How BMC deal collapsed
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.
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)