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Zvamaida Murwira Senior Reporter
The Zimbabwe Mining Development Corporation (ZMDC) lost US$40 million worth of shareholding in one of its mining firms in a botched joint venture investment deal, an audit has revealed.NetOne realised a mere US$1 100 in 2012, the first year, in its One-Wallet project after investing US$226 000 in the business, a mere o,005 percent return.

In her 2012 report Auditor-General Ms Milded Chiri said ZMDC ceded 80 percent equity worth US$40 million to Glassfinish Investments (Pvt) Ltd, but the firm failed to raise the money despite it having secured the equity.

“As per the shareholders agreement between ZMDC and Glassfinish Investment dated February 2, 2010, the parties agreed that ZMDC was to cede 80 percent of its investment in the joint venture company for US$40 million and it would retain 20 percent.

“ZMDC ceded its shareholding to Glassfinish Investments but it had not been paid the US$40 million for the sale of the shareholding,” read the report.

In its response management at ZMDC noted the observations, adding that the US$40 million was accrued in 2010 financial statements and said they would pursue the matter.

“Follow up through letters have been made,” reads the response.

In her evaluation of response of management of ZMDC, Ms Chiri said considering the amount involved, management should have come up with a specific strategy for recovering it, adding there was commitment by management to take action.

In diamond mining at Chiadzwa, Ms Chiri said ZMDC did not have board representations on the joint venture companies as was laid down in their agreements.

In Anjin and Diamond Mining Company ZMDC did not have any board representation despite it having four seats while with respect to Mbada Diamond, ZMDC had one representation from a requirement of two.

On Netone, Ms Chiri urged the mobile service provider to increase the catchment of “One Wallet” dealer network to ensure return of investments.

“Revenue of US$1 194 was earned from ‘One Wallet’ product for the year ended 2012. The cost of implementing the product was US$225 867 and the return on investment thereof was 0,005 percent,” read the report.

“An analysis of the product performance revealed that the ‘One Wallet’ product did not have a facility to transfer funds across other networks and customers had to swap their old sim cards with new ones in order to access the product.”

In its response, management said it had continued to engage more dealers who had already started advertising the product. “NetOne had already engaged the supplier of One Wallet system on the issue of funds transfer across networks and the works are now at an advanced stage.

“Once the system update has been completed deployment will be promptly made in order to increase use and availability across the country where mobile networks have coverage,” management responded that time.

NetOne said the swapping of sim cards from the 32k to 128k sim cards, was required if the customers could transact sending money to other network users.

“Besides issues to do with the wallet security, the sim swaps are encouraged because of the additional product offerings that come with the new sim card.

“These products will be used for customer retention and meet certain identified gaps in customer needs,” read the response.
NetOne has since started implementing the product and in its advertisements state that it can send money autocross all networks.