HomeBusiness DigestZitac’s US$350 000 debt raises more smoke

Zitac’s US$350 000 debt raises more smoke

Bernard Mpofu

THE Zimbabwe Industry Tobacco Auction Centre (Zitac) faces a fresh storm over a debt of US$350 000 owing to tobacco merchant, Mashonaland Tobacco Company (MTC), while reports suggest that the company has not fully paid a tobacco levy for the last marketing season. Documents to hand show that Zitac has failed to reimburse MTC, a tobacco merchant company, funds for deliveries since the auction floors closed last September.

Zitac acknowledges owing the tobacco merchant an undisclosed amount of funds in correspondence in the possession of businessdigest, which industry sources say is in excess of US$350 000.

“We hereby write this letter acknowledging that we owe you funds that emanated from the previous tobacco selling season. We received your statement, however we are doing our final reconciliation on your account, after which we will negotiate with our bankers and furnish you with our payment plan before the 24th November, 2010,” reads a November 19 2010 letter written by Richard Chabata, Zitac finance manager.

Follow up correspondence written by Chabata to MTC on November 24 shows that Zitac had deferred the submission of a “payment plan” to the last week of 2010.

“Following the correspondence we wrote to you acknowledging the debt we owe you, we do want to inform you that we had a meeting with TIMB (Tobacco Industry Marketing Board). In principle TIMB arbitrated us and the Boka family and the TIMB guaranteed us that we will operate till 2014.

“The draft documents are the one our banks are waiting for in order for them to release funds after which we will give you our payment plan next week,” reads a letter.

The money was yet to be paid at the time of going to print last night.

In the meantime the Boka family, property owners of the 50 000 square metre complex being leased by Zitac, has approached the High Court seeking eviction of Zitac for allegedly violating a nearly decade-long lease agreement.

The family, through its investment arm was also granted a conditional licence by the TIMB.

Zitac, according to the letter, claimed that industry regulator, TIMB, had “guaranteed” the auction centre that it would operate up to 2014. Kudzai Hamadziripi, Zitac public relations manager, said the matter was now being handled by Zitac and MTC lawyers.

“MTC and Zitac made correspondence through our respective lawyers and we have come to an agreement,” Hamadziripi said. She would not divulge the agreement saying it was a “private and confidential” matter.

Questions faxed to MTC on Tuesday had not been  responded to at the time of going to press. But when reached for comment, an MTC director Graham Du Preez said “a response will be sent to you as soon as possible”.

The businessdigest also understands that Zitac still owes part of the tobacco levy from last season’s trading season. However, TIMB chief executive Andrew Matibiri would neither confirm nor deny the debt.

“We are doing the final reconciliation of the 2010 accounts so we are not in a position to comment on that. We have to finish that before the next marketing season,” he said.

Last year, the country’s two auction floors — Zitac and Tobacco Sales Floor —  traded an average of 3 000 bales per trade as a result of resurgent tobacco farming, an industry which had contracted in the aftermath of the controversial land reform exercise in 2000.

Official statistics show that nearly half of the 52 000 tobacco growers have registered for the 2011 selling season.
Government is projecting 150 million kgs of the golden leaf, up from 123 million kgs sold last season.

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