A forensic audit into Millennium Tobacco Floors (MTF) Private Limited is nearly complete amid revelations of alleged fraudulent activities by the company's directors, which came to light after the firm's liquidation, it has been revealed.
The tobacco auctioning company, which was owned by Edward Raradza, commenced operations in 2011, but folded less than two years later due to serious debt and has since been put under liquidation.
"There are strong suspicions that the company may have been run fraudulently and negligently," said MTF judicial manager Winsley Militala at a meeting of creditors last week.
"Following the resolutions, I engaged BCA Forensic Audit Services. over the years, we have been putting frantic efforts to try and have that report ready and make a way forward in view of the fact that there are serious allegations against the directors and if we are to go for the directors, something for the benefit of creditors may be salvaged,"
At the meeting, Militala read a letter from the auditors, BCA.
"This has been a difficult assignment as there have been limited resources to interrogate MTF operations coupled by the fact that some key parties were not willing to cooperate with the investigation process," BCA said in the letter.
"The forensic audit identified findings, which we believe will assist you in taking action against some of the directors."
BCA said it had finished the field work of the audit and was waiting to proceed to the final phase,which would include interviewing parties implicated so far, and they would then compile the final report.
To that effect, BCA would require at least 30% of the fees to produce the final report with Militala suggesting that creditors contribute pro rata to pay the forensic auditors' fees.
Militala said MTF assets were all disposed and that there were no bank balances to pay the creditors as well as the forensic auditors.
"We disposed of everything that we managed to recover such as computers and office furniture and we did our interim account," he said.
"The balance we were left with after was some $14 000 as an initial deposit to the forensic auditor and we were left penniless.
"So by the time we moved in, there were no bank balances, save for going for the assets purportedly taken over by the directors presumably bought by the company.
"I don't see any other asset being readily available to dispose and meet the cost we have."
Though the full debt could not be ascertained, MTF owes the now-defunct Trust Bank $600 000 and the National Social Security Authority $70 000, among other companies.
According to the MTF financial statement, the company shareholders appear not to have ever injected capital into the business and relied on borrowings to finance operations.
Current liabilities as at October 31, 2012 stood at $4,2 million made up of creditors, who were owed $3,1 million and a bank overdraft of $1,2 million.
Militala said the new Insolvency Act makes directors liable for folded companies' debts and that personal assets could be attached.