HomeBusiness BuzzFarm & City audit unearths weak corporate governance

Farm & City audit unearths weak corporate governance

…CFI boss at the centre of cash scandal

An internal audit centred on whether CFI Holdings deputy chief executive Shingirayi Chibhanguza, who represents the interest of Nicholas Van Hoogstraten in the group, could have misused US$200 000 in cash after officials of Bellevue Abattoirs and Butcheries, a company he is associated with, collected cash from Farm & City outlets in December and January this year, has come under the sportlight.

Chris Muronzi

Businessman Nicholas van Hoogstraten
Businessman Nicholas van Hoogstraten

The disclosures could claim the scalp of Chibhanguza, who landed the post a few years ago after a compromise deal between the major shareholders—Hamish and Simon Rudland and Van Hoogstraten—that culminated in the sacking of the then chief executive Steve Kuipa and chairman Simplicious Chihambakwe.

The Rudlands are represented by Timothy Nyika, the chief executive.

An internal audit report at Farm & City has unearthed weak corporate governance and possible conflict of interest on the part of Chibhanguza, who is heading the retail unit, after officials affiliated with Bellevue Butchery and Abattoirs, an entity Chibhanguza has an interest in, collected cash from Farm & City branches without required internal approvals.

It is not clear if the funds were reimbursed.

An internal audit conducted on 23-25 January this year established that cash was not banked as per company policy on various occasions between December 29 2016 and 22 January 2017, a development auditors said need the board’s attention.

“We noted that some cash is not banked but is instead collected from branch by some Bellevue Abattoir officials (a company affiliated to management). The official simply signs a completed bank deposits slips and collects cash which is not enough for proper handover and takeover for the cash,” the report found.

“Apart from the proper procedures, the transaction also poses risk on corporate governance of the organisation being compromised as the company collecting the cash is affiliated to FCC management. The Finance director explained that this cash was for fertilizer purchases.”

The audit noted that the association between Bellevue and Farm & City posed serious risk to good corporate governance.

The funds in question were collected from Farm & City Murehwa and Nyanga outlets.

According to the documents, on December 29 2016, Bellevue officials collected US$9 362 in cash from Farm & City Murehwa and US$17 868,40. From 6 to 22 January, varying amounts of cash were collected by Bellevue officials running close to US$200 000 in Murehwa and Nyanga.

Chibhanguza is representing business tycoon Nicholas van Hoogstraten’s interest both in management and on the board.
The report compiled by E. Mandisodza and reviewed and finalised by an E Madziva was cleared by Chester Mutevhe, CFI acting Finance Director, a T Hofisi, E Madziva, A Karimanzira, C Mukumba, R Machingaidze, D Gwashu and an E Muguza on 16 February.

The report was also distributed to Nyika, Chibhanguza, Mutevhe, Rudland, an Zinyemba and T. Hofisi.

The audit also raised the red flag on another transaction where goods were delivered to Farm & City and ordered by Bellevue.

The auditors said corporate governance was compromised, adding that all delivery notes should be in Farm & City’s name.

It is not clear why deliveries of 50kg urea with a value of US$15 984 were in Bellevue’s name.

The revelation comes as Zimbabwe is battling a crippling cash crisis that has seen banks failing to honour withdrawals on demand, forcing the majority of Zimbabweans to use electronic balances.

The disclosures also shed light on how companies have starved the economy of much-needed cash. Cash is attracting a premium of as high as 20% on the black market.

Chibhanguza yesterday said he does not comment on internal issues.

“I do not comment on internal company issues in the press. As a company we strive to uphold good corporate governance practice and have a full internal audit team which constantly checks all transactions and report and advise on improving the same where there are gaps,” he said. “Where there is fraud and theft we also report these to the relevant authorities. We then have external auditors who also check our transactions to make sure everything is above board and report to the board and shareholders.”

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