A LEADING audit firm has sensationally distanced itself from Zimbabwe Cricket (ZC)’s hotly disputed financial statements of 2015 in a development likely to expose massive fraudulent activities in the administration of the game.
HLB Zimbabwe — a subsidiary of HLB International — has categorically disowned the audit, whose contents were exclusively published by the Zimbabwe Independent a fortnight ago. The firm says it has not completed the audit as it was waiting for “outstanding information” from ZC to finalise its report.
Sources said ZC was not willing to supply the requested information as it would expose massive fraud at the organisation.
Following publication of the story, an HLB Zimbabwe company representative swiftly reacted with a scathing letter to ZC chairman Tavengwa Mukuhlani (pictured) demanding answers.
In the letter dated September 13, seen by the Independent, HLB Zimbabwe asked the ZC boss to clear the audit firm’s name by explaining origins of the report, which was presented to ZC board members and delegates to the cricket governing body’s annual general as an agenda for the meeting.
This has come to light after this paper broke the story that ZC’s new board was set to refuse to endorse the audit report at the association’s AGM last week.
It has now emerged that not only was HLB unaware of the audit report produced in their name and circulated to ZC directors, but the chartered accounting firm had in fact abandoned work on the audit in April after ZC did not avail full information requested by the auditors to allow a smooth and credible exercise.
The development has caused serious discomfort to HLB Zimbabwe who, in a last-ditch effort to save the company’s reputation, was last week forced to write to Mukuhlani expressing displeasure at the conduct of its client, which it described as “unacceptable.”
ZC’s AGM went ahead as scheduled last week, but the financials were removed from the agenda following receipt of HLB Zimbabwe’s letter, which advised them to do so. The directors asked for a special general meeting at the completion of a properly-conducted audit. No date has been set.
“This letter serves to inform you that the audit for 2015 has not been finalised,” read the letter signed off by HLB Zimbabwe representative Clement Ruzengwe.
“We have been waiting for outstanding information in order to complete the audit, which has not been forthcoming from Zimbabwe Cricket. We are thus surprised that the audit report for that year (2015) has been circulated to the Board,” reads the letter.
“If indeed an audit report has been circulated to the Board, this has been done without our knowledge or authorisation. We disassociate ourselves from that report, and we request an explanation from your good offices as to how that report, purported to have come from us, has ended up in your board papers. We ask to see a copy of this board pack that has been circulated.
“We also require that any report, purported to have emanated from us, be removed from your Annual General Meeting Agenda, and that the correct position be given to the board and the newspaper (Zimbabwe Independent).
“As auditors of Zimbabwe Cricket, we were not even aware of your impending Annual General Meeting. This situation is unacceptable and we are looking to receive an explanation as to how these events came to pass.”
At the time of writing, ZC had not responded to HLB Zimbabwe’s correspondence, signed September 13.
ZC chairman Mukuhlani was not reachable for comment.
While HLB was quite forthright in its official correspondence to ZC, a source close to the firm said it had in fact considered severing ties with the cricket governing body following the debacle.
“They were actually in the process of deciding if it’s prudent to continue the relationship with ZC after what has happened. Normally when an auditing firm suspend work like what happened, they can decide to continue the relationship or end it altogether, depending on the nature of the client. They are not at all pleased with ongoing events. To them, being associated with such an audit report is a serious breach of professional responsibility. This has serious impact on their practice.”
The story which sparked the furore was carried two weeks ago, in which we reported that ZC’s audited financial statement for 2015 could spark an investigation after members of the association’s new board raised alarm over questionable operating expenditure.
The report, given to board members and leaked to the Independent, raised suspicions among directors.
The audit reported that ZC generated annual revenue of US$23 million — a figure boosted by the World Cup held in the same year — but a source within the organisation’s secretariat says the bone of contention among the new youthful board is the way figures were loosely thrown around in the financial report without explicit clarification about how the money was spent.
What particularly aroused suspicion among new board members, elected to office in August 2015, is US$5,2 million which, according to the audit, went towards “tour expenses”. This is despite the fact that all seven tours embarked on by Zimbabwe in the year under review, both at home and abroad, including the World Cup in Australia, were sponsored.
Bangladeshi sports marketing agency, Total Sport Marketing, had the marketing and broadcasting rights for Zimbabwe during the year under review and, under the deal, were reportedly responsible for such tour expenses in return for marketing the games at a profit.
Zimbabwe’s first outgoing tour of the year in 2015 was at the World Cup in Australia and New Zealand in February. World cricket’s governing body, the International Cricket Council, fully bankrolls tournament costs. The directors also questioned several other figures in the audit report.
The audit saga could lead to criminal proceedings.