CSC lost its market dominance when the European Union banned beef imports from Zimbabwe in 2001.
AN audit of a multi-million dollar pension fund administered by the cash-strapped beef processor, Cold Storage Company Limited (CSC), has exposed massive manipulation of financial resources, infuriating its 1 300 members who are now seeking recourse from the High Court. It has emerged from the audit that pension contributions by workers have not been remitted to the pension fund since 2001, throwing pensioners into poverty.
A series of pension fund transactions by the State-controlled beef company, which is battling to recover from a devastating crisis triggered by prolonged under-capitalisation, left US$4,6 million unaccounted for, the Financial Gazette’s Companies and Markets heard. The disappearance of US$4,6 million, which was in the form of Treasury Bills (TBs) issued by the central bank during the Zimbabwe dollar era, was unearthed by Beacon Actuarial.
The TBs, as workers now allege in papers before the High Court, were never transferred to Marsh Insurance Brokers, which had became the new manager of the CSC pension fund after it had been moved from Old Mutual Life Assurance Company in 2001. The TBs had not matured when CSC bosses transferred the pension fund account. Pension funds in the form of TBs were to be transferred to Marsh once they were liquidated on maturity.
Papers filed by workers with the High Court on August 1, 2014 argued that there was no evidence showing that the TBs were transmitted to Marsh after their maturity, and that CSC had not remitted contributions since 2001, even after deducting contributions from staff. These developments mean those retiring from CSC are not accessing their pensions at a time when an economic crisis, highlighted by liquidity constraints, has dealt a blow on consumers, the majority of them unemployed.
“This transfer saw the transfer of assets of the Cold Storage Company Limited Pension Fund to Marsh Insurance Brokers but not all assets were transferred because some of the assets were in the form of Treasury Bills which matured at a later date,” CSC workers argued in the High Court appeal filed by Rodgers Matsikidze of Matsikidze and Mucheche Legal Practitioners.
“However, upon maturity there is no proof as to what became of the Treasury Bills. In essence there was a deficit in the CSC Pension Fund at the time of the transfer in the sum of US$4,570 686…despite the fact that the defendant (CSC) was deducting monies for pension contributions from employees there was a huge deficit upon the transfer.”
The Commissioner of Insurance has directed CSC to stop deducting pension contributions after realising that nothing was being remitted. Matsikidze said massive damage had already been inflicted on the pension fund. “Technically, the workers have no pension,” he said. CSC, the first respondent, and CSC Pension Fund, the second respondent, were given until August 10, 2014 to file responses with the High Court. They had not approached the courts by deadline date.
“We are applying for a default judgment because CSC has not responded,” said the labour lawyer.
“As it stands the second defendant has limited funds to cater for all pensioners and it has been agreed (by) the board of trustees that no pension funds be paid to any pensioner until the issue is put to rest.”
The courts were also looking at reports that complex administrative factors, such as transferring and promoting CSC staff and giving them new employment numbers, had resulted in diminution of the affected workers’ pensions. It was not clear why the same workers were given new numbers. CSC chief executive officer, Ngoni Chinogaramombe’s mobile numbers were not reachable.
“The discrepancy prejudiced the plaintiffs (workers) in terms of actual covered pension contribution because they ended up with less number of years as compared to the actual period when they started contributing,” the High Court papers argued. CSC lost its market dominance when the European Union (EU) banned beef imports from Zimbabwe in 2001, denying the parastatal entry into the lucrative trading bloc.
The ban was triggered by the outbreak of foot-and-mouth disease in Zimbabwe, and has had far reaching implications on turnover and general operations. CSC had a 9 100 tonne export quota to the EU before the outbreak of foot-and-mouth, and tapped into a US$15 million revolving facility where payments were made in advance. The collapse of CSC has had far- reaching implications on Zimbabwe’s beef output and export earnings.
At US$45 million per annum, beef exports accounted for four percent of the country’s export earnings in the late 1990s. Official statistics indicate that beef output declined to 90 000 tonnes in 2008 from 95 000 tonnes in 2007 before rising to 93 000 tonnes in 2009.
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