13 March 2018

Zimbabwe: Premier Tobacco Fails to Pay Workers

Debt-stricken and financially troubled Premier Tobacco Auction Floors has not paid workers for nearly two and half years, raising questions about its financial capacity to purchase tobacco this season.

The company has been stuttering since 2015 when it emerged it had failed to remit $1 million in statutory obligations, including tobacco levies. Premier Tobacco is Zimbabwe's third largest tobacco Auction Floor.

Well placed sources, part of the workers who have not been paid their dues during period under review, said the practice was now a habit executives had mastered while living large and driving posh cars.

Several cases have already been filed by former casual and permanent workers of one of Zimbabwe's eminent tobacco auction floors.

Key staff including a former operations manager, finance manager and marketing manager recently left the company over payment issues.

Premier employs 20 permanent and about 100 casual workers. The workers are reportedly paid only the first month into a marketing season and going forward allegedly only 'receive' promises.

Asked to comment Premier Tobacco Auction Floor chairperson Owen Murumbi, one of the major shareholders in the company, referred all questions to Mr Philmon Mangena, a major shareholder in the company.

Mr Mangena is former chief executive of Millennium Tobacco Auction Floors, which also collapsed in spectacular fashion due to financial challenges.

Sources said while the matter had been brought to Tobacco Industry and Marketing Board (TIMB's) attention, no action had been taken although being up to date on obligations is reportedly a licensing condition.

TIMB spokesman Isheunesu Moyo said the issue of paying workers was an internal matter for the company, but could not say whether the regulator had been apprised of the remuneration issues at Premier.

"I am not aware of whether they have brought the issue to TIMB or not, but what I am aware of is that the money they use to buy tobacco is a completely different arrangement they have with their buyers.

"They have a different arrangement with buyers who buy from their floors."

While fears have previously been raised about the possibility that Premier may fail to get a licence towards the start of each marketing season, the company has gone on to obtain the licence regardless.

"Workers have not been paid over the past two and half years. Each time workers inquire, management promises to pay later saying the company is struggling, but you see them driving posh cars," a source said.

The challenges at Premier have brought to question the effectiveness of TIMB regarding regulation of the industry amid several reports that Premier is struggling financially, but it continues to be licensed every season.

Parallels have been drawn between what is happening at Premier and what consumed its forerunners in the business, including Millennium Tobacco, which collapsed in 2013 under a mountain of debt.

Aspersions have also been cast over the regulator for allowing officials who were associated with the collapse of Zimbabwe Tobacco Auction Centre (ZITAC) to start their own tobacco auction floors. An audit by JSM Chartered Accountants revealed that there was little accountability over company assets and business transactions and that ZITAC's accounting and processing controls needed to be overhauled.

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