Nepotism dogs Cold Storage Company board appointments

Source: Nepotism dogs Cold Storage Company board appointments | The Financial Gazette May 4, 2017

A TWELVE-MEMBER board appointed to the Cold Storage Company (CSC) last month has set tongues wagging following revelations that a quarter of the appointees are related, in one way or the other, to bigwigs in President Robert Mugabe’s bloated Cabinet.

Last month, Agriculture, Mechanisation and Irrigation Development Minister, Joseph Made, retained Sylvia Khumalo-Jiyane to chair the CSC board to steer the troubled meat processor to profitability after years of operating in the red.

Other board members include Nemrod Chiminya (deputy chair); Emily Mumbengegwi; Peter Nyoni; Cecilia Paradza; Bekhithemba Nhomo; Anxious Masuka; Rufaro Mazunze; Khodholo Setaboli; the chief executive officer (CEO) of CSC, Ngoni Chinogaramombe and two Ministry of Agriculture representatives, Unesu Ushewokunze-Obatolu and Reston Muzamhindo.
It has now emerged that three of the board members are related to bureaucrats in Cabinet, suggesting there might have been corporate governance breaches in the appointments.
Chiminya is brother to Home Affairs Minister, Ignatius Chombo, who also happens to be the ZANU-PF secretary for administration — placing him fourth in the ruling party’s hierarchy.
Mumbengegwi is the wife of Foreign Affairs Minister, Simbarashe Mumbengegwi.
She is also a board member of the Tobacco Industry Marketing Board (TIMB).

Peter Nyoni is husband to Sithembiso Nyoni, the Minister of Small to Medium Enterprises and Cooperative Development. He also sits on the ZB Financial Holdings Limited board, where he is currently acting chairperson.
Corporate governance experts told the Financial Gazette this week that it was too much of a coincidence that a 12-member board of a government-owned entity could have three non-executive directors who are related to key figures serving in the same Cabinet.

Without implying any wrongdoing on the part of the appointing authority, they said such appointments fuel suspicions that there could be political considerations involved in selecting stewards for strategic State assets whereby cronies end up ensconced in key positions at the expense of more deserving individuals.

There are also questions around the independence of the CSC board considering that two of its board members, Ushewokunze-Obatolu and Muzamindo are from the parent ministry, where they serve as principal director for livestock and principal director in charge of farm mechanisation, respectively.

In justifying some of the appointments, Made was quoted recently saying he had to accommodate officials from the pay-as-you-go pension fund, the National Social Security Authority (NSSA), after it had injected US$18 million into the troubled beef processor to enable it to turn around the corner.

Seconded from the NSSA board are three members including Chiminya who, besides being the co-owner of Shelter Zimbabwe, also sits on the board of the nascent National Building Society, which was created by NSSA.
Chiminya has served as chairman of Zvimba Rural District Council for many years and was previously TIMB chairperson.
Still, corporate governance experts say the appointments throws into doubt prospects of reviving the fortunes of CSC, once Zimbabwe’s biggest supplier of beef to the European Union and the local market.

A corporate governance expert who declined to be named for fear of victimisation said it was critical that appointments to public institutions be done in a transparent manner to remove questions around possible nepotism; patronage that compromises the directors’ effectiveness; lack of independence of directors; erosion of public confidence; negative public perception; reputational risk; corruption; and lack of transparency in the nomination process.

“The CSC board, as presently constituted, is also prone to government interference, thus compromising its independence and effectiveness. A compromised board erodes investor confidence at a time when government is trying to woe investment in CSC,” said the expert.

“This development sets a bad precedence and shows government’s half-hearted measures in strengthening good corporate governance in parastatals. These board appointments fly in the face of governance principles set out in our National Code on Corporate Governance, which puts a lot of emphasis on director independence and calls for transparency in nomination of directors,” she added.