A meaty mess at CSC:

Dossier de­tails nau­se­at­ing rot Golden para­chutes un­der spot­light

The Sunday Mail (Zimbabwe) - - FRONT PAGE - Dar­ling­ton Musarurwa and Ishe­mu­n­y­oro Ching­were

A28-PAGE dossier com­piled by ex-work­ers of the Cold Stor­age Com­pany in­di­cates the Sta­te­owned en­ter­prise could have lost more than US$12 mil­lion in well-knit schemes that brought the once mighty meat pro­ducer and pro­ces­sor to its knees.

Ex­po­sure of the al­leged loot­ing fol­lows a fall­out be­tween work­ers — both cur­rent and for­mer — and man­age­ment over a US$2,1 mil­lion re­trench­ment kitty that will mostly ben­e­fit man­agers, some of whom are ac­cused of bring­ing CSC down.

CSC’s man­age­ment and cred­i­tors were ex­pected to strike an agree­ment on May 18, 2017 through a scheme of ar­range­ment, but for­mer work­ers scup­pered the process by lodg­ing ob­jec­tions with the High Court.

The ex-work­ers are against an as­pect of the deal that will put tidy sums in the pock­ets of man­agers.

As­set leak­age

Work­ers say that one of the key con­duits through which sig­nif­i­cant as­set leak­ages oc­curred, in­clud­ing al­leged loot­ing of beef stocks, was via fran­chise agree­ments signed with lo­cal com­pa­nies to sell beef for CSC.

CSC had 22 Meat Pride retail out­lets op­er­ated as fran­chises or di­rectly-owned shops in ar­eas such as Bu­l­awayo, Kadoma, Chin­hoyi, Karoi, Kariba, Vic­to­ria Falls, Chi­tung­wiza, Rusape and Mutare.

The units in Chin­hoyi, Kariba, Vic­to­ria Falls, Rusape and Chi­tung­wiza were in the or­bit of the Harare branch.

Through the fran­chise agree­ments, com­pa­nies part­ner­ing CSC were sup­posed to sup­ply not less than two tonnes of “ac­cept­able beef” and re­lated prod­ucts per month, pay em­ploy­ees, and man­age day-to-day oper­a­tions and mar­ket­ing.

While costs for wa­ter, elec­tric­ity, rentals, rates and con­sum­ables were shared equally, the con­tracted com­pany was sup­posed to share 70 per­cent of costs of re­pairs and main­te­nance. It re­turn, it would get 70 per­cent of gross beef sales.

CSC would in­vest in butch­ery equip­ment, dis­play chillers, is­land freez­ers, col­d­rooms, fridges and cash reg­is­ters. It was also re­spon­si­ble for tiling and struc­tural changes to out­lets.

But dur­ing the sub­sis­tence of most of these agree­ments, par­tic­u­larly those in Chi­tung­wiza and Harare, this never hap­pened — and some of these com­pa­nies even ended up claim­ing beef from CSC.

“The req­ui­site fi­nan­cial ac­count­ing and record­ing of these trans­ac­tions and as­sets were in most cases in­com­plete, fraud­u­lent and col­lu­sive mis­rep­re­sen­ta­tions that even­tu­ally led to the col­lapse and or can­cel­la­tion of fran­chises,” reads part of the dossier.

“How­ever, most fran­chised as­sets were not re­turned to Cold Stor­age Com­pany as should have been the case. Most fran­chises re­tained both (sic) their ren­o­vated shops, CSC equip­ment/as­set, beef stocks and sales pro­ceeds. And nei­ther were rec­on­cil­i­a­tions of trad­ing ac­counts done to es­tab­lish the req­ui­site fi­nan­cial po­si­tions of the par­ties at their ter­mi­na­tion.”

The al­leged fi­nan­cial prej­u­dice runs into mil­lions of dol­lars.

The dossier also says key doc­u­ments such as lease agree­ments could have been de­stroyed to cover up the scam.

Chi­tung­wiza & Souther­ton scan­dals

For the Chi­tung­wiza fran­chise, CSC roped in Ol­i­trade as its part­ner from Jan­uary 2009 to De­cem­ber 2009 and the prop­erty on which Meat Pride op­er­ated was leased from Old Mu­tual.

It is al­leged that Ol­i­trade never held up its end of the bar­gain and ended up claim­ing 600 tonnes of beef from CSC Harare un­der un­clear cir­cum­stances.

When au­di­tors re­quested a copy of the lease agree­ment, it was never found — even as work­ers main­tain that there was never a CSC un­der­tak­ing to sup­ply Ol­i­trade with beef.

It was the same script for Souther­ton (Harare) Meat Price where a sim­i­larly struc­tured agree­ment was signed on Jan­uary 5, 2009 with Ol­i­trade.

Ac­cord­ing to the dossier, “There is ev­i­dence of Ol­i­trade fraud­u­lently get­ting 20 tonnes of CSC Harare branch beef weekly to­wards an un­spec­i­fied ton­nage . . . this de­spite Ol­i­trade hav­ing no proof of hav­ing been owed this un­spec­i­fied ton­nage by CSC Harare branch.”

The deal ended in July 2011 af­ter phase one of the Botswana Meat Com­mis­sion agree­ment set in.

Though CSC closed the busi­ness on June 2012, work­ers say there are in­di­ca­tions the out­let was be­ing op­er­ated by some Harare branch man­agers as ev­i­denced by “the Stand 8824 Souther­ton busi­ness li­cence is­sued un­der CSC name on City of Harare ac­count num­ber BUS00014947”.

Here, CSC could have lost more US$480 000 from beef claimed by Ol­i­trade.

Af­ter that, CSC en­tered an­other agree­ment to lease the Chi­tung­wiza prop­erty to Meat Mart, a com­pany owned by a Mr Much­abaiwa, from Jan­uary 1, 2011 to De­cem­ber 2011.

Ac­cord­ing to that agree­ment, the new ten­ant would lease “un­spec­i­fied as­sets” from CSC while also tak­ing over em­ploy­ees at na­tional em­ploy­ment coun­cil rates.

Rentals were pegged at US$250 per month, with Meat Mart bear­ing the costs of re­pairs and main­te­nance.

How­ever, Meat Mart lodged a claim of US$11 782 for costs in­curred in re­fur­bish­ing the cold room; and then sug­gest­ing that the CSC “debt” could be off­set by for­go­ing pay­ing rentals for 47 months.

Even af­ter its lease ex­pired on De­cem­ber 31, 2011, Meat Mart stayed put; and by the end of Septem­ber 2015 owed more than US$14 250 in un­paid rentals.

Fur­ther, Meat Mart al­legedly did not pay work­ers it in­her­ited from CSC.

‘Inept man­age­ment’

CSC lost more than US$500 000 in un­paid rentals and levies for util­i­ties, es­pe­cially for prop­er­ties leased out in Harare to com­pa­nies like Refresh Bev­er­ages and Drum­monds Chick­ens.

As a ma­jor con­sumer of wa­ter at CSC’s Harare branch (37 500 litres per month), man­age­ment had — with the aid of a con­sul­tant — de­cided to make Refresh Bev­er­ages foot 30 per­cent of the bill.

How­ever, on Oc­to­ber 6, 2009 Refresh’s oper­a­tions ex­ec­u­tive, a Mr Kan­darira, wrote to CSC’s act­ing na­tional sales man­ager Mr Jamisa Ndlovu for a down­ward vari­a­tion to 12 per­cent for wa­ter and 10 per­cent for elec­tric­ity.

The par­ties set­tled on 15 per­cent for elec­tric­ity and 30 per­cent for wa­ter.

Refresh started de­fault­ing and when it even­tu­ally moved out in De­cem­ber 2010, its bill had soared to US$152 377,66.

But work­ers al­lege that through a “de­lib­er­ate and sys­tem­atic win­dow dress­ing ex­er­cise”, CSC gave Refresh a US$60 000 bill.

It was only through irate work­ers’ in­ter­ven­tion that man­age­ment with­held Refresh’s 28-tonne re­frig­er­ated trailer as lien (prop­erty held un­til a debt is paid) for the un­paid bill.

There was to be more in­trigue sur­round­ing the truck.

CSC man­age­ment leased the truck to an­other ten­ant, Quick Ice, in a deal that was ini­tially sup­posed to run for five months through April 16, 2011 at US$1 000 per month.

Noth­ing was ever paid, al­legedly prej­u­dic­ing the pub­lic en­tity of more than US$57 000.

The last time the trailer left the premises — laden with 28 tonnes of meat — it was never seen again.

It is al­leged that CSC man­age­ment struck a deal with Refresh In­dus­tries to re­lease the trailer un­der un­clear cir­cum­stances.

Al­le­ga­tions are that CSC lost more than US$321 000 from that episode.

It goes on CSC charged Drum­mond Chick­ens 20 per­cent monthly for wa­ter and 31 per­cent for elec­tric­ity as it used much power for its cold rooms.

But Mr Troy Drum­mond, the owner of the busi­ness, wrote a let­ter on June 11, 2009 seek­ing a down­ward re­view, also ques­tion­ing Zesa and Harare City’s billing sys­tem.

He then started pay­ing US$300 and US$750 monthly to­wards wa­ter and elec­tric­ity re­spec­tively.

On De­cem­ber 10, 2010, CSC took le­gal ac­tion against Drum­mond to re­cover more than US$97 590 in un­paid bills (case num­ber HC9751/12).

When the firm moved out in De­cem­ber 2010, US$97 590 was billed in­stead of US$130 808 that ought to have been charged. When work­ers de­manded the terms of the lease agree­ment, it could not be found. By the time of go­ing to print, CSC chief ex­ec­u­tive of­fi­cer Mr Ngoni Chinog­a­ramombe had not re­sponded to ques­tions sent to his e-mail ad­dress and his mo­bile phone.

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