THE Kingdom Meikles Africa Ltd (KMAL) saga has deepened after an investigation team probing allegations of externalising foreign currency hit a brick wall during a high-powered mission to South Africa recently.
This has left KMAL rocked by boardroom wrangling between chairman John Moxon and chief executive Nigel Chanakira.
The Reserve Bank, which is part of the probe, has now initiated a process to recover the allegedly externalised funds. This followed dramatic events earlier this month in South Africa after the probe team entailing Reserve Bank, police and local consultants ran into cat-and-mouse games with South African company executives, lawyers, police and court officials in a bid to get to the bottom of the matter.
The South African Reserve Bank also declined to play ball. The investigation was resultantly aborted after encountering the difficulties, which included threats and intimidation between lawyers and police.
KMAL is facing a series of allegations of salting away funds, including:
*That the company externalised to South Africa US$18,6 million and R21,2 million as shown in its 2007 annual report;
*That it disposed of its 25% shareholding in TM Supermarkets (Pvt) Ltd to South Africaâ€™s Pick â€˜n Pay worth R30,6 million but failed to remit proceeds in violation of the exchange control regulations;
*Disposing of 4 548 939 shares in South Africaâ€™s giant conglomerate Mvelaphanda Group valued at R52,7 million without necessary exchange control approval;
*Failing to remit a dividend of R11,6 million due from its investment in Mvelaphanda;
*Transferring US$3,7 billion from its books via its subsidiary in the Virgin Islands to Mentor Holdings Ltd owned by Moxonâ€™s close business associate Steven Levenberg through misrepresentations;
*Transferring Euro 10,3 million through its subsidiary in the Virgin Islands to Coolbay Investments (Pty) Ltd on the basis of distortions. Coolbay, owned by Moxon, accessed the funds through Cape Grace Hotel Ltd, also incorporated in the Virgin Islands, by misrepresenting facts; Â
*Investing in M-Southern Foods and Galnor Foods, South African companies, without Reserve Bank approval;
*Failing to account for US$26 million after the company (then Meikles Consolidated Holdings and later Meikles Africa Ltd) had raised US$68 million through an IPO on the London Stock Exchange.
Official documents say there is a prima facie case of breaching exchange controls and possible fraud.
â€œPreliminary investigations have revealed potential exchange control violations involving transactions by or between Cape Grace, Coolbay, and Mentor, all of which are based in SA,â€ official documents say. â€œThese transactions were processed through Afrifocus, Nedbank, Investec, M-Southern Foods, Unity Trust and Standard Bank.â€
Information gleaned from official documents obtained in South Africa shows that the local central bank will give Moxon through KMAL a specified period to answer to allegations levelled against him and the company.
After that the exchange control department of the Reserve Bank will demand repatriation of funds which run into millions of dollars.
â€œThe most likely penalties for identified violations of Exchange Control Regulations, Statutory Instrument 109 of 1996, will be to liquidate KMALâ€™s local FCAs or garnish the companyâ€™s future foreign currency earnings, until externalised amounts have been fully recovered,â€ documents say.
â€œAnother option would be to expungeÂ the Reserve Bankâ€™s â€˜official debtâ€™ with KMAL, using the companyâ€™s funds which were maintained at the bank and were to be released to KMALâ€™s investments into the region. The â€˜officialâ€™ balance owed to KMAL
as at November 24 was US$32 835 908.â€
KMALâ€™s problems started recently when Moxon wanted to force out Chanakira at an aborted EGM. The EGM was blocked by the courts.
After the fight broke out, things went from bad to worse. Chanakira spilled the beans by opening a case of externalisation of funds to the police.
The police, Reserve Bank and BCA Consulting (Pvt) Ltd commenced investigations into the matter which involves KMAL and a number of South African companies.
The South African companies involved include the Mvelaphanda Group, owned by businessman and politician Tokyo Sexwale, Afrifocus Securities (Pty) Ltd, Nedbank, Investec, Standard Bank, M-Southern Foods, PKF Chartered Accountants, Pick â€˜n Pay, Cape Grace Hotel, Mentor, Coolbay Investments, Unity Trust and Galnor (Pty) Ltd.
The investigation team â€“â€“ which was in South Africa from November 9-17 â€“â€“ included Detective Inspector Boniface Magocha and Detective Sergeant Emmanuel Busho from the Zimbabwe Republic Police, Charity Kadungure and Susan Kabungaidze from the Reserve Bank and BCA Consultingâ€™s Shepherd Nhondova, Budhama Chikambi, Joanna Mambeu and Antiock Kurauone.
Their contact persons were officials at the South African Reserve Bank, who included Charles Nevhutanda (head of exchange control), Alexander Allis (exchange control investigations), Elijah Mazibuko (also exchange control), Ross Hooper (senior manager operations and finance) and Thys Basson (senior manager investigations).
The Zimbabwean teamâ€™s contact person in the South African Police Service was Captain Madela Hlatshwayo and Interpol officers.
Documents say the investigation was aborted after Hlatshwayo had beenÂ threatened by Mentor and Coolbay lawyers at the Randburg Magistratesâ€™ Courts on November 15 when he was applying for authority to interview and obtain company records in terms of the Criminal Procedure Act to assist the probe.Â Interpol and the South African Reserve Bank did not help much, it is said, and the investigation was grounded.
This forced the Zimbabwean team to try to secure interviews and records without subpoenas, an approach which did not yield the required details.
By Dumisani Muleya