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Although the actual amount to be covered by Dr Mudhumo’s shareholding in the bread-manufacturing firm could not be ascertained, company insiders told Herald Business that Lobels’ value ranges between US$25 million and US$30 million.

This implies that his shares are worth between US$2,5 million and US$3 million.
An audit report by Camelsa exposed a massive US$7,6 million fraud. However it could not be immediately established how Lobels would recover the remaining funds.
The fraud led to the resignation of Dr Mudhumo and two senior managers, finance director Mr Nesbert Gufu and treasury accountant Mr Tonderai Chipere who were also implicated.

The audit report revealed that the company was prejudiced about US$7,6 million, which was siphoned through fictitious companies purported to be flour suppliers. These companies were linked to Dr Mudhumo and the two directors.
“It looks like a shareholders agreement that (Dr) Mudhumo foregoes his stake in Lobels to cover part of the money he is alleged to have embezzled,” said one source.

Mr Livingstone Gwata who is also the chairman of the group, tourism guru Mr Herbet Nkala, Dr Burombo Mudhumo, Retired Brigadier David Chiveza and Mr Fred Mtanda formed the consortium that owns the majority stake in the troubled firm.
Lobels acting chief executive Rtd Brigadier Chiveza yesterday confirmed the development but could not comment much because the matter was subjudice. “There are processes that need to be followed and I can not comment much at the moment.”

Efforts to get a comment from Dr Mudhumo proved fruitless.
Lobels decided to engage external auditors to expose “the financial mess” at the company before fresh capital could be invested.
Shareholders have since raised about US$4 million to recapitalise the business. It is also understood that the company would have to go under reconstruction that would involve introduction of new shareholders for more fresh capital injection.

Once recapitalised, the company projects bread output to rise to about 250 000 loaves per day from the current 120 000 loaves.
At full capacity, Lobels produces an average of 300 000 loaves per day.
Lobels has since 2006 been rolling out retail outlets countrywide as part of the groups’ growth strategy initiatives.

The company commenced operations in the late 1940’s under Lobels brothers. In 2002, a consortium of business entrepreneurs bought Lobels. It has operations in Harare and Bulawayo.
Like many companies, the group’s challenges are mainly due to inadequate funding for retooling and supporting operations.