HomeBusiness DigestTurnall MD, FD in funds abuse storm

Turnall MD, FD in funds abuse storm

TURNALL Holdings Ltd MD Caleb Musodza and FD Kenias Horonga were fingered in a case of possible abuse of company funds amounting US$410 000, businessdigest can reveal.

By Fidelity Mhlanga

This comes after Turnall announced the departure of the two officials this week.

The alleged abuse of company resources is believed to have informed Turnall’s decision to part ways with Musodza and Horonga this week, who were singled out in an internal audit concluded in July 2016.

According to documents seen by businessdigest, on April 26 this year, Turnall transferred US$50 000 secured under the Distressed and Marginalised Areas Fund (Dimaf) from its Cabs account number 10005093563 into the company’s Barclays Bank executive salaries account.

It is alleged that the top executives at Turnall squandered US$50 000 through cash-in-lieu-of-leave payments.

The US$50 000 was part of the US$1 million facility secured from government by the firm under Dimaf. The funds were meant to revive seriously distressed firms through procurement of critical raw materials and machinery.

Documents also show that on January 27 this year, top executives awarded themselves loans amounting to US$360 000.
The loans are yet to be repaid. However, it is not clear how many executives benefited from the advanced loan.
Musodza dismissed the allegations he abused Dimaf funds as false and malicious.

“Generally I notice that while your source is aware of various allegations that had been made to certain members of the executive employees, and that there was an internal audit commissioned by the board to verify the allegations, the same source is not aware of the findings of the internal audit verification exercise or is not being truthful,” Musodza said.

“This was part of the allegations investigated by our internal auditors and found to be totally untrue. Every dollar of the Dimaf fund you refer to was properly traced, verified and accounted for by the internal auditors and the board. Thus the allegation is totally false and malicious.”

Musodza added that there was no employee at Turnall who benefitted from Dimaf.

“There is no employee at any level that benefitted from the Dimaf funds as alleged. The Dimaf funds were used for their intended purposes and this was verified by the internal auditors and the board,” he said.

On the issue of loans, Musodza said the allegation.

“This allegation is totally false and there is no member of staff (executives included) that has drawn any loan as alleged. Audit work done by internal audit verified this,” he said.

“Our system doesn’t allow the payment of goods and services without documentation and, in this regard, I find these allegations lacking substance. Verification done by internal auditors on these allegations proved that the transaction was normal and above board.”

When reached for comment, Horonga refused to comment, saying Musodza’s comment to the paper was sufficient.

“I am not saying anything further because you received responses from Mr Musodza,” he said. The allegations against the two come at a time Turnall is struggling financially.

So dire is the situation that Turnall recorded a net loss of US$1,8 million in the six months to June 30 2016, from a comparative profit of US$400 000 last year.

The executives decision to award themselves huge loans irked employees who got a 50% salary cut. The employees are demoralised and are threatening industrial action.

Turnall board led by chairperson Rita Likukuma has also been accused by employees of protecting the executives at the risk of running down the company.

Musodza and Horonga were fingered in fraudulent activities in an audit report completed in July by the company’s auditors Ernerst and Young.

Likukuma would not be drawn to comment on the allegations on Tuesday, referring businessdigest to a public notice which appeared in the press on Wednesday. The company notice announced Musodza and Horonga were leaving the organisation effective October 1 and will proceed on leave until December 31 to pursue other business interests.

According to documents at hand, Horonga made payments of US$4 800 to Conduit Investments (Bosch) for his vehicle repair without invoicing.

On March 22 2016, a payment to Conduit Investments was done without invoice, with the invoice only dated July 4 2016, a scenario pointing to fraudulent behaviour.

The vehicle repair was allegedly paid in full by Turnall despite the vehicle being fully covered by Eagle Insurance, a situation which piqued the insurance firm.

Horonga has a tainted past. A forensic investigation into Innscor Africa Ltd’s subsidiary — Colcom Ltd — claimed his scalp and his purchasing manager after an audit unearthed questionable procurement procedures and porous systems at the company

It is also alleged that Turnall is operating without a registered engineer, which has resulted in high waste levels and operational inefficiencies.

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