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Business Reporter
ALLIED Timbers has appointed KPMG to carry out a forensic audit to establish if there was impropriety in the conduct of former chief executive Dr Joseph Kanyekanye. Dr Kanyekanye left the group in February after agreeing to a “mutual separation” with the board. But Allied Timbers chairman Mr Emmanuel Fundira said yesterday the State-owned company had commissioned the forensic audit meant to establish if there was abuse in terms of the systems and regulations. If there was, charges could be raised.

Prior to the termination of his contract, Dr Kanyekanye was on suspension after the board raised several charges of misconduct against him.

The suspension was meant to facilitate investigations into Dr Kanyekanye’s conduct, which was bordered on corruption, failure to observe operating procedures and gross insubordination.

Mr Fundira said despite mutual termination of the contract, his board was unhappy with how Allied was run.

He said the board was also concerned with suspected “shady deals” that could have prejudiced the company of millions of dollars.

It also wants to establish if corporate governance systems were not violated.

“For instance, the Botswana operation is currently under liquidation. We want to fully understand and prove what happened there; we lost about $6 million, which is a lot of money.

“We want to know why the money is not collectable.

“You may have a situation, for instance, where one gives orders to friends knowing very well that they will not pay.”

As such, the audit would reveal where systems were violated and areas that need plugging to avoid recurrence of such irregularities with potential negative impact on the group.

“In terms of corporate governance, we do have corporate governance code at Allied Timbers. We think this was violated, but that can only be confirmed by the forensic audit.

“So the forensic audit is meant to show how we lost so much money and why the organisation is in a condition in which it is, when it is supposed to be in a healthy condition,” he said.

Dr Kanyekanye could not be reached for a comment by the time of going to print yesterday.

Meanwhile, Allied has appointed a new finance director with the effect from March 1 while a new chief executive will be appointed once the forensic audit has been completed.

“We do not want him (the new CEO) entangled in issues he was not part of,” said Mr Fundira.

On export markets, Mr Fundira said the Zambian market was growing “very fast”, with value of orders averaging $2 million in a quarter.

The company has also secured substantial orders in South Africa, Angola and the Democratic Republic of Congo.

Mr Fundira said the company was relooking at Allied Timbers market strategy to ensure its products do not find way to other distribution channels other than its own.

For instance, contracted millers were paid an agreed percentage of timber they would have been hired to process, which they would sell at prices lower than Allied Timbers’.

“We are going to look at our strategy, a lot of the problems we have were caused by ourselves. We had interrelated or contracted parties in terms of parcelling out the business,” he said.

“For example, in the business of milling, we were not paying cash to millers. They were paid using timber. Some of them would then undercut us when they sold the timber.”

He said audit findings would help the company to strengthen its corporate governance systems “by making sure that the management or the board does not allow such (irregularities) to grow because that destroys shareholder value and the business”.

Allied is wholly owned by the Government and has three divisions – Allied Timbers Zimbabwe, Allied Timbers Saligna and Altim Zimbabwe.

Its operations involve plantations, harvesting, and processing, marketing and selling of both pine and gum.

It operations are concentrated mainly in the Eastern Highlands and the Midlands.

The company specialises in sawn timber, poles, and various other value added timber-based products such as doors, flooring timber and blackboards.