3 October 2012

Zimbabwe: Zanu-PF Firms in Red

THE liquidity crunch rattling the country's financial markets has worsened an already desperate situation at ZANU-PF-run companies, some of which are tottering on the brink of collapse after failing to pay their statutory obligations such as taxes, The Financial Gazette can exclusively reveal.

Workers at some of the struggling companies warned this week that they may end up filing for liquidation after going for several months without being paid in what would essentially put the last nail in their coffin.

ZANU-PF has since independence in 1980 invested in real estate, listed and non-listed stocks in order to sustain its operations from rental income and dividends.

Contrary to expectations, the majority of the investments have failed to declare dividends and are, instead, crying out for recapitalisation at a time the party cannot sustain itself from subscriptions raised from its membership as well as funding received through the Political Parties Finance Act, which prohibits local parties from being recipients of foreign funding.

The party narrowly survived eviction by the Catering Industry Pension Fund from its Gweru offices in June this year over unpaid utility bills and rentals amounting to about US$6 000, underlining the depth of its financial woes.

Out of ZANU-PF's swathe of companies, the only outlier that has not disappointed its shareholders has been its investment in a Zimbabwe Stock Exchange-listed banking group.

The diversified financial institution also owns another bellwether stock trading on the local bourse involved in the manufacture and supply of asbestos-cement roofing products.

The party also operates a string of companies, among them Zidco Holdings, Treger Holdings, Cater-craft, Jongwe Printers, Zidlee and Fibrolite which are reportedly trading below the red ink and desperately in need of fresh capital to reinvigorate them.

The bulk of these companies have been beset by mismanagement, resulting in some of their workers failing to get their salaries on time.

Since dollarisation in February 2009, the party's companies have continued to sing the blues with efforts to turn them around failing to bring tangible results.

Some of these companies are said to be heavily indebted to various service providers such as ZESA Holdings and the Zimbabwe Revenue Authority.

Last month, workers at Jongwe Printers, which prints the party's propaganda mouthpiece - The Voice - were up in arms against their management over unpaid salaries. This week, workers at Catercraft, which runs catering services at all the country's airports, said they had not been paid for the past six months despite the fact that the company operates lucrative contracts with airlines such as Ethiopian Airlines and South African Airways. Catercraft also provides services to the national airline, Air Zimbabwe as well as to a number of chartered airlines.

On Tuesday, the chairperson of Catercraft's workers' committee, Marshall Muyambo, said the employees had met the chairperson of ZANU-PF's business development unit, Sithembiso Nyoni and the party's secretary for labour and production, Dzikamai Mavhaire as well as Catercraft chairperson, Khamal Khalfan but their problems remained unresolved.

Nyoni is also the Minister of Small and Medium Enterprises and Coo-perative Development while Kha-lfan is the Oman's honorary consul to Zimbabwe as well as patron of the Zimbabwe National Army charities.

"It is actually unfair to the worker who wakes up every morning, bathes, goes to work and goes home with nothing at the end of the day," said Muyambo. "The outcome of the meeting with Mrs Nyoni is that she said she will call the chairperson and give us feedback, but the chairperson (Khalfan) is not around at the moment."

Nyoni referred all questions to Khalfan who was not immediately reachable after being contacted for comment this week. She, however, denied claims that the majority of ZANU-PF companies were struggling, but could not give further details.

Mavhaire blew his top when contacted for comment. He said: "I am saying if you write that story what will it serve? I want people with intellectual capacity. That village way of asking questions I don't like. If it is about selling your paper, write whatever you want, bye."

Before the formation of the inclusive government in 2009, ZANU-PF instituted at least two audits into the affairs of its companies, but the findings were never made public.

One of the audits caused a storm in 2005 after party hawks took advantage of its damning findings to settle political scores with those they thought were in the running to succeed President Robert Mugabe who, at that time, had encouraged members to debate his succession openly.

In the intervening years, the veteran nationalist was forced to disband a succession committee that had been established to lead discussion on the issue after the party became divided over internecine fights to succeed him.

The audit had opened a can of worms into how ZANU-PF companies were being run.

A report of the Committee on Party Investments, debated by the party's supreme decision-making body in between congresses -- the Politburo in 2005, revealed that the companies were riddled with managerial corruption and incompetence, which could have prejudiced the ruling party of billions of Zimbabwe dollars and assets at the time.

The report noted that some of the companies had virtually collapsed, while others had not been audited for years and their financial accounts were a complete mess.

The liquidity crisis has not only affected ZANU-PF companies: The revived ZAPU now depends on the generosity of its well-heeled members.

Movement for Democratic Change secretary general and Finance Minister, Tendai Biti also revealed recently that his party only had US$50,000 to fund its 2008 election campaign.

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