12 April 2019

Zimbabwe: Hwange Colliery Audit Exposes Payroll Scandal

Former Hwange Colliery Company Limited (HCCL) managing director Thomas Makore included his personal domestic workers on the financially-strapped coal miner's official monthly payroll -- among other poor corporate governance practices -- which saw the company losing substantial revenue during his turbulent four-year tenure, an external forensic audit has revealed.

The audit, by Ralph Bomment Greenacre & Reynolds, discovered that Makore received his domestic workers' wages along with his monthly salary, while at the same time they also got separate monthly payments from the normal HCCL monthly payroll.

"From the foregoing circumstance, Mr Thomas Makore double dipped, in the absence of further contractual evidential information on his personal file to the contrary. There was no evidence that Mr T S Makore paid the domestic workers from the allowances he received. The said domestic workers were being paid by the mine and form part of the outstanding mine wages," the audit report reads.

However, the auditors could not quantify the actual prejudice because senior executives at HCCL refused to cooperate.

"Any accurate prejudice cannot be assessed as the Estates person, a Mr Moyo, in charge of such labour did not cooperate with us despite him being asked by Mrs Kamocha, the Payroll Accountant, to provide us with information about the persons who actually worked at Mr T Makore's residence for confirmation about whether in addition to their mine salaries, Mr T Makore paid them extra money or not. Suffice to state that the matter ranks for misfeasance in the absence of evidence to the contrary," the report reads.

Makore, auditors said, also oversaw the purchase of malfunctioning mining equipment for HCCL from a company called Turbo Mining without carrying out an inspection.

Auditors also found out that the equipment may have been overvalued, raising the possibility of corruption.

"Management did not carry out an inspection about whether the equipment which HCCL went on to buy functioned properly or whether it was serviceable or not before purchasing it. HCCL engineering personnel carried out the inspection after the purchase agreement had been signed already.

"The management did not perform valuation of Turbo Mining before purchasing the assets. Valuation was performed 80 days later as at 13 July, 2015 and the report is dated 16 July, 2015. HCCL may have lost US$1 199 975. The Managing Director Mr Thomas Makore signed the contract of purchase on 24 April, 2015. Auditors believe that the process was not clear, and needed an investigation of the matter," the report further reads.

Mines minister Winston Chitando, who was implicated in the report as having allegedly orchestrated shady business dealings and presided over the misuse of a US$115,5 million loan at the troubled mine, this week declined to comment on the audit, saying he was yet to see a copy of the document.

"It's unfortunate that I don't even know it was published. I await to be given a copy but all I can say is that from time the board (which I chaired) was appointed, we were observing all corporate government issues. I haven't seen it, I will wait to see it before I can comment," he said.

The rot picked up by the auditors spanned three years to 2018.

Makore was suspended by the former HCCL board which was led by Juliana Muskwe to pave way for investigations into allegations of corruption and mismanagement mid-last year.

He, however, resigned in the middle of the investigation, which included the forensic audit.

HCCL was placed under reconstruction last October after it emerged that it had become technically insolvent.

There were plans last year by the company to sell houses it owns in Hwange, the biggest town in the resource-rich Matabeleland North province, to offset a US$300 million debt.

Contacted for comment, Makore said: "I have not seen the report."

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