Source: Kanyekanye faces $10m lawsuit | The Herald July 8, 2019
Daniel Nemukuyu Investigations and special reports Editor
ALLIED Timbers Zimbabwe is seeking to recover $10 million from its former chief executive officer, Joseph Kanyekanye, which was lost through unlawful hefty discounts to selected customers, unauthorised allowances and diverting millions of dollars meant for payment of Value Added Tax (VAT) to other projects.
The development is a new strategy that is now being used by parastatals for employees whose actions would have caused loss of public funds.
Criminal charges in such cases involving public funds, are preferred, but separate civil proceedings helps recover lost public funds.
A recent audit report by KPMG, which is yet to be tabled in Parliament, shows that Allied Timbers owes the State $3 103 018 in unpaid VAT in respect of contract milling arrangements that were never accounted for.
Allegations are that Kanyekanye’s actions subjected Allied Timbers to tax liabilities, but the said milling contract arrangements were never accounted for.
He also stands accused of unlawfully spending US$14 007 on buying himself a Samsung tablet, paying himself unauthorised allowances for trips to South Africa and Botswana, paying his children’s school and examination fees without approval and encashing his leave days on his own.
Kanyekanye, according to the report, allegedly caused financial prejudice to the parastatal to the tune of US$2 765 892 through making unauthorised discounts to customers on the company’s timber.
Allied Timbers also lost US$4 972 892 through failure by Kanyekanye to acquit CD1 forms in respect of timber exports, thereby exposing the company to unnecessary tax liability.
To that end, Allied Timbers, through Harare lawyer Mr Caleb Mucheche of Caleb Mucheche & Partners, issued summons at the High Court claiming $10 million plus interest. Interest, according to the summons, should be paid at the prescribed rate of 5 percent per annum.
Allied Timbers is also claiming costs of the suit on a legal practitioner-client scale.
According to the plaintiff’s declaration, Kanyekanye during his tenure as chief executive officer, conducted business with negligence and caused financial loss the company.
“The defendant conducted the business of the plaintiff with gross negligence and gross incompetence in breach of the express and implied terms of his contract of employment coupled with his common law fiduciary duties and managing director-chief executive officer thus causing financial prejudice to the company and acting contrary to the best interests of the plaintiff,” reads the declaration.
Kanyekanye, according to the parastatal, should pay for the loss of public funds.
“The defendant’s wrongful conduct or omissions led to both financial loss to the plaintiff and loss of huge sums of public funds, the latter owing to the nature of the plaintiff as a parastatal,” read the papers.
The company claims it was put on an unnecessary expense in paying lawyers for the litigation, the call for an order for costs on a punitive scale.
Kanyekanye left Allied Timbers in 2015, after agreeing on mutual separation with the board.
Prior to the termination of his contract, Kanyekanye was on suspension after the board raised several charges of misconduct against him. The suspension was meant to facilitate investigations into his conduct which bordered on corruption, failure to observe operating procedures and gross insubordination.