How BMC deal col­lapsed

The Sunday Mail (Zimbabwe) - - NEWS - Busi­ness Re­porters

FOR an ail­ing in­sti­tu­tion such as CSC, the mem­o­ran­dum of un­der­stand­ing signed with Botswana Meat Com­mis­sion (BMC) in 2011 for the lat­ter to sup­ply more than 24 000 cat­tle was God­send.

It was only made pos­si­ble af­ter the Euro­pean Union’s 2007 beef im­port ban over the out­break of Foot and Mouth dis­ease af­fected Oka­vango and Ngu­ni­land farm­ers in the neigh­bour­ing coun­try.

How­ever, most butcheries that were con­tracted to sell the meat ran rings around the paras­tatal, with the re­sult that the lat­ter suf­fered huge losses.

For ex­am­ple, be­tween July 2011 and Fe­bru­ary 2012, CSC en­gaged Rain­ham Abat­toir’s Butcheries, which got beef on credit de­spite not lodg­ing a credit ap­pli­ca­tion form or guar­an­tee or col­lat­eral.

Of the US$122 000 meat stocks it got, it only paid US$77 489, leav­ing an out­stand­ing amount of US$44 511.

Although CSC sought le­gal re­course to re­cover the out­stand­ing amount, the com­pany act­ing sales man­ager Mr Jamisa Ndlovu - who iron­i­cally signed all the con­tentious deals, par­tic­u­larly in Harare - in­structed their lawyers Du­ruru & As­so­ciates (through an in­ter­nal mem­o­ran­dum note) not to pur­sue the case any far­ther as a deal had been made to com­pen­sate the loss by tak­ing pos­ses­sion of the com­pany’s two butcheries in Makoni, Chi­tung­wiza. This did not hap­pen. The is­sue went back and forth un­til Rain­ham sub­mit­ted an out of court set­tle­ment of­fer of US$12 000, de­spite ow­ing more than US$41 000 ac­cord­ing to au­di­tors.

It is es­ti­mated that CSC lost close to US$500 000 in this way.

“In most in­ves­ti­gated cases, the par­tic­i­pat­ing fraud­sters did not even ap­ply for credit fa­cil­i­ties with CSC Harare branch and or fraud­u­lently sub­mit­ted credit ap­pli­ca­tions which were ei­ther in­com­plete or with­out the req­ui­site guar­an­tees, col­lat­eral and or pledges; although through con­nivance, they were able to ob­tain Cold Stor­age Com­pany beef on al­leged credit.

“In most in­ves­ti­gated cases, the al­leged butcheries did not ex­ist but were in­di­vid­u­als par­tic­i­pat­ing in this fraud­u­lent beef wind­fall and hence­forth most are said to be miss­ing and can­not be lo­cated.

“Even in sit­u­a­tions where al­leged col­lat­er­als or pledges were made - ve­hi­cle reg­is­tra­tion books, ti­tle deeds - these were later re­leased back to the fraud­sters through con­nivance with the CSC Harare branch man­agers,” added 28-page re­port com­piled by in­ter­nal CSC sources.

It is be­lieved that some of the de­clared monthly fig­ures were wrong and did not tally with stock rec­on­cil­i­a­tion of sales.

Sim­i­lar ar­range­ments in Mutare could have cost the 79-year-old meat pro­ces­sor more than US$53 716.

Quite ex­traor­di­nar­ily in most of the cases in­voices were man­u­ally gen­er­ated de­spite a Pas­tel ac­count­ing sys­tem hav­ing been in­stalled.

There were also in­com­plete till reg­is­ters.

Over­all, beef debtors amount­ing to US$72 000 were com­pletely omit­ted for the fi­nan­cial year ended 2011.


There were also short­falls in CSC’s var­i­ous cash ac­counts, which arose from dif­fer­ences be­tween re­ported meat sales, bank­ings, debtors bal­ances, cash with­held to pay off ex­penses and cash at hand.

An es­ti­mated US$130 000 leak­age in this way for Harare, fol­lowed by Gweru (US$39 000); Mutare (US$38 584); Vic­to­ria Falls (US$60 000).

Over­all, the iden­ti­fied short­falls amounted to more than US$268 000.

Billing cri­sis

At the time the Botswana deal was still sub­sist­ing, work­ers raised eye­brows on some deals signed be­tween the paras­tatal and shad­owy in­di­vid­u­als and com­pa­nies, in­clud­ing brief­case ven­tures.

One such com­pany was Util­ity Costs and Man­age­ment Con­sul­tants which was en­gaged to es­tab­lish the ve­rac­ity and au­then­tic­ity of some of CSC’s bills.

Mr Jamisa Ndlovu had ear­lier writ­ten to the City of Harare query­ing the billing es­pe­cially of ac­count num­ber 30014312.

Cor­rec­tions of US$194 000 were duly made for wa­ter and in­ter­est re­ver­sals.

Util­ity Costs and Man­age­ment Con­sul­tants, which au­di­tors de­scribed as a “brief­case com­pany that nei­ther ex­ists nor ex­isted”, sub­se­quently claimed US$66 881 for the work done.

It was only through the ef­forts of Mr Peter Ma­suka, who had taken over as one of the branch ac­coun­tants - af­ter a Mr Man­daza was trans­ferred to Bu­l­awayo - that the whole cha­rade was brought to an end.

By then Mr Jamisa Ndlovu was also un­der sus­pen­sion.

Be­sides only US$10 000 hav­ing be­ing paid to the “shad­owy” con­sul­tancy firm, no fur­ther pay­ments were made.

But most wor­ry­ing CSC could have lost more than US$1 mil­lion through such billing scan­dals.

An ad­di­tional US$1 mil­lion could also have been lost through Zesa billing sys­tems.

Beef de­liv­ery trucks

Again there were queries on the de­ci­sion that was taken to hire beef de­liv­ery trans­porters, with­out go­ing to ten­der, to carry the BMC meat to the var­i­ous out­lets. Some of the trans­porters were even given CSC trucks and re­frig­er­ated trail­ers and would only pro­vide tow hoses, but they still charged US$1,50 per kilo­me­tre to trans­port beef from Bu­l­awayo to Harare and its alled sub-branches.

The said trans­porters would earn on av­er­age US$1 350 per trip on the Harare-Bu­l­awayo route, with fuel be­ing ad­vanced “to speed up the beef trans­porta­tion process”.

In the five-month pe­riod be­tween July 2011 and De­cem­ber 2011, the trans­porters - some of whom were in­ci­den­tally among the mot­ley of butcheries con­tracted to sell meet on be­half of CSC, and who were fail­ing to set­tle their debts had since been paid US$406 000.

And ad­di­tional US$145 000 bill was ac­crued be­tween Jan­uary 2012 and March 2012. This was all for lo­cal de­liv­er­ies. How­ever, Pi­o­neer Trans­port, which was con­tracted to wheel cat­tle from Botswana to CSC, charged far lower rates than those levied by lo­cal trans­porters.

It is strongly sus­pected that since some - if not most - of the trans­porters sim­i­larly owned butcheries some of them could have di­verted sup­plies to their own busi­nesses as in­di­cated by miss­ing in­voice books.

What irked work­ers the most is the fact that be­fore the fren­zied hir­ing of trans­porters, CSC had dis­posed most of its ve­hi­cles in 2011.

It is es­ti­mated that the State-owned en­ter­prise could have lost more than US$2 mil­lion in this way.

With barely a year in ex­is­tence, the BMC deal nat­u­rally col­lapsed.

De­spite get­ting cat­tle from Botswana, CSC failed to get back on the rails — (File pic­ture)

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