Harare — HAPPYMORE Mapara, the group chief executive officer (CEO) of AICO Africa Limited was this week sent on suspension pending investigations into the operations of the company after falling out with key shareholders at the Zimbabwe Stock Exch-ange (ZSE)-listed conglomerate.

Insiders at AICO said daggers were drawn out against Mapara in August/September this year after an audit by KPMG lifted the lid on transactions that were done in contravention of exchange control regulations.

While Mapara had defen-ded himself and his team against any wrongdoing, his explanations did little to placate the majority of the AICO board members who are now pushing for his complete ouster.

AICO insiders said pressure was being brought to bear on Mapara to negotiate an exit package and pave the way for a new pair of hands at the conglomerate that is not tainted by the current allegations.

Mapara is however, said to be digging his heels in, saying he would rather wait for the outcome of the investigations to clear his name against any wrongdoing.

"It's true that Mapara is on forced leave and on the verge of getting fired," said a source.

"An audit report by KPMG and another one conducted by internal auditors at AICO have prompted the board to get rid of Mapara. We believe he may be getting his marching orders in the next few days," added the source.

The Financial Gazette was the first to reveal the results of a KPMG audit, which brought to the fore startling creative accounting methods that were hatched by management at AICO to circumvent exchange control regulations at the height of the country's economic recession.

Mapara had alleged that some members of staff who used to supply goods to AICO under other people's names had been peeved by the entry of new suppliers and hence were going all out to settle old scores with him.

The KPMG report had cited three special purpose vehicles, one of which was established offshore, that were used to side step State controls.

AICO had established Yucatan Holdings (Proprietary) Limited last year to facilitate trade between the group and certain of its customers operating in regions that could not maintain direct trade relations with Zimbabwe.

Sources said the regions were the European trading bloc and the West that had imposed targeted sanctions on Presi-dent Robert Mugabe and more than 200 members of his previous administration.

In the United States, for example, Washington has been discouraging Ame-rican businesses from doing business in Zimbabwe.

A number of American businesses, including Heinz, have since pulled out of the country.

An analysis of Yucatan's trade dealings reveal however, that the company's excess cash resources were being utilised to settle AICO's commitments prior to being repatriated to Zimbabwe in violation of local exchange control regulations in effect at the time.

The exchange controls were only abandoned in February this year. During the period July to October 2008 payments amounting to US$1,3 million were made from Yucatan's bank account to various individuals in exchange for cash in Zimbabwe dollars.

The audit report also reveals that AICO bought a shelf company called Salamax Trading (Proprietary) Limited during the same period for purposes of procuring products on its behalf.

A wholly owned subsidiary of Yucatan, Salamax was incorporated in South Africa, and received full financial support from AICO.

Interestingly, Salamax contributed 0,3 percent to group revenue during the period under review.

"We observed that the registration process (of Salamax) was yet to be completed. Although shares in Salamax were transferred to Yucatan, the registration documents currently identify Patrick Clancy, the owner of Professional Accounting Services, as the sole director of the company," reads part of the audit report.

"In addition, Patrick Clancy is the sole signatory on the company's bank accounts and is responsible for maintaining the company's accounting records. Given the current status of the company's statutory and registration documentation, the group may have no legal claim to any of the company's assets. Significant amounts of money are frequently transferred to Salamax for the group's purchase."

AICO, according to the same documents, also operated Zambrano Investments (Private) Limited which was established to carry out speculative trading activities on the Zimbabwe Stock Exchange to retain or increase the value of excess cash resources held.

As at March 31 2009, Zambrano had on its books investments amounting to US$921 423.

The audit report dated June 16 2009 also expressed reservations over one of the transactions in which AICO bought two motor vehicles (Toyota Hilux models) valued at US$15 700 each for two Reserve Bank of Zimbabwe officials in exchange of Zimbabwe dollar cash.

Of the transaction, the report said: "There was no agreement in place in respect of these transactions and no other documentation could be provided. The transactions were, however, authorised by the group chief executive officer.