say anything.”
During the hearing, stunning allegations were made of abductions and kidnappings against those who threatened to blow the whistle. Muskwe said her board was not consulted on most of these shenanigans.
ZSE acting CEO Martin Matanda said the company could be suspended from both the ZSE and LSE. “We have been in communication with Hwange [Colliery] officials and what was of concern was that the decision to put the company under reconstruction was not done without consultations.
“ZSE will of course notify the exchanges where there are secondary listings of any action taken that we are obliged to disclose. I will have to update you when the listings committee has a final position,” he told Business Day on Thursday.
Board member Tome said the directors were worried the three stock markets will take stern action against the firm.
“We have received communication from the ZSE, who have demanded an explanation of what is going on. They have warned us of serious repercussions. We are also concerned about possible repercussions from the JSE and LSE.
“We are afraid that everything that could happen may have serious repercussions on not only Hwange but the entire image of the country. We are one of the few Zimbabwean companies listed on international stock markets,” he told a portfolio committee hearing.
Market analyst Brains Muchemwa said it was highly likely that Hwange would be suspended from the JSE and ZSE. “A decision by the ZSE will automatically be followed by the JSE,” he said. “Hwange has needed changes to get better for a couple of years now.”