IN a bid to avert the liquidation of the Cold Storage Company (CSC), the government last year placed the parastatal under a corporate rescue plan in terms of the Insolvency Act while facilitating its revival.
It then appointed Ngoni Kudenga of BDO Zimbabwe Chartered Accountants as the corporate rescue practitioner for the ailing giant beef processor.
Kudenga was empowered to terminate or vary any questionable leases of the CSC’s properties in both agricultural and commercial areas and also collect all rentals.
But is he the right person to rescue the CSC?
For instance, following his appointment, the Allied Food Workers’ Union of Zimbabwe (AFWUZ) — which represents CSC workers — questioned his competence and suitability.
AFWUZ, through its lawyers Mathonsi Ncube Law Chambers, applied to the High Court challenging Kudenga`s appointment.
The union alleged that Ngoni and Lands, Agriculture, Fisheries, Water and Rural Resettlement minister Anxious Masuka, who appointed him, were friends, associates and cronies.
It is also worth noting that Masuka was a member of the last CSC board which failed to implement the recommendations of the audit report to turn around the fortunes of the struggling meat processor.
He was appointed to the CSC board in April 2017 by former Agriculture minister Joseph Made alongside Sylvia Khumalo Jiyane (board chairperson), Nemrod Chiminya (deputy chairperson), committee members Emily Mumbengegwi, Peter Nyoni, Cecilia Paradza, Bekhithemba Nkomo, Rufaro Mazunze, Khodholo Setaboli, Unesu Ushewokunze Obatolu and engineer Reston Muzamhindo.
This leaves the two — Kudenga and Masuka — conflicted.
“It is a fact that the two are long-time business associates. In fact, when the Honorable Minister of Agriculture was the chief executive officer for Zimbabwe Agricultural Society, Mr Ngoni Kudenga was his principal as the president of the Zimbabwe Agricultural Society,” reads the application from AFWUZ.
“This cronyism will clearly compromise our clients’ interests and therefore submit that Mr Ngoni Kudenga is not independent, competent and clearly conflicted. The allegations raised by Dr Masuka in HC177/20 are of serious nature and hampered the revival of Cold Storage Company (Pvt) Ltd.
“We cannot afford to have the “jobs for boys” appointments and ignore that fact that Mr Ngoni Kudenga has also been involved in the disputed state enterprise audit at NSSA (National Social Security Authority) and clearly has no capabilities to turn around this company,” reads the papers in part.
The workers further alleged that Kudenga has no track record of handling high-profile jobs, especially in view of his close personal relationship with the appointing authority, Masuka. AFWUZ proposed that for a fair and credible process, an independent audit firm be appointed.
Again, on 4 March 2021 through their lawyers Mathonsi Ncube Law Chambers, workers wrote a letter to the Master of the High Court demanding Kudenga’s removal from the office of corporate interim rescue practitioner due to his conflict of interest and lack of independence in the exercise of his duties.
“Mr Kudenga is also disqualified by Section 131 (1) and 132 (d) of the Insolvency Act…he confirms he has a relationship with the Honourable minister Dr Anxious Masuka who appointed him into office. It (shows) that Mr Kudenga’s appointment could not have been on merit therefore he is conflicted and cannot be expected to independently exercise his duties,” reads a letter also copied to the Attorney General’s office Civil Division and Masuka.
Lawyers said it must be noted that part of Kudenga’s duties include the investigation of the actions, activities and decisions of the previous board to which Masuka who appointed him was a member of.
“It is undoubtedly clear Mr Kudenga is already conflicted and cannot be expected to independently carry out his duties and as such, should be removed from his office….,” they wrote.
“Our client reiterates that Mr Kudenga is clearly not a competent, fit and proper candidate for the position of corporate rescue practitioner for CSC in that he has a pending case against him, Vela vs The Auditor General of Zimbabwe which clearly shows why Mr Kudenga should not be entrusted with the fate of CSC.”
The workers said Kudenga was reported to the Institute of Chartered Accountants of Zimbabwe (ICAZ) by Vela after the court order and his appointment to the office of corporate rescue practitioner of the CSC.
“It must be noted that Mr Kudenga was appointed to his current position without having been cleared of all the allegations levelled against him. His reputation has been tainted and our client argues that it is unacceptable for Mr Kudenga to continue with his duties as corporate rescue practitioner of CSC,” they said.
“In conclusion, we request the master to exercise her discretion in terms of the act and appoint an independent person without legacy issues of CSC.”
Former Nssa chairperson Robin Vela recently requested that ICAZ probe Kudenga and his counterpart Gilbert Gwatiringa for unprofessional conduct. Vela was relieved of his duties as Nssa board chairperson in 2018 on the basis that he was no longer resident in the country as prescribed by the Nssa Act.
A BDO forensic investigation report released in 2019 later implicated him in corruption at the state pensions fund.
He denied wrongdoing and, in July 2020, High Court judge Justice Webster Chinamora quashed the BDO report, describing it as “biased”, “incompetent” and “riddled with inaccuracies.”
The audit report was also later discredited by a South African forensic audit firm, Nexus Forensic Service headed by Advocate Werner Bouwer.
In a letter to ICAZ through his lawyers, Vela said: “We are instructed to lodge, as we hereby do, a complaint against Messrs Kudenga and Gwatiringa, both of whom are members of ICAZ, for acting unprofessionally and in brazen violation of all known standards binding upon members of the accounting and audit profession.”
The lawyers said the degree of unprofessionalism, mala fides and negligence exhibited in the report is egregious and leaves one wondering if standards within the local accounting scene have been allowed to deteriorate to such pathetic levels.
The dubious and callous manner in which conclusions were made was so outrageous in their defiance of logic that no sensible person would have arrived at them, they wrote.
Vela said the irregularities occurred because neither Kudenga nor any other person involved in the execution of that forensic audit was qualified to conduct an audit of that nature.
“The investigation was not carried out with an open and enquiring mind but showed, from the outset, that BDO Zimbabwe was a hired gun on a witchhunt meant to saddle our client with liability at all costs,” Vela stated.
Kudenga declined to comment, saying the issue about his appointment was before the courts, hence it was sub judice.
He also refused to spell out his plans for reviving the CSC.
With all the allegations levelled against him, can Kudenga deliver?
Only time will tell.
The CSC has been struggling to sustain profitable operations over the past years and faces the risk of liquidation as creditors demand their dues.
Mounting debts and accusations of poor management and alleged corruptions, among other factors, dragged the company into insolvency, with the increased risk profile making it difficult to attract fresh investment or working capital.
The CSC has a total debt exceeding US$42.5 million.
At Independence in 1980, the 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 enjoyed an annual export quota of 9 100 tonnes of beef to the EU.