Malawi Standard (Blantyre)

24 October 2004

Malawi: Mvula Speaks On Paradiso Coaches

Blantyre — When they decided to pull out in 1997, Stagecoach had left the country's public transport company with a fleet of about 50 buses on their last wheels and most of these were not able to complete a trip. In a historic turn of events, Stagecoach had given back the company to the people of Malawi at a nominal cost of K1 at a farewell party at Blantyre Sports Club.

The then Managing Director, in almost tears, told the gathering at that function "the deregulation of passenger transport had killed the once giant passenger transport company."

The Government of Malawi had no option but to close the company, commencing with a massive retrenchment in 1998/99 and further retrenchments were halted due to limited financial capacity to pay off retrenchment package.

In December 2000, Admarc Holdings Company seconded Humphrey Mvula as an undertaker to see through the process of the sale of the company and ultimate liquidation because at that time, the transport specialist hired by the company had recommended closure as the only way out.

Whilst the shareholders were struggling with the identification of the retrenchment package, the new management decided to give the company a trial. This resulted in the turn around of the company from MK87 million loss registered in 2000/2001 financial year to a profit of MK36 million in 2002/2003 and then MK117 million 2003/2004 financial year.

Mvula had his contract terminated a couple of weeks ago following allegations of corruption and fraud. Since his departure at Shire Bus Lines, there has been much speculation regarding Mvula's tenure at the company.

The most recent was published in the Malawi News of October 16-22, 2004, entitled 'Another Probe On Mvula.' In the article, it is alleged that "Mvula faces new counts involving the purchase and ownership of the company's new fleet of buses, the luxurious Paradiso and Sacramento coaches" and that the buses were bought "exorbitantly", suggesting fraud in the purchase and dubious ownership.

In an interview with UDF News Mvula dismisses the allegations as not true.

"The bid to purchase buses is something that started way back in 1999 and this crusade climaxed in 2000 when the Government of Malawi through the cabinet committee on economy and Admarc agreed to assist Shire Bus Lines in three ways," Mvula explained.

He said that first, they decided to assist the bus company to act as guarantors in the purchase of buses to the maximum of US$6 million. Government was going to guarantee Admarc to help Shire Bus Lines identify buses that it could purchase.

Secondly, he said the agreement also provided that the buses and accompanying spare parts package should be imported duty free.

"These decisions were made because at the time when Stagecoach dis-invested from Malawi, it had stopped the fleet replacement programme leaving behind buses that had an average age of ten to fifteen years. This fleet replacement programme had stopped long time ago, seven years before 1997 when Stagecoach pulled out," Mvula recalled.

"In a viable bus operation, the useful life of any bus ends at about five to seven years maximum and at that stage the drive train will have gone through the first and second overhaul. The bus becomes very expensive and unreliable to operate beyond that age, especially when you look at our roads and the distances that these buses cover," Mvula said.

"Four white managing directors had come and gone." Mvula said. "Some stayed for very few days. One stayed for only two months and said 'look this company is beyond salvation.' And technically when I came in on secondment from Admarc Investments, I was meant to be an undertaker, somebody who was going to see through the sale of the company," he emphasised.

The former CEO said that the company had actually started reducing staff, under a retrenchment programme. He, however, could not continue with the retrenchment programme because there was no money to pay the terminal benefits of retrenched employees.

"So we lived on. We crawled on hoping that maybe we shall have money tomorrow, and the issue of getting new buses became more of a nightmare than a real business thought. I changed orientation, the mindset of the people. I said, look guys, we can still make money with these old buses, because even in the UK, some buses are 15 or so years, we just have to improve and get these buses going," recalled Mvula.

He said that at that particular time they had been to "every bank in Malawi and to every bank in this part of Africa."

"I went with my directors, not alone, and with Ministry of Finance officials, looking for money; ABSA, Standard Bank, any bank that you can talk about in this part of the world. But the company was just not credit-worthy. The company was as good as bankrupt and no-one was prepared to risk his or her money into this company," he said, adding that Shire also looked for technical partners all over to add value to the venture.

"We said what are going to do; we have to live on. Look, we have so many people most of whom have worked only for Shire Bus Lines. Their skills are only towards a passenger transport company, they cannot be re-trained. The company is one of those with the highest number of drivers, over 500 PSV drivers. If they lost jobs today where would they go? The company has over 700 qualified mechanics and assistants; all these are specialized in buses, where would they go? We have 500 plus conductors. These have only been trained in issuing tickets and managing passenger transport, where would they go? Basically, it's a specialized industry and that even the person who is in support service, the expertise is only towards a bus.

Mvula recalls that he took this as a challenge, and that with the support of the board, he was poised to still look around for support. He said that luckily, in due course the company received about eight bids from Globex Trading Corporation, Colbot Investments, Daimler Chrysler, Volvo South Africa, ERF UK, Scania South Africa and Europe, PEW Limited and TEM.

After a critical analysis through the board and corporate officers, Scania was chosen as the best. Scania offered a better package because they also provided spare parts back-up, training package for staff besides the finance package.

"They were prepared to invest into the company via retooling the workshop. In terms of price, they also offered better price of the product, because the price of the product is not what you finally pay, but it's what goes with that package too especially the after-sale technical and spare parts support, " he said.

Mvula recalled that they worked very hard internally as a company until they made adequate money in form of reserves to pay for the shortfall.

He said they later talked to the Leasing and Finance Company of Malawi (LFC) who agreed to support the bus budget project. Shire paid half down to LFC and they provided the additional loan, which, according to the former CEO, the company is still paying for two coaches. Then they went to INDEbank and they did the same.

Mvula said as for the Sacramentos, it was an arrangement backed by the company's track record, because LFC and INDEbank had seen the company do well and decided to give the company some buses on short-term open account.

"No guarantees, because they trusted me as a person, the directors and my colleagues you can ask them," he said, adding that the buses were given to him specifically on trust "because I had demonstrated good performance."

"They were aware that I pulled a company from continuous losses of over MK80 million per year to the first profit of MK36 million, then to MK117 million and the time I was leaving I had already clocked up to about to K40 million in profit. I mean, I didn't buy any new buses, I only rehabilitated the same old buses.

"I think it is an insult to professionalism and a demonstration of the highest level of ignorance in corporate issues to suggest that a person can run his or her personal buses along side the company fleet. How would somebody bring in those buses into Shire Bus Lines? Suppose this manager a Mr. Mvula is so corrupt, or is so bad, how would he bring those buses in a company that employs up to 2,000 people? How does one recover his dues? Companies do not operate like that," said Mvula.

He said that there must be a serious lack of appreciation on how assets move in and out of a company. "You cannot even just buy or dispose of an asset, even a damaged cell-phone, you cannot dispose of it, without a board approval," Mvula, who is also UDF publicity secretary and deputy research director, said.

He said that the hate-campaign should not reach a point where people lose sight of how business operates and the good things that people have done.

"So those buses do not belong to any single individual and they have never belonged to anyone. Look, they can check with anybody in that system and we should thank Leasing and Finance Company and INDEbank for the support, and also our own foresight for identifying the shortfall. As for the Sacramentos, they are on my courtesy because they are on an open account with Scania," he emphasized.

Then the former CEO said that to talk of those buses, as second hand is an insult to technology. Mvula said that Paradiso 1200 are the latest generation of buses.

"Even if you go to South Africa, you will not find them," he said, adding that his management, with board's approval decided to purchase those buses for two basic reasons.

Mvula said since this type of buses are not replaced so often, and that as a growing bus company in this part of Africa, they did not want to be left behind in terms of technology.

"They are the newest buses. We were buying them because we wanted to be a SADC player, we wanted to compete with South Africa, and we wanted to compete with everybody. We had the South African market as a target. We needed a good product that can go into South African market and compete with buses in South Africa. It was not just aimed for Malawi. If it was just Malawi, Sacramento would have done the trick, but we said we wanted a bus that will go to Zambia, to South Africa and compete at that international level without any problems and that was the whole idea," explained Mvula.

Mvula then advised journalists in country to approach issues with maturity and should cross-check on facts, saying this particular issue is a sensitive one because it talks about the only national passenger transport company.

"We should be patriotic. We should investigate thoroughly. The industry is very sensitive and it is so easy to lose goodwill from the people. Some of us have worked so hard to see it take off. That company was destined for closure and I was posted to that company as an undertaker. Since the company has turned around, I want all of us to give it goodwill, and every Malawian should give it support.

"Mvula there or not there, my request to every Malawian is we should give it goodwill. It will only have goodwill if people do not give the company undue and unnecessary negative publicity," he said.

"Some of us have worked very hard for the company to move to where to it is today. Look, we don't regret being out of that company, I was an employee, and not a director nor a shareholder. I am not even aspiring for one moment that I should possibly go back, never. But we would like to see that company continue growing beyond what it is today because that's the only company in Malawi that has resurrected from the dead, like it or hate it," Mvula said.

He finally said that history that he did a wonderful job at Shre Bus Lines should not be erased just because of the on-going corruption charges.

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