Chitando sucked into $111m Hwange scam

Hwange Colliery in 2016 lost a $111 million loan from government to fund its revival due to mismanagement, reckless trading and money laundering which has sucked in Mines minister Winston Chitando, an audit report has revealed.

Reynolds Tendai Muza, a forensic auditor and investigator with Ralph Bomment Greenacre and Reynolds noted in the audit report that Chitando — the current Mines minister, who was the Hwange Colliery board chairperson at the time in question, embarked on unethical practices during his tenure because a company transporting the bulk of the coal at the mine, Inductoserve, was linked to his constituency in Gutu, and that he was paying journalists "bribes" to cover up corruption.

"Management during the chairmanship of Chitando embarked on extensive unethical practice of paying what I define as 'bribes' to many journalists under the guise of corporate social responsibility," read the forensic audit.

Hwange Colliery was hurriedly put under reconstruction by Chitando and Justice minister Ziyambi Ziyambi; an issue which the Parliamentary Mines Committee during the chairmanship of Temba Mliswa felt was to cover up corrupt practices at the mine.

"During the year 2016, the mine got a United States dollar $111,5 million 15-year loan from the Ministry of Finance which attracts an interest of 7% per annum in the form of Treasury Bills (TBs), although TBs styled in the US dollar are not money that can be utilised to pay for foreign currency-denominated logistics," Muza said in the forensic audit.

"Audited accounts show that the company made a loss after tax of $115 million for the year ended December 31, 2015, but in 2016 after implementing Ralph Bomment Greenacre and Reynolds turnaround quick wins, the performance improved by 37,6% in under six months, and the loss for the year came down to $89 million. The 2017 audited results show that the loss for the year went down to $43 million, a 62,61% cumulative improvement in under one-and-a-half years, and by 2018 as at September 30 management accounts show that the loss for the nine months stood at $32 million," he said.

Muza said some directors at Hwange felt that its waning fortunes could have been because the board appeared to be leading the company into "reckless trading" and deviating from the "quick wins" which were directed by Ralph Bomment Greenacre and Reynolds in order to turn around its fortunes.

"There was trading with gross negligence, buying of Turbo mining equipment ($2,02 million) without due diligence when the equipment was only worth $823 000 only; and (there was) no valuation; and (there could also have been) money laundering involving Inductoserve, a contracted foreign haulage company," read the forensic audit.

When Muza appeared before the Mines Committee last year to give oral evidence, he said 68% of coal transportation at Hwange Colliery was being done by Inductoserve, adding that several companies performed incompatible functions of loading coal.

He said there were fraudulent activities by companies ferrying coal at Hwange where they overstated the tonnage.

"Assuming the tonnage is deemed to be 30 tonnes per each load, a truck that makes 10 loaded trips per day is deemed to have ferried 300 tonnes per day. There is persuasion for hired truckers to make more trips per day, but carrying less than the assumed 30 tonnes. Because of the foregoing weaknesses, tonnages recorded in forecasting processing at the processing plants can be overstated or misleading," Muza said.