Theft of money from the CSC pension fund
TINASHE MAKICHI/SYDNEY KAWADZA
THE Cold Storage Company (CSC) pension fund has been rocked by a scandal involving former top executives, who are believed to be involved in diverting millions of embezzled US dollars in dividends to a private account.
Documents gleaned by the Zimbabwe Independent reveal how dividends from Old Mutual’s investments were understated or funneled to a separate account that does not belong to the pension fund.
Dividends were paid into an account named Omlac EB Operations, which is unrelated to the pension. Former CSC employees say the funds have been frozen for years.
Omlac EB Operations administrators could not be identified during Independent investigation.
The money was supposed to be transferred to the current CSC pension fund administrator, Marsh Employee Benefits – now known as BrightZim, but that didn’t happen.
This therefore exposed 832 pension fund members to the risk of losing their contributions.
“The fund’s dividends from Old Mutual’s investments went into a separate account that does not belong to the fund. Monday afternoon (next week) I should be able to get to the bottom of it. Dividends were paid to an account named Omlac EB Operations,” said a source well placed for the developments.
Former CSC employees told the Independent that funds belonging to pension funds were either missing from the company’s financial statements or understated.
Information gathered reveals that the government had agreed with the investor, Boustead Beef Zimbabwe, to take over the debt from the pension fund, but later discovered that the debt was understated by more than US$18 million.
Close observation of former employees also revealed that there had been an undervaluation of shares and dividends, citing that the fund had been transferred from Old Mutual as a defined benefit to Marsh Employee Benefits (now BrightZim) in 2001.
The shares were worth ZW$317,503,528 (US$2.1 million) and Marsh confirmed receipt according to documents provided to the Independent.
However, the account’s disputed figures stand at 33 million Zimbabwean dollars (US$220,000), although the former manager and administrator maintained that they had not received data on the transfer, according to employees. .
This contrasts with membership data holdings published by Old Mutual in July 2016.
The investigation also revealed that the members of the pension fund committee had been advised by the Insurance and Pensions Commission (IPEC) to ensure that the assets were in place before the fund was dissolved.
During the asset audit, it was discovered that a total of 218,312 demutualization shares were still intact and the pension fund had received dividend shares from Nedbank (9,891) and Quilttre (72,770) , but the dividend was not reflected in the fund’s financial statements.
These shares are also not reflected in CSC’s financials, while Nedbank’s shares were reportedly understated to reflect 276 while Quilttre’s were reduced to 8,798.
A dividend of $456,737.22 from Old Mutual shares from 2010 to date is still blocked in the Omlac EB Operations account. The same amount does not appear in the CSC or in the financial statements of the pension fund.
Employees also accuse former executives of having misled the government.
The employees have since written to the Office of the Auditor General (AG) requesting a forensic audit. Ipec ordered the pension fund committee to dissolve it.
Ipec’s Director of Pensions Supervision, Cuthbert Munjoma, confirmed this development.
“No contributions have been made since 2001 as the sponsoring employer, CSC Private Limited, was no longer operational. This led to the accumulation of pension contribution arrears and the fund was finally released in 2012 which made the existence of the fund untenable,” Munjoma said.
“In addition, membership data issues led to the suspension of benefit payments in 2012.”
According to a plan of arrangement adopted by the High Court for CSC, the arrears of contributions, which amounted to $4.5 million, were to be taken over by the new investor, who would carry out the liquidation over a period of 10 years. .
Munjoma added that this did not materialize as the investor, Boustead Beef, indicated that he was still in the process of reviving the business.
“Under these circumstances, the commission had to order the dissolution of the fund, so that members get at least some value from the existing assets,” he said.
Boustead Beef Zimbabwe, also raised the red flag on some of the anomalies at CSC.
The government presented a corporate bailout for CSC by appointing BDO Zimbabwe whose mandate was to investigate and advise on the pension fund.
BDO Zimbabwe was ultimately disqualified at a March 2021 creditors’ meeting in Bulawayo over conflict of interest allegations.
Vonani Majoko won the tender to be the administrator and is currently collecting rent from CSC tenants.
His phone went unanswered yesterday.
Approached for comment, former CSC Director General Ngoni Chinogaramombe referred all questions to CSC Client Relations Manager (Benefits Division) Sheeba Takabinga.
Takabinga referred the questions to BrightZim’s business development manager, Alackias Gavure, who said curtly, “We do not provide third-party feedback or responses on customer issues.”