Ndamu Sandu
4 October 2008
ZAMBIAN firm, TAP Building Products Limited (TAP) paid up US$700 000 to service providers for the period it was erroneously put under the administration of AMG Global chief Arafas Gwaradzimba, it emerged last week.
The payments were made to AMG; lawyers Mulenga Mundashi and Co; and auditors, PricewaterhouseCoopers.
But there is no evidence of receipts and invoices on some of the payments, raising fears that the Zambian firm could have paid for fictitious services.
Gwaradzimba assumed control of TAP in 2006 after the Zambian High Court had ruled that by virtue of the expropriation decrees promulgated by President Robert Mugabe in September 2004. TAP, a company wholly owned by Africa Resources Limited is an associate company of SMM Holdings and deemed to be under reconstruction and therefore under his control.
Gwaradzimba had been appointed SMM Holdings administrator pursuant to the operation of the controversial legislation that permitted the Government to take over the control and management of Mutumwa Mawere's companies without the involvement of the judiciary.
Investigations by this paper showed that TAP is not an associate of SMM Holdings meaning that AMG's appointment as administrators of the Zambian company was erroneous.
An associate is a company in which a group of companies has a substantial stake, but not outright control. This usually means more than 20% but less than 50%.
A share certificate shows that TAP shareholders, as at December 31, 2005 were Africa Resources Limited (ARL) and Africa Construction Limited (ACL) with 5% and 95% respectively. ARL and ACL are incorporated under the laws of the British Virgin Island.
After the January 30, 2006 High Court of Zambia ruling, Gwaradzimba dissolved the board and appointed a new one.
But in August, the Supreme Court of Zambia ruled reconstruction laws used to take over the running of companies owned by businessman Mawere could not be used in Zambia as it was a sovereign state with its own laws. The court ruled that for a company to be put under reconstruction, it had to be insolvent. If the company is insolvent it will be put under a Receiver/Manager under the Zambian laws, the court ruled.
Documents in possession of Standardbusiness show that although AMG had received K 1 210 404 914 (US$345 829.98) for the period it was in charge, the firm had not provided invoices and receipts for certain payments made to them and TAP was battling to get the invoices and receipts.
"We have not received invoices for payments with respect for cheque numbers 6801, 801657 and 801917. As for receipts, we have again not received receipts for cheques 6801, 801657, 802048, 803184 and 803154," wrote Ezra Chisenga Financial and Market Analyst manager.
He said that efforts to get the receipts from AMG proved futile and had been one of the reasons for the delay in completion of the exercise.
"We will continue to pursue AMG Global to give us those documents," Chisenga said.
Mulenga Mundashi & Co. were paid US$127 346.10 in four installments for services rendered. The four payments were: US$60 000; US$26 934; US$37 346.10; and US$3 066.
"Mulenga Mundashi & Co. has confirmed that no receipt was made for the final payment of US$3 066.00. However they have confirmed receipt by providing a deposit slip which copy is also included in the bound volume," Chisenga said.
The seven board members appointed by Gwaradzimba -- David Phiri, Lawrence Sikutwe, Oliver Mtasa, Peter Moyo, Chilufya Mbalashi, Edwin Manikai and Chirandu Dhlembeu -- gobbled up US$111 679.11 in board fees. TAP Zambia also footed the bill for the board members' accommodation and meals. The three Zambians on the board -- Phiri, Sikutwe and Mbalashi -- did not benefit from the facility. Instead the four Zimbabwean board members -- Manikai, Dhlembeu, Moyo and Mtasa were flown to Zambia and had their accommodation catered for by the Zambian firm.
Mtasa attended the March 22, 2007 board meeting before he was appointed a board member in May 2007.
Gwaradzimba did not see anomaly in Moyo attending the meeting telling this paper last week that he was replacing Mtasa who had left the organisation.
Papers seen by this paper show that Gwaradzimba and Wesley Sibanda, a top official at AMG were added to the list of beneficiaries to bring the total amount spent on board members to US$25 639.27 in air tickets and accommodation.
PricewaterhouseCoopers got US$ 89 594.29 for statutory audits performed on TAP from 2005 to 2007.
Gwaradzimba said AMG had provided all the invoices and receipts.
"There is nothing like that," he said, "It is Mutumwa Mawere saying that."
Told that papers from TAP clearly show that there were payments without invoices and receipts, Gwaradzimba disagreed: "That is not true. I am sure TAP would not do that. They would have communicated to us."
Asked whether their payment will not be affected by the Supreme Court ruling overruling an earlier judgment, Gwaradzimba said their action was guided by the High Court ruling which had said that TAP was an associate company of SMM Holdings.
But he told Standardbusiness the August Supreme Court of Zambia ruling declared null and void the board he had appointed for TAP "and Mawere can appoint his board members".
Mawere last week said that Gwaradzimba should not have gotten any fees as he was not appointed administrator of TAP.
"The Supreme Court ruling to the extent that it declared the application of the Zimbabwean law on whose basis Gwaradzimba was appointed invalid, makes all actions, benefits, and rights arising from the enforcement of such order null and void," he said.
"You cannot claim to benefit from a law that has been declared to be invalid."
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