Al­lied Tim­bers foren­sic au­dit now com­plete

The Sunday Mail (Zimbabwe) - - BUSINESS NEWS - Golden Sibanda Se­nior Busi­ness Re­porter

CHAR­TERED ac­coun­tants, KPMG, have com­pleted a foren­sic au­dit into the sus­pected rot that took place and nearly brought down State-owned tim­ber pro­ducer Al­lied Tim­bers Zim­babwe dur­ing the reign of for­mer chief ex­ec­u­tive of­fi­cer Dr Joseph Kanyekanye (pic­tured).

In­cum­bent chief ex­ec­u­tive Dr Daniel Sit­hole said the foren­sic au­dit had been com­pleted and was now with En­vi­ron­ment, Wa­ter and Cli­mate Min­is­ter Op­pah Muchin­guri for pre­sen­ta­tion to Gov­ern­ment amid strong be­lief it ex­posed how Al­lied was haem­or­rhaged over the past decade.

Fears abound the com­pany could have been heav­ily prej­u­diced of re­sources over a long pe­riod of time un­der the pre­vi­ous ex­ec­u­tive dur­ing which it made peren­nial losses for nearly 10 years and made lit­tle in­vest­ment to­wards re­gen­er­a­tion of tim­ber es­tates.

For­mer chief ex­ec­u­tive Dr Kanyekanye left the group in 2015, af­ter a fall­out with the board. While the sep­a­ra­tion was mu­tual, the re­la­tion­ship had soured.

Prior to the ter­mi­na­tion of his con­tract, Dr Kanyekanye had been on sus­pen­sion af­ter the board raised sev­eral charges of mis­con­duct against him. The sus­pen­sion was meant to al­low in­ves­ti­ga­tions into his con­duct bor­der­ing on al­leged cor­rup­tion, fail­ure to ob­serve op­er­at­ing pro­ce­dures and gross in­sub­or­di­na­tion.

While Dr Sit­hole would not dis­cuss finer de­tails of the things he found up­side down when he took over at the helm of Al­lied Tim­bers last year, he cited in­stances of bla­tant man­age­rial neg­li­gence and po­ten­tial and sus­pected plun­der of the firm’s re­sources.

“The foren­sic au­dit un­der­taken by KPMG has been com­pleted and I be­lieve the min­is­ter now has it for pre­sen­ta­tion to the share­holder. The au­dit took 22 months to com­plete,” Dr Sit­hole said.

Min­is­ter Muchin­guri could not be reached for a com­ment on the re­port, but last week in­ti­mated KPMG had com­pleted the au­dit.

Plun­der of com­pany re­sources

Dr Sit­hole said he had not seen the re­port yet to be able to dis­cuss its find­ings, but said the sit­u­a­tion he found when he took over the helm of Al­lied showed its as­sets, in­clud­ing sawmills at Gwend­ingwe, Erin and Sta­ple­ford es­tates had been van­dalised, to jus­tify bring­ing in out­siders for tim­ber har­vest­ing. Ex­ter­nal con­trac­tors were al­legedly used to milk the firm.

This was done through hired pri­vate mo­bile sawmills to­talling 71, a sit­u­a­tion that ex­posed the com­pany to pil­fer­age of tim­ber, as mon­i­tor­ing move­ment and ac­tiv­i­ties of the con­trac­tors, who were paid por­tions of har­vested tim­ber, was dif­fi­cult.

“When I came in Jan­uary 2016, what I did was to look at the 71 mo­bile sawmills, which were com­pet­ing to cut the trees. The first thing I did was chase ev­ery­one out. We had to se­cure the re­source, so we re­duced the con­trac­tors from 71 to 21,” Dr Sit­hole said.

He added the num­ber has been cut fur­ther by nearly half.

“With 71 mo­bile sawmills, that was chaos,” he added.

“The huge num­ber of sawmills was a ruse. How can you have 71 mo­bile sawmills cut­ting the trees? How do you con­trol them? It was a ruse, tim­ber was stolen; be­cause it is not about the num­ber of sawmills, it is about the qual­ity of op­er­a­tors,” Dr Sit­hole said.

The foren­sic au­dit would sub­stan­ti­ate or prove claims that some of the mo­bile sawmills used on Al­lied Tim­bers vast plan­ta­tions were par­ties re­lated to the pre­vi­ous CEO, no­tably TS Tim­bers, which is al­legedly owned by Dr Kanyekanye’s as­so­ciates.

Ac­cord­ing to Dr Sit­hole, the hap­haz­ard and in­dis­crim­i­nate har­vest­ing of tim­ber with­out a vi­able plan to re­gen­er­ate the threes threat­ened to plunge Zim­babwe into short­ages of tim­ber in seven years time, as­sum­ing lit­tle or noth­ing was done about the is­sue.

Re­build­ing a wrecked ship

The com­pany is now fo­cused on re­gen­er­at­ing its plan­ta­tions with a tar­get to plant 6 000 hectares each year over the next 10 years, oth­er­wise, Zim­babwe will have to re­sort to im­ports within the next seven to nine years, ac­cord­ing to eval­u­a­tion by a GIS spe­cial­ist.

“Al­lied is a strate­gic as­set, we have 60 per­cent of the forestry land.”

Zim­babwe is the only coun­try in SADC, which ex­ports tim­ber, es­pe­cially with re­gard to highly sought-af­ter roof­ing tim­ber.

The need to ca­pac­i­tate Al­lied Tim­bers, also tak­ing into fo­cus its strate­gic im­por­tance to the econ­omy, saw di­rec­tors manag­ing to con­vince Gov­ern­ment of the ur­gent need to re­cap­i­talise the com­pany. Gov­ern­ment has obliged by in­clud­ing it among in­sti­tu­tions to ben­e­fit from the $150 mil­lion Be­larus equip­ment fa­cil­ity.

Gov­ern­ment has not in­vested in the com­pany since sep­a­rat­ing its com­mer­cial ac­tiv­i­ties from the reg­u­la­tory func­tions of the then Forestry Com­mis­sion of Zim­babwe to the Forestry Com­pany of Zim­babwe in 2 000, when it had to sus­tain it­self from in­ter­nal re­sources.

As such, the com­pany will get crit­i­cal equip­ment for tim­ber har­vest­ing and trans­porta­tion, civil works (plan­ta­tion road mak­ing) and tim­ber pro­cess­ing among oth­ers, es­ti­mated to the value of $25 mil­lion.

A plan for an ex­ten­sive re­build­ing ex­er­cise is also al­ready on hand, which en­tails a build, op­er­ate and trans­fer scheme as well as pub­lic pri­vate part­ner­ships, which the Gov­ern­ment, as share­holder, has al­ready en­dorsed, Dr Sit­hole said.

Al­lied Tim­bers Zim­babwe’s op­er­a­tions in­volve plan­ta­tions, har­vest­ing, pro­cess­ing, mar­ket­ing and sell­ing of both pine and gum. The State-owned tim­ber com­pany’s op­er­a­tions are highly con­cen­trated in the Eastern High­lands and Mid­lands ar­eas of Zim­babwe.

Al­lied Tim­bers spe­cialises in sawn tim­ber, poles and other value added tim­ber based prod­ucts such as doors, floor­ing, bran­der­ing, trusses as well as honey.

It cur­rently ex­ports prod­ucts to Botswana, Namibia and South Africa and is ex­pected to ex­pand its foothold into other re­gional and in­ter­na­tional mar­kets.

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