CFI battle gets nastier as Van Hoogstraten wants lawsuits against former directors

CFI battle gets nastier as Van Hoogstraten wants lawsuits against former directors

HARARE, December 18 (The Source) – Messina Investments’ Nicholas Van Hoogstraten said Stalap nominated directors who recently exited the agro-industrial group, CFI Holdings shall be held accountable for the alleged poor corporate governance and will have criminal cases brought against them.

Three directors Hamish Rudland, Douglas Mamvura and Ephraim Chawoneka resigned from CFI board in the past two weeks, marking the end of Stalap representation on the CFI board,

Last month, acting chairperson Grace Muradzikwa stepped down from the board while acting chief executive Timothy Nyika quit on December 1.

Stalap investments and Messina Investments own 41 percent and 42 percent respectively in the group, but van Hoogstraten, backed by minorities, wrestled control of the group despite the financial muscle behind Stalap.

Stalap is an investment vehicle for shares held in CFI by the National Social Security Authority and Zimre Holdings.

“We are not yet done with these Stalap nominated directors. The fact that they are out does not mean they will go away with it. It only means they they can’t steal any more money, it does not mean they will get away with what they have stolen already. I’m not a politician, so bygones are not bygones,” Hoogstraten told The Source.

Rudland resigned from the board last Wednesday after being accused of prejudicing the company thousands of dollars in transactions involving companies that he had interest in such as Unifreight and Tefco while Mamvura and Chawoneka resigned from CFI holdings board the previous week ahead of an EGM called to dismiss them.

However, Shingirai Chibanguza survived the axe after 52,1 percent of shareholders voted against his removal from the CFI board on Wednesday.

Chibanguza was accused of setting up an unsanctioned parallel cash collection system in his capacity as managing director of Farm and City..

He, however, distanced himself from the scandal and narrated several dubious transactions which he said were crafted by Stalap nominated directors to benefit its shareholders at the expense of other stakeholders.

He said Stalap had requested of his removal from the board in order to get rid of him as an ‘obstruction’ to their questionable transactions.

“During my directorship of CFI, l started discovering a lot of questionable transactions mainly on the land and properties section. When I started questioning these transactions, Stalap/Zimre decided that the best way was to get rid of me,” CFI,” Chibanguza told shareholders on Wednesday at the company’s last EGM.

The burning issue relates to the sale of 834 hectares of Langford Estate to Fidelity Life Holdings in 2015, which Messina believes was sold at a large discount.

CFI sold off Langford in 2015 to Fidelity to pay off combined debts of $18 million, owed to FBC Bank, Agribank, CBZ, the Infrastructure Development Bank of Zimbabwe, NMB and Standard Chartered.

Mamvura and Chawoneka, however, joined the CFI board in May this year, nearly two years after the Langord deal was concluded.

Zimre and NSSA have a combined 55,52 percent shareholding in Fidelity, with questions raised whether due diligence was done in light of the related parties involvement.

Additionally, Chibanguza said during his suspension, Stalap tried to do another transaction involving a $5 million mortgage bond, which could potentially harm CFI.

“Recently, it has come to my attention that after my suspension Stalap/Zimre directors perpetrated another fraud by registering a $5 million mortgage bond over company property of Tefco, a company owned by one of the Stalap/Zimre directors,” Chibanguza said.

In a later email, Chibanguza told The Source that Tefco is a finance company fronting for Simon and Hamish Rudland and that CFI was going to default, and lose some assets to Tefco.

“The interest rate at 13 percent plus 2 percent fee is too high for the amounts involved. The business can’t afford this as the rate would have gone higher on default. This would have led to the company losing very strategic assets, which is a repeat of what has been happening over the previous years.” Chibanguza said.

Chibanguza said a number of questionable land related transactions took place in the agro industrial group.

“There was Maitlands, where again another Stalap/Zimre related company Zimre property Investments (ZPI) was collecting money on the pretext of “managing” the development of the land whereas in reality they were being paid for doing nothing,” Chibanguza said.

“Previously in 2012, another piece of land measuring 330 hectares had been sold to Fidelity life by CFI at around $1/square metre when the market price was at least 5 times that amount. The stands were then, after a basic servicing, sold at a price of $60/square metre,” Chibanguza said.

Additionally, Chibanguza said Unifreight another company related to Stalap/Zimre director was also using CFI retail units free of charge and there were other land related transactions involving Stalap /Zimre and their nominees which were also detrimental to CFI.

“If one looks at the history of CFI, one sees that the company was deliberately run down so as to strip all its assets on the pretext of saving it from creditors,” Chibanguza said.

Chibhanguza , who took over as the managing director of the CFI subsidiary Farm and City in mid-2016, said by then the company had limited stocks, operating at a loss and owed all its suppliers money.

“This (transactions by Stalap directors) will now be investigated and we will have a forensic audit on all land related issues” Chibanguza said.

Shingirayi Zinyemba who chaired the EGMs said a new CFI board will be announced in due course following the exit of Stalap nominated directors.

“We now have a conflict free board which will grow the business for the benefit of all shareholders, definitely a lot better than the last 12 years,” Zinyemba said.

CFI has been a perennial loss maker over the past years resulting in accumulated losses amounting to $66,02 million as at March 31. The agro industrial company, which used to be one of the blue chip companies on the ZSE, has lost significant value over the past decade, with total assets declining from $132,6 million in 2013 to the current $96,5 million.

The group’s revenue generating capacity has been declining over the years, with revenue declining from $67,4 million in 2013 to $24,9 million in 2017.

Analysts say the fight for control indicates CFI’s promise because of its strategic business units across the agriculture value chain. It has three divisions in poultry, retail and light manufacturing and property, all potential gold mines once the economy is on the recovery path.

Editors Note: In the story “undefined” sent at: 18/12/2017 14:47

This is a corrected repeat.