Tobacco Sales Ltd (TSL) board did not consent to an incestuous corporate relationships that saw Tobacco Sales Floors (TSF) wholly-owned division general manager (GM) Mary Machingaidze enter into business with her husband’s tobacco contract and merchant company, businessdigest has established.
This comes in the wake of corporate governance and conflict of interest allegations on the part of Machingaidze, TSF’s GM, after the company entered into business with ELT, a company owned by her husband, David.
Well-placed sources say ELT, which is also housed at TSF, could be enjoying an unfair advantage over its competitors amid allegations of price manipulations.
The company was licensed by the Tobacco Industry and Marketing Board (TIMB) to ELT, an indigenous tobacco contracting firm, to carry out activities in the 2017 marketing season.
Sources close to the developments say the deal was never brought to the attention of the board and could have been done clandestinely. It has emerged that in some instances farmers who wanted to sell tobacco to TSF found themselves selling their tobacco to ELT, a charge the company did not respond to.
With the average floor price for TSF at US$2,91 per kilogramme of tobacco, the average on ELT contract floor is US$2,56 per kilogramme, farmers could be losing as much as 35 US cents per kg.
Although the losses seem marginal, cumulatively and depending on the volumes sold, the value lost through the arrangement could translate to several millions per season.TSL chief executive Washington Matsaire had not responded to questions on whether the board had been made aware of the case of possible conflict of interest on Machingaidze’s part beforehand.
A TSL director Peter Mujaya claimed to be in charge of TSF, a move widely seen as an attempt to contain the corporate governance scandal rocking the company. Mujaya did not respond to questions over corporate governance concerns and possible conflict of interest relating to the ELT and TSF relationship.
When contacted by businessdigest, Mujaya avoided responding to questions relating to whether the business arrangement amounted to conflict of interest and whether this violated corporate governance at the company. TSF provides auction services for a number of independent tobacco merchants.
“TSF, as a company, has clear guidelines on the conduct of business, both by its staff as well as its clients. These guidelines and conditions have been fully complied with,” he said. Mujaya further claimed the board and management of TSL were aware of ELT’s planned operations, adding Machingaidze declared her interest.
ELT stands accused of benefitting unfairly from its relationship with TSF leading manager and of price manipulations at the auction floors. “The auctioning of all tobacco is handled within clear guidelines set by the Regulator, the TIMB. TSF always ensures that all its operations work within the guidelines set by the regulator.
Important to note is the fact that TIMB maintains a presence on the floor to ensure compliance, during the auctioning of the tobacco,” Mujaya said. He would not be drawn to comment on whether ELT was getting preferential treatment or enjoying an unfair business advantage as alleged.
His comments are seen as an attempt to minimise and contain the corporate governance scandal.
Her husband’s phone went unanswered. Machingaidze was the MD of Cotton Company of Zimbabwe Ltd until 2013.