CFI deputy CE nailed

CFI deputy CE nailed

Source: CFI deputy CE nailed – The Zimbabwe Independent November 13, 2017

A disciplinary hearing into charges of corporate governance deficiencies at CFI Holdings found deputy chief executive Shingirayi Chibhanguza guilty of unilaterally, inventing a new cash collection system to pay amounts running into hundreds of thousands to a company he once worked for.

By Chris Muronzi

This was done unilaterally and without the knowledge of his boss Timothy Nyika and the company’s board.

Information at hand shows that the disciplinary hearing revolved around allegations Chibhanguza instituted a cash collection system that was contrary to the established system. It also sought to establish whether or not he had the “requisite authority” to implement the system.

This comes after an internal audit report at Farm & City early this year 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 he has an interest in, collected cash from Farm & City branches without required internal approvals.

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.

Although Chibhanguza argued he had been charged using the wrong code, saying the charges preferred against him were “vague and embarrassing”, his arguments were dismissed.

Chibhanguza, according to the documents, argued that he had exercised his “executive authority” when he introduced the cash collection system to “secure and utilise the most cost-effective manner of remitting money to suppliers.”

The CFI official, who is representing the interests of Nicholas van Hoogstraten in the company, had also claimed that he did not need board approval or the acting CEO’s approval to implement the system of cash collections.

The disciplinary hearing adjudicated by Edward Mapara and Matts Kunaka found that although Chibhanguza had executive authority, he still needed to seek the nod of the board and his boss — the acting chief executive.

“The employee is right in saying that he had executive authority. He is also right in claiming that the other managers he refers to as executive were aware of this arrangement. The question which he does not address is the scope of his executive authority. According to the Collins dictionary executive authority refers to, ‘having a function or purpose of carrying plans, orders, laws, decree etc, with practical effect’,” Mapara and Kunaka noted.

The hearing authorities — Mapara and Kunaka — found that Chibhanguza needed higher authority to implement the new cash collection system and that executive authority did not stipulate putting into place new laws or plans .

“That function is reserved for higher authority, in this case the CEO or the board. He (Chibhanguza) also points that other executives were aware of the new arrangement. Other executives cannot be substituted for the board or the CEO. It was correct to consult the other managers. They could however not legitimise his actions. That is not their responsibility. There was nothing wrong in the employee seeking a ‘secure’ and cost effective manner of remitting money to suppliers. That was indeed his duties. He, however, needed authority to activate the cost effective manner. The suggested cost effective manner had to pass scrutiny which could be provided by the ACEO or the board.”

The hearing authorities found that Chibhanguza’s actions amounted to “egregious disregard for an instutionalised system of handling of cash”.

“To implement an unauthorised system constituted an egregious disregard for an institutionalised system of handling cash. The system introduced by the employee was so radical that it could not be justified as part of his executive functions. Even without having been favoured with CFI manuals, the taking of the risk involved in entrusting your cash to an unrelated third party could not be unilaterally taken,” the hearing authorities said. “The involvement of other managers cannot purge the reckless disregard for authority. Being a director and executive cannot amount to a licence to act howsoever one wishes. The employee works for a listed company and decisions of this nature cannot be taken unilaterally.”

According to documents, Chibhanguza had admitted to previously working for Bellevue, but argued that he had not taken advantage of his previous relations with Bellevue to organise a cost effective cash collection system from CFI branches.

Chibhanguza also raised concerns that his employer had not suffered any prejudice, but hearing authorities found that there was risk of losing the money.

“The arrangement was not reduced to writing. It is not known how the risks of loss were to be dealt with. The employee argues that the system of cash collection was transparent and that the people collecting the cash were known, their details were openly recorded,” the hearing authorities said. “The transparent system was not availed to the ACEO and to the board. How then could it be deemed transparent particularly in a listed company?”

Mapara and Kunaka found that no prejudice had been suffered, but it had exposed the company to possible risk of loss.

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

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