by Zimdaily.com
December 16, 2004
HaRaRE - The ruling Zanu PF is currently reeling from a severe financial emergency, Zimdaily heard this week.Whilst the party generally commands huge state and non-state resources, it currently is reeling from a severe financial crisis.
Documents obtained by Zimdaily reveal that the ruling party is in dire straits because its companies, which used to be a major source of income, are performing badly due to a combination of gross mismanagement, corruption and incompetence. The ruling party recently made a whopping $15.5 billion loss, underlining the poor performance of its vast business empire.
Its accumulated deficit since 2000 is about $17.06 billion. The party now wants to raise money through dinners, raffle draws, soccer matches, music shows and membership fees and subscriptions to reduce the deficit.
Early this month Zanu PF failed to raise $20 billion for its congress. It only managed to raise $16,36 billion. This year the party had raised $158,1 million from membership fees and subscriptions. Donations and proceeds from fund-raising activities had generated $15,9 billion. However, the money was spent on events such as the Youth Congress in July ($1,4 billion) and the Women Congress in September ($2,6 billion) and the main congress.
Last year Zanu PF also failed to raise $2,1 billion for its Masvingo conference in December. It only managed to raise $1,2 billion from "donations" which in actual fact included extortions from private companies. It was forced to sell its shares in Sare to a shelf-company, Smoothnest, owned by Zanu PF front and prominent lawyer Edwin Manikai, to raise $800 million. Smoothnest is currently under probe by Zanu PF for getting $800 million from the Reserve Bank of Zimbabwe and $1 billion from First Bank, which is controlled by the party, and how it bought Sare shares.
The ruling party has interests in several private and public companies.
Its shareholdings are held by its wholly owned investment vehicle, M&S Syndicate (Pvt) Ltd. Zanu PF has interests in Tregers Holdings, through aM Tregers (Pvt) Ltd, Mike appeal, Catercraft, Fibrolite, Zidlee, Sare, First Banking Corporation, and Zidco Holdings.
The party also has a slew of briefcase companies, such as Segmented Investments, Sovereign, Hustonville, Tescrom, amelia, Ryobi, Printfit, Smoothnest, and M&S Investments, which were formed to evade and bust the current European Union and american sanctions. These companies are however under internal investigation for corruption and possible fraud against the Zanu PF.
However, some of the firms, in which the party has an interest, have since been closed, while others face collapse. Some of the companies had not been audited for years and their financial accounts were a complete mess.
For instance, a joint venture between M&S Syndicate and a Namibian company Nagua was closed last year officially due to „financial mismanagement‰. „Unknown people‰ looted the company‚s property. Zanu PF‚s investment in the Democratic Republic of Congo through First bank has collapsed and put into liquidation.
a $650 million Tregers Holdings cheque for dividend declared on February 18 2003 for the year ended December 31 2002 cannot be accounted for. But Zanu PF says it is „inconceivable‰ that Tregers, in which the party has a 41,96% shareholding, managed to declare a $1,2 billion dividend in four years when its annual turnover was about $150 billion.
There are further queries over the murky investment of $120 million in the portfolio investment company M&S Investments by Zanu PF's wholly owned investment arm, M&S Syndicate (Pvt) Ltd.
Furthermore, Fibrolite was closed last December, while Zidlee, which failed to take over Delta in 1989, has not declared dividends transparently. Mike appel declared a $31 million dividend in 2003 but $250 million this year. an investigation has been launched into operations of the company. Zanu PF also had interests in several firms such as National Blankets, Woolworths and Ottawa Building, which used to house aNC political activists in Harare during the 1980s, were disposed of in unclear circumstances.
Some companies‚ books, for instance those of Catercraft, have not been audited for at least four years and there have been no board meetings for two years.
Some of the Zanu PF investments such as in Bindura Nickel Mine were also unclear. Zanu PF has a 23% equity in Bindura through the Reserve Bank of Zimbabwe. Further inquiries into this investment have been recommended.
There are also fears that companies like Tregers could have externalised funds. This has led to investigations of possible money-laundering, tax evasion and fraud. Police are expected to be soon engaged to conduct further investigations in order establish whether or not there was any prejudice in terms of revenue to the party on its investments.
Zanu PF businesses are engulfed in chaos largely because there are no records of transactions. Most of its business arrangements were not written down during the formation of the companies as they were done verbally.
Zanu PF secretary for administration Emmerson Mnangagwa, who runs the companies and sits on nearly all companies‚ boards, has been blamed together with former M&S Syndicate directors Manharlal Chiunilal and Jayant Chiunilal Joshi who have fled the country. The Joshi brothers and Dipak Pandya, another M&S Syndicate director, fled the country in april shortly after Zanu PF launched an investigation into the state of its companies.
Several Zanu PF officials were quizzed during the investigation and about the escape of the Joshi brothers and Pandya. Didymus Mutasa, the party‚s secretary for external affairs, said the three ran way from being arrested. He said Jayant was believed to be in Dubai, while Manharlal was in Manchester, England.
It is suspected Zanu PF has interests in africa Resources, Banco Nationale of Mozambique, DRC Bank in the Democratic Republic of Congo, and Shabanie and Mashaba Mines.
Furthermore, Zanu PF separately owns Jongwe Printing & Publishing Company, as well as Jongwe and Nyadzonya farms.
Zanu PF is also in deep financial trouble because companies owned by its supporters and well-wishers are also in distress due to the current economic crisis. Its membership subscription fees are so negligible that they do now add much into the party‚s coffers. In the end, Zanu PF is simply in the red at the moment.
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