A PROBE into the operations of a firm that clinched the deal to revive the Cold Storage Company (CSC) two years ago kicked off in December, with Lands, Agriculture, Water and Rural Resettlement minister Anxious Masuka directing experts to see if the UK-based investor has capacity to rebuild the beef producer.
This week, Masuka said key aspects of the agreement had not been fulfilled since 2019, when
Boustead Beef undertook to inject US$130 million over five years to bring the State-run CSC back to full-scale operations.
Boustead Beef was given the rights to operate CSC’s abattoirs and deploy resources towards paying off debts.
But Masuka said implementation of the transaction had been delayed by a “myriad of issues”, which forced government to appoint a corporate rescuer plan in December and liquidation.
The corporate rescuer, Ngoni Kudenga is now investigating “the dismissal of employees from the date the joint venture was signed” and “Boustead Beef’s current operations (investments made and operational initiatives implemented since the signing of the agreement) and establish whether or not it has the capacity to revive CSC”.
While Masuka did not specifically blame Boustead for asset stripping, he said Kudenga was also investigating such reports.
In December, Masuka had hinted that it would be difficult to implement the CSC deal while creditors were mounting plans to attach assets.
CSC’s creditors include several urban councils, National Social Security Authority and the Zimbabwe Electricity Transmission and Distribution Company, who were owed a combined US$36 million.
Many years of mismanagement and plunder have grounded CSC, which enjoyed a quota to ship 9 100 tonnes of beef to the European Union a year in the 1990s.
The firm also had a US$15 million revolving facility with the bloc, under which it was paid in advance.
The company used to earn the country at least US$45 million annually, before the scourge of plunder set in.
“It was part of the agreement that the investor would use the Cold Storage Company assets and extinguish the company’s liabilities/debts. However, this process was delayed by a myriad of issues which necessitated the placement of CSC under a corporate rescue plan…granted on the 3rd of December 2020,” the Masuka’s statement said this week.
“The objective is to avoid liquidation and bring CSC back to profitability and contribute to the Livestock Growth Plan and National Development Strategy…while ensuring that it remains in a solvent state,” he said.
But the deal had weaknesses from the first day Similar future deals may fall into the same trap until a range of issues around CSC are addressed, possibly by Kudenga.
CSC no longer fits the profile of a big and appropriately run firm that it used to be during boom time in the 1990s.
Its once good brand has been affected by mismanagement, while goodwill has been compromised by a governance rot.
This has been compounded by a shrinking market in Zimbabwe, where disposable incomes have been eroded by the decades-long economic crisis, as well as de-industrialisation.