Could this intricate web be at the heart of AirZim fight?

via Could this intricate web be at the heart of AirZim fight? February 17, 2014 NewsDay

ZIMBABWE is a dying country. It is grinding to a slow, but painful death superintended by greedy public officials working hand-in-hand with powerful politicians.
This combination of corrupt executives and mafia politicians, like vultures, is on the prowl scouring for carcasses of ailing parastatals to feed their want.

The aforesaid imagery may sound strong and evocative, but it’s a reality staring back at the citizens.

One need not look too far to prove the decay.

Most State-owned firms like Willowvale Mazda Motor Industries (WMMI), National Railways of Zimbabwe (NRZ), Cold Storage Company (CSC), Ziscosteel (now rebirthed as New Zimsteel), Agriculture and Rural Development Authority (Arda), Zimbabwe United Passenger Company (Zupco) and TelOne to mention, but a few, tell the story.

However, for now troubled national airline, Air Zimbabwe (AirZim), will suffice as an exemplar of this new phenomenon.

The choice of AirZim is deliberate because it is the only State-owned company so far that has done a comprehensive forensic audit of its state of affairs.

Reading through the AirZim BCA forensic audit report, one gets a sense that Zimbabwe has slipped into a mafia state where a few executives in parastatals or quasi-government organisations with close links to politicians are milking the country dry.

The report unearthes corrupt procurement activities at the national airline particularly the purchase of aviation insurance and aircraft parts.

The airline was allegedly fleeced of over $10 million in four years in a well-orchestrated insurance rip-off involving senior management and approved by both the airline’s board and line Transport and Infrastructural Development ministry.

The national carrier awarded Navistar Insurance the multi-million dollar contract to cover AirZim’s fleet, cargo, officers and passengers.

The contract was given without going to tender supposedly under the impression that ZimRe was under sanctions following the 2009 notice from the European Union.

The airline’s executives and remaining pilots were living large at the expense of other employees who went for months on end without receiving their salaries.

They received good perks including top-of-the-range executive vehicles, fuel, regional and international complimentary tickets and spending money as allowances.
The audit also unearthed that the airline could have lost more than $10 million in spare parts purchasing transactions that were done through middlemen instead of procuring them directly from the suppliers – Boeing.

Despite its declining revenue base, the airline staff rose to over 1 360 employees against the 11 planes operated by AirZim, whose fortunes continued to sag.
The planes are three MA60s from China, three Boeing 737s, three Boeing 767s and two leased Airbuses A320.

The airline later leased an Embraer Jet for its domestic flights.

It recently emerged that the two leased A320 Airbuses have for the last four months been grounded at OR Tambo International Airport in Johannesburg, South Africa, amid disclosures that the aircraft were unserviceable; one was being stripped of its parts to repair the other.

Upon receiving the BCA audit report in December 2013, the fired Ozias Bvute-led AirZim board immediately suspended nearly all the executives implicated in the report.

Among the suspended top officials were company secretary and acting managing director Grace Pfumbidzayi, acting group chief executive officer Innocent Mavhunga, finance director Nicholas Mujeri, finance manager Patience Tichagwa and human resources manager Oswald Madziva.

Bvute had established himself at the airline and his hand and tentacles were spreading into every facet of the national carrier and even beyond.

To some, he was slowly turning himself into an executive chairman while he regarded himself as the national carrier’s “saviour”.

Soon after his appointment, his board started making a raft of changes in the organisation from the shop floor right up to the top echelons of AirZim — including its trading and/or business partners.

Most of the rot at the airline in the period under review happened under the watch of then Transport and Infrastructural Development minister Nicholas Goche.
Goche appointed the Bvute-led board and received weekly progress reports from the airline’s chief executive officer.

The Bvute board immediately appointed MetBank as principal bankers to AirZim, moving the main account from CBZ Bank and the board also transferred the controversial insurance account to Champions Insurance.

Bvute is a major shareholder at MetBank, but his lawyers say there was no conflict of interest in this move because Bvute recused himself from the meeting that made the decision.

But the Air Zimbabwe scandal has revealed an intricate web of connections and inter-connections between companies and individuals that points to collusion in the looting of the airline’s funds.

NewsDay investigations also showed that the national airline was paying over $4 million a year in insurance to its new brokers – Champions Insurance.
According to documents, AirZim pays 455 447 euros and $484 509 per quarter as insurance premiums to Champions.

Apparently, Bvute, who is also MetBank non-executive director, is the group chief executive officer of Metropolitan Holdings, the company that runs MetBank, while another AirZim board member Nathan Chikono is Champions Insurance managing director.

Bvute and his associates at MetBank, Peter Chingoka and Wilson Manase, also control Zimbabwe Cricket (ZC).

Bvute has since left ZC, but the organisation has since transferred its principal bank account to MetBank.

In addition, Bvute’s board also did not waste time to discipline the accused AirZim executives and immediately set up a tribunal headed by Harare-based lawyer Wellington Pasipanodya.

Curiously, Pasipanodya is a partner at Manase and Manase Legal Practitioners. Manase is MetBank chair and ZC vice-chairman while Chingoka is ZC chairman.

The disciplinary hearings, true to the emerging political dimensions in parastatal management, were playing out in the full glare of the media with convictions being publicised before judgments had been handed down.

Lawyers, speaking on condition of anonymity since the matter has become sub judice, say the best way for full disclosure of the rot at AirZim to be exposed is the holding of trials in open court.

They say this would allow the accused to subpoena witnesses for their defence especially ministers and board members who approved the deals.

This week, Transport and Infrastructure Development minister Obert Mpofu, in firing Ozias Bvute and his AirZim board, said it had failed to observe good corporate governance.

Mpofu said he learnt a lot about developments at AirZim from the media instead of getting it direct from the board.

“I received the forensic audit report on Monday this week where upon reading it I realised most of the issues have been reported verbatim by papers. It shows the board’s total lack of appreciation that there is an authority or sheer lack of corporate governance,” he said.

In an apparent move to sweep clean the rot at the troubled AirZim, Mpofu ordered that the forensic auditing exercise should be extended to December 2013.
It originally covered up to March of 2013 soon after the Bvute-led board was appointed into office.

“The auditors now have to cover up to the end of the year so that it also covers what transpired between March and the end of the year when the board took over,” Mpofu said.

It remains to be seen whether the handling of the AirZim saga will act as an example of how the other scandals at the Zimbabwe Broadcasting Corporation and Premier Service Medical Aid Society will be handled as divisions start to emerge in the government and the ruling Zanu PF party.

Cabinet ministers in the Zanu PF government are airing divergent views in public about the unravelling corruption and looting in the public sector.

Peculiarly, Local Government minister Ignatius Chombo last month ordered the reversal of Harare town clerk Tendai Mahachi’s suspension on allegations of refusing to hand over the executives’ pay schedule to Town House.

And, on the other hand, Vice-President Joice Mujuru in Chinhoyi attacked the media for being used to destroy Zanu PF by reporting on the Salarygate scandal and corruption in parastatals.

One is left with a sense, the Willogate scandal, War Victims Compensation Fund scam and Senior Civil Servants Housing Scheme scandal are coming back to haunt the nation and no action will be taken against the culprits.