Mystery surrounds the award by the bankrupt state telecommunications firm NetOne of a $6 million ‘loan’ to Standard Chartered Bank (United Kingdom), which the bank apparently failed to ‘repay’ resulting in it being written off.
The mystery loan is just one of a litany of corrupt deals and bad investment decisions made by suspended NetOne managing director Reward Kangai who is now sitting at home on full pay as a team of investigators tries to unravel his dirty deals.
While the NetOne board chaired by Grace Mugabe’s relative Alex Marufu wants to simplify matters for Kangai by sticking to light issues uncovered recently by finance director Sibusiso Ndlovu, investigations by Now Daily show that the rot at Zimbabwe’s second largest mobile operator runs deep and has been going on for years. Kangai may be guilty, but beneficiaries of his corruption are many, including president Robert Mugabe and senior members of Zanu PF, who still get free services from the corporation.
Typical of all corruptly-run state enterprises in Zimbabwe, NetOne did not submit its accounts regularly for audit. However, the latest available audit presented to finance minister Patrick Chinamasa by auditor-general Mildred Chiri in June 2015 paints a picture of unbridled corruption, greed, gross incompetence and mismanagement on Kangai’s part.
Among the critical issues raised in Chiri’s audit reports are:
- Failure by NetOne to account for a $21 million loan from the ministry of information technology, postal and courier services which is now the subject of a dispute;
- Purchase of a $1 million mansion by Kangai in Borrowdale without board or government approval;
- Failure by NetOne to recover a mysterious $6 million ‘loan’ to Standard Chartered Bank (UK) and failure by Kangai to explain the circumstances under which it was given;
- Awarding hefty ‘bonuses’ to all staff without measuring individual performance in line with government regulations;
- Incurring a $5 million loss as at 31 December 2013, with current liabilities exceeding current assets by $82 million.
The contentious $21 million ‘loan’ to NetOne was only discovered as Chiri was going through the ICT ministry accounts and discovered that records were not in order.
“The agreement is still to be signed by both parties for a loan of $20 716 619 given to NetOne in December 2013,” the auditor-general said. “In the absence of a contract and accounting records it becomes difficult to ascertain whether the terms and conditions for the repayment of the loan and interest are adhered to. The completeness and accuracy of the figures disclosed on the return submitted for audit may be difficult to ascertain. There is need for a contract to be signed between NetOne and the Ministry of Information Communication Technology, Postal and Courier Services.”
Government sources said the loan was just one of possibly hundreds of millions of dollars that went down the NetOne sinkhole as the objectives for the loan were not spelt out. Officials said it was habitual for Kangai and his colleagues to abuse government loans and incur unnecessary losses with the knowledge that the state had an obligation to bail them out.
“The culture of abuse became so entrenched that NetOne bosses did not see the need to contain their costs or operate at a profit even though their competitors were making super-profits. It is inconceivable that NetOne could make such phenomenal losses when they had a near-monopoly and the demand for their products was so high. Kangai continuously cried that NetOne needed more money from government, yet he could not account for the hundreds of millions that had been poured into the business,” said a senior government official familiar with the issue.
Kangai acknowledged in a statement a dispute had arisen with the ministry over the ‘loan’.
“The issue regarding the debt between the Ministry and NetOne is in dispute with the latter maintaining that they are owed by government. This position was communicated to Treasury who are yet to make a decision. A contract will be drawn once Treasury has made a decision regarding this debt,” Kangai said.
A management consultant criticized government over the anomaly.
“Obviously this money was abused, which is why NetOne are diverting attention to what they are owed by government. This is a loan that was given for a specific purpose but was not applied to that purpose. If the government was paying a debt, they would have said so at the outset. Kangai deliberately created the confusion in order to get away with this blatant diversion of funds,” said the consultant.
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