Chitando, shareholders clash in Hwange Colliery scandal

MINES minister Winston Chitando unilaterally recommended Hwange Colliery Company Limited's placement under administration without the blessing of other shareholders. The move is widely seen by some officials as an attempt to cover up massive corruption involving senior management and public officials at the troubled coal miner, it emerged this week.

Justice minister Ziyambi Ziyambi announced the decision two weeks ago, saying it was meant to put the company on a recovery path and ultimately back to profitability. But shareholders, as well as the Hwange board led by Juliana Muskwe, workers and the Zimbabwe Stock Exchange (ZSE) —which responded by suspending the firm —were also not informed or consulted.

The development came at a time the board was overseeing a forensic audit of the company to establish the circumstances under which about US$6,5 million was siphoned out of its already lean coffers.

Officials say Chitando, who has not been in good books with the board, had been keen on frustrating the audit as evidenced by his earlier decision to dissolve the board. Other shareholders however thwarted the move.

British tycoon Nicholas Van Hoogstraten, a key shareholder, confirmed he was opposed to government's decision to place the company under reconstruction before the finalisation of the forensic audit.

He confirmed that he was not consulted when the decision was made. "I have not been consulted by the government on this matter. I do not believe any shareholders have been consulted. I do not know what a ‘reconstruction' means — this is news to me. However, I would make the obvious point that Hwange has been the victim of massive corruption and mismanagement over many years, as I have repeatedly stated in the media, and complained of to the various responsible ministers — all to no avail," Van Hoogstraten said.

"A forensic audit report should be, and needs to be, a prerequisite to any ‘reconstruction'. The recent Scheme of Arrangement was a short-term nonsense that I did not support, as it was only going to buy time and its main purpose was to cover up the systematic rape of the company by a succession of corrupt and incompetent managing directors, chairmen and management. Criminal proceedings will need to be taken against the responsible persons and their counterparties and not swept under the carpet, as has been the case, too many times in the past."

Van Hoogstraten holds 31% shareholding in Hwange. Government has 36,7% shareholding, making it the biggest shareholder. However, according to the arrangement in place, government has no power to arrive at such decisions without a unanimous shareholders' vote. Hwange workers' committee chairperson, Deliverance Nyoni, also confirmed they were not consulted. "Surely if we were consulted, we were not going to agree to an act which took away workers' rights. This is slavery. One thing for sure is that we will defend our rights through every possible legal way. We were given an opportunity as workers to purchase shares, which we did and this makes us a key subject in the company's boardroom affairs," he added.

Muskwe, who exposed Chitando's dominant hand in the company while giving oral evidence before the Parliamentary Portfolio Committee on Mines on Thursday last week, also confirmed her board was not consulted when the decision to put the company under administration was made. "No consultations were ever made, neither to the board nor other shareholders. What this effectively means is that the board technically no longer exists, something which he (Chitando) has always wanted to happen. This also means that the forensic audit which we have been undertaking to ascertain the extent of corruption at the company will no longer proceed. Everything has been thrown into confusion," she said.

Muskwe declined to give further details, but another board member alleged that Chitando used the reconstruction decision as a tool to settle scores with the board and advance questionable interests. The board member also exposed the conflict on interest in the appointment of administrator Bekithemba Moyo, saying his company, DBF Capital, had business interests with Hwange.

Moyo will be assisted by Mutsa Mollie Jean Remba, the managing partner of Dube, Manikai & Hwacha (DMH) law firm which, according to the board member, represents senior managers whom the Muskwe board suspended from Hwange as part of its corruption investigations. These include former Hwange managing director Thomas Makore, human resources director Shepherd Manamike and finance director Tawanda Marapira.

Those appointed are conflicted in many ways. DBF Capital attempted without success to fundraise on behalf of Hwange. One wonders whether they (DBF) will now be able to raise funding under reconstruction. Mutsa Remba of DMH Legal Practitioners has been engaged in the negotiation for the Mota Engil contract extension. Further, the same law firm is representing Makore, Marapira, Munangwa, Manamike, Mutombe, Zvidzai, Chamunirwa, all accused of improprieties. Whose interests will DMH, let alone Mutsa, be serving in all this? This reconstruction is a façade to cover up incompetence, corruption, fraud and all forms of syndicated improprieties," the board member said.

Chitando could not be reached for comment as he was not answering his phone.