Former Hippo Valley Estates financial director, John Chibwe, who was relieved of his duties for alleged acts of misstatement of financial position, as previously reported by this publication, has sensationally accused Tongaat Huletts Limited (THL) of milking the entity dry.
THL is a Johannesburg Stock Exchange (JSE) listed parent company of Hippo Valley, which is listed on the Zimbabwe Stock Exchange.
In a representation to Hippo Valley’s minority shareholders — National Social Security Authority, a State entity, the Zimbabwe Revenue Authority and the Zimbabwe Stock Exchange, seen by Business Weekly, Chibwe accused THL of siphoning money out of the country through misrepresentation and falsification of documents.
The first major point of concern raised by Chibwe is that THL, obtained approval from the Reserve Bank of Zimbabwe Exchange Control to charge a 2 percent technical assistance fee. However, it ended up incorporating cost elements “completely unrelated to technical fees” to justify repatriation of exaggerated figures.
Chibwe said Hippo Valley was charged more than US$60 million between 2009 and 2019 in technical fees including unrelated cost elements such as directors’ fees; Pay-As-You-Earn, share based payments; mark-up on goods exported (by Tongaat) to Zimbabwe, legal fees and travel expenses to South Africa for local personnel among others.
“Added to the above, the cession agreement was also backdated by THL to allow for remittance of technical fees in prior years,” before the 2009 effective date. This, according to Chibwe, resulted in minority shareholders losing US$29 million in value.
He said the impact of the technical fees payments prejudiced minority shareholders through the reduction in profit and hence no dividends were paid since dollarisation in 2009 and before.
“Majority shareholder was getting a payment in lieu of a dividend, while the minority shareholders went for close to two decades without a dividend,” argued the former Hippo chief finance officer.
Chibwe also said the fraudulent misrepresentation to the RBZ Exchange Control of the true nature and make-up of the technical fees, amounts to “foreign currency externalisation”.
However, Hippo Valley company secretary Bigboy Shava, said the matter was receiving the attention of the board, management and the law enforcement agents and could not comment.
“The Zimbabwe Republic Police is currently busy with a criminal investigation and it is important that this be finalised without compromising the investigation,” he said.
However, Chibwe continued with his claims, alleging some of the underhand dealings were uncovered by Zimra and attracted heavy penalties and additional taxes, thus “further eroding minority shareholder returns”.
He did not deny that he was part of the key personnel at Hippo who could have raised the alarm, but argued everything was done at the behest of the majority shareholder who had unfettered powers through a board that did not meet principles of good corporate governance.