Zimpapers Logo

The fate of the $22 million that Meikles Limited transferred to South Africa in 2008, purportedly for investment, remains shrouded in mystery as the group continues to flout corporate governance rules amid allegations that the chairman has not paid back the $11,7 million he owes while there are serious accounting irregularities.

Well placed sources within the group said Meikles, which is the only company which has a single independent director in the form of Mr Rugare Chidembo – the rest are executive – has got hidden dealings which go against its standing as a public company.

Information availed by sources and from the 2014 annual report shows that while some effort was made to recognise, in the group’s accounts in 2011, the possibility of recovering 65 percent of the $22 million funds, about $11,7 million, nothing has materialised almost four years on.

The funds, earmarked for future investment in Africa, are currently held by Gondor Capital Limited, a South African registered shareholder entity held 100 percent by the Moxon Group.

Meikles said, back then, that the purported expansion investment outside the country would mobilise upward of $200 million for capital investments into Meikles Limited and Zimbabwe.

The funds, which later sparked serious boardroom squabbles in the conglomerate, were allegedly transferred to South Africa by Meikles Limited executive chairman Mr John Moxon without the full consent of other directors in the group.

However, the outcome of litigation, instigated by former chief executive Mr Nigel Chanakira, eventually allowed a recoverable sum denominated in South African rand equivalent to $11,7 million, an amount later reinstated in the group accounts.

“It is time that the Board facilitated the return of these funds to relieve the pressure on the Group. What have these funds been doing, earning nothing all these years? This does not make any sense at all,” said a highly placed source in the group.

“When combined with the unyielding investment in Mentor of $34,5 million; $45 million is the reality of assets shrouded in secrecy and contradictory statements, which change year on year, but never produce the excitement promised,” the source said.

The boardroom battle over the manner the $22 million was exported to SA led to the collapse of an 18 months marriage between Meikles and the Chanakira-led Kingdom Financial Holdings.

Meikles has been inconsistent regarding the recoverability of the funds, indicating at one point in 2009 that the prospects of repatriating $17,5 million of the original amount were bleak.

Sources said since the value of Meikles, which has a $40 million market price shares held by Gondor Capital can only be about $18 million, it was unlikely that the $11,7 million or 65 percent of the value could be recoverable as a current asset.

“What are the terms of this loan to the Chairman? This sum is worth close to $20 million at current value if the interest had been saved. It is irresponsible for the Directors to tell shareholders once again that the funds are there with no cash flow commitment when the group is bleeding.

Where? The future is now.”

Further, sources said it did not make sense for directors to continue telling shareholders that the funds were available yet the funds have never yielded income since being shipped out.

Questions have also been raised about how Meikles was treating its investment in Mentor, a South African associate with interests in hospitality, catering, financial services and energy, amid allegations of gross violation of accounting rules.

Mentor is classified by the board as an arms’ length investment not a sharing of equity association as promised to shareholders.

In the 2014 annual report the group says that “The value of the Group’s investment in Mentor has increased by 20 percent expressed in terms of South African Rand, but is static in terms of United States dollars.”

“The investment has been accounted for at cost as there is a wide range of possible fair value measurements and, in the view of the Directors, cost represents the best estimate of fair value within that range.”

According to the annual report under notes to the financial statements Meikles gives an interpretation of IFRS10 in the context of Mentor saying with the auditors saying that Meikles has no direct control over the investment. However the board has two directors, both of which are associated with the chairman.

Meikles in 2011 said that it expected to reap significant returns from its investment in Mentor, where it holds 35 percent after merging selling Cape Grace Hotel (SA) and converting the $4,5 million held by Mentor for Cape Grace into equity. This investment has never performed as promised.

“The Cape Grace still dominates the website as a trophy Meikles business and the perception is that it is still controlled by Meikles. Nowhere does it state that Meikles does not own the Cape Grace,” said the sources adding that the chairman of Meikles is directly involved in the day to day operations of the Cape Grace and rightfully boasts about the performance of this entity at every opportunity.

“There is clearly a very close association between the Chairman and the directors of Mentor.”

The Zimbabwe Stock Exchange listed group also promised in August 2011 to furnish shareholders with details of the sale of Cape, which carried a transaction value of $30 million, to Mentor Holdings, but no further statements were made thereafter.

“It is critical for the integrity of the Board that the smoke and mirrors approach to shareholder disclosure on the subject of funds held by Gondor and Mentor is stopped immediately. Why would the Board hard sell the investment to shareholders in 2012 and why would shareholders have agreed, except by default and fait accomplice, if they had known that the 2014 disclosure was the intention all along?” said the concerned sources. – Wires