Zimbabwe: Tobacco Auction Broke

Source from:  The Herald 03/07/2011

CREDITORS of the Zimbabwe Tobacco Auction Centre, under provisional liquidation, are likely to lose out as the firm's liabilities far outweigh its assets. The High Court appointed Mr Oliver Masomera of Obram Trust Company as the provisional liquidator of Onclass Invest-ments, trading as Zitac and Thirdline Trading, the major shareholder of the collapsed tobacco auction floor. Indications are that the assets realised so far may not exceed US$300 000 while the claims are close to US$5 million. Apart from over US$2 million Zitac owes Boka Invesments for commissions and rent arrears, the firm owes Tobacco Industry and Marketing Board US$200 000 for levies and commissions from last season. The company also owes MTC about US$350 000. It is also understood that Zitac has a US$820 000 debt obligation to a number of banks, including the Zimbabwe Allied Baking Group and the Metropolitan Bank. The money owed to the banks was reportedly not secured. Zitac, which over the past 10 years operated the country's largest tobacco auction floor, had secured the funding from the banks on the understanding it would be paid off this season. The Reserve Bank and the Zimbabwe Revenue Authority also have US$500 000 and US$1 million claims on the company respectively. Zitac's problems seem to have been compounded by the firm's failure to secure a licence from the Tobacco Industry and Marketing Board for the current tobacco selling season. The licence was subsequently granted to Boka Tobacco Floors. Before the liquidation order by the High Court, the Registrar of Companies had warned he would dissolve the company, as it had not lodged its statutory returns. Zitac was once a vibrant tobacco merchant turning over US$54 million annually. The move by the TIMB to award a licence to Boka Investments for the current tobacco marketing season has seriously compromised Zitac's ability to pay off its debts. Trouble for the indigenous firm, largely controlled by Mr Wilson Nyabonda and Mr Caleb Dengu, started after its audit by JCM Chartered Accountants revealed gross financial irregularities. Central to the report was the breach of corporate governance rules, which indicated that "there is no separation of control and ownership" by the major shareholders. Onclass Investments, trading as Zitac, has allegedly failed to produce financial statements since 2004. The company has failed to engage auditors for a record five years. Matters came to a head when the Boka family sought to recover rent arrears for the period between 2004 and 2009 from Zitac. Enditem