Allied Timbers forensic audit now complete
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.