THE Cold Storage Company (CSC) has been stripped of assets by some members of its executive and board as well as government officials, leaving it under corporate proceedings to rescue the State enterprise and avoid liquidation, The NewsHawks can report.
This comes amid revelations that more than 10 000 of the firm’s cattle have been stolen through the government’s heifer breed schemes. This dramatises plunder at the parastatal, which was one of the major State-owned companies at Independence in 1980.
Documents seen by this investigative centre show the company, which used to be a major player in the beef market, has been pillaged by its executive, board members and government officials with impunity.
According to court papers seen by The NewsHawks, Lands, Agriculture, Water and Rural Resettlement Minister Anxious Masuka has successfully applied on behalf of government for placement of the CSC under corporate rescue proceedings. The court case number is HC1779/20.
In his founding affidavit accompanying the court application, Masuka said the Livestock Joint Farming Concession agreement signed by the government and Boustead Beef (Pvt) Ltd last year was now difficult to implement as creditors were threatening to attach CSC assets, while former employees had destroyed important documents, among other bottlenecks.
Masuka said creditors, including the Zimbabwe Electricity Supply Authority, National Social Security Authority and urban councils (Bulawayo, Harare and Chinhoyi), had laid a siege on the CSC, demanding immediate settlement of debts, while disconnecting water and electricity over payment.
“It also came to light that there continues to be rampant corruption and unlawful dissipation of assets by certain executive members, board members, government officials and the respondent’s (CSC) officials. More than 10 000 head of cattle have been misappropriated in the government heifer breed schemes,” the minister said.
“At the moment, the respondent (CSC) is only in control of approximately 25% of its assets. Former board members and executives are alleged to have corruptly allocated themselves, family and other individuals various ranches and homesteads, denying the investor access to these assets to refurbish, develop and restock.”
The CSC is now in a state of collapse due to extended periods of mismanagement, incompetence and corruption, just like many other State enterprises.
Ngoni Kudenga of BDO Zimbabwe Chartered Accountants has now been appointed interim corporate rescue practitioner, taking control of the CSC’s assets and business.
The latest development comes 18 months after the government misled the nation that a “British beef giant”, Boustead, would pump US$130 million to revive the company. Investigations by the media, however, showed the purported beef processing behemoth was only an agricultural start-up with a small balance sheet.
Records showed Boustead only had net capital of US$12 674 between 2013 to 2016. Nicholas Havecroft, Gavin Havecroft, Nicholas Lee and Harald Torbjorn Gabriel Jakob Kinde were its directors.
Yet Finance Minister Mthuli Ncube had informed Cabinet and Information Minister Monica Mutsvangwa then announced that the CSC would be resuscitated through a concession agreement under rehabilitate, operate and transfer terms.
Mutsvangwa claimed Boustead would “raise and invest a minimum of US$130 million into CSC over five years” for capital expenditures and working capital.
The CSC has debt exceeding US$42.5 million. It was expected to pay rentals of US$100 000 per annum during the first five years of the agreement.
But checks revealed Boustead is not a UK company, but a local start-up owned by Nick Havercroft. It only commenced operations in 2013. The local firm operates under registration number 4852/2013 as recorded by the Companies Registry. In the UK, there is Boustead Agriculture, registered under number 08154075 and domiciled at 78-80 St John Street, London, England, EC1M 4JN. It was only set up by Boustead founders to raise money for the CSC deal.
Masuka said after Boustead agreed with the CSC, the parastatal’s management failed to cooperate.
“Also that former employees deleted company information from hard drives of the company computers and destroyed important documents such as employee records, cattle loan schemes and bank account details, hence the investor is failing to make head or tail of the agreement and the implementation,” he said.
Masuka said the Zimbabwe Asset Management Company also threatened to sell the CSC’s Bulawayo abattoir and the canning factory to settle a ZW$3,71 million debt.
The CSC was also under siege from numerous pending court cases and orders.
“More former employees or their relatives are coming forward with various claims which cannot be verified as management destroyed most of the records,” he added.
In light of this, Masuka said it was clear that unless something is done, the “noble intentions of the government” to revive the company would fail. In the circumstances, he said, the parastatal should be placed under corporate rescue proceedings under Kudenga. Thus all pending legal action will be stayed.
Kudenga will be empowered to terminate or vary any questionable leases of the CSC’s properties in both agricultural and commercial areas and also collect all rentals.
Masuka said Boustead, despite its questionable capacity, had managed to get the services of an engineering audit report from Soft Energy Supply Chain Management Co. Ltd at a cost of US$3 million; engage cold chain room management companies to refurbish, operate and manage the cold room chain systems across the facilities as and when they are brought back into production.
Production at the tannery resumed in January 2020 with the refurbishment of tanning drums, waste management systems, water circulation systems, splitting machinery and electrical systems.
Boustead, which will continue under new circumstances, had also negotiated and concluded a partnership agreement to refurbish, operate and supply beef to the government’s processing company through a lease agreement with Fabwell Farming in respect of Dubane and Maphabane Ranches in Matabeleland South.
At these ranches, Masuka said fence lines have been rebuilt, roads rebuilt, dips refurbished, new cattle handling facilities built, solar-powered water pumps and lighting installed, with modern technology being applied to enhance breeding targeting breeds such as Tuli, Limozin, Angus and Brahman.
Currently, there is a herd of cattle of over 5 000 and the target is 13 000 in the next five years.
“The investor is in the process of finalising various contracts to supply 50 000 tonnes of beef to Angola, 2 000 tonnes per month to Hong Kong, 22 000 tonnes to Malta, finalising export permits to China and other potential orders for various other markets including the United Arab Emirates, Russia, United Kingdom, Malaysia and South Africa,” he said.
A copy of the LJFC agreement seen by The NewsHawks says Boustead would assume control of the ranches and meat processing facilities run by the CSC spread across the country.
The company will also take over and manage the CSC’s distribution centres and residential properties in Harare, Gweru and Mutare for the same period.
Ranches include Maphaneni Ranch, Dubane Ranch, Umguza Chomfukwe Dubane Umzingwane-Railway Block Gwanda Ranch, Chivumburu, Mushandike Ranch (Meyers Rust), Zeederberg Belwigwe, Willsgrove Feedlot and Darwendale Ranch.
The CSC’s Bulawayo complex is the largest meat slaughtering facility in Africa and only trails Botswana Meat Commission in terms of the latest technologies.
At Independence in 1980, CSC was one of Zimbabwe’s major foreign currency earners, as it exported thousands of tonnes of beef to the European Union (EU).
At its peak, the beef processor and marketer used to handle up to 150 000 tonnes of beef and associated by-products annually and exported to the EU, where it had an annual quota of 9 100 tonnes of beef.