ZNFU board rejects audit report

ZNFU board rejects audit report

ZNFU board resolution

The board of the Zambia National Farmers Union (ZNFU) has rejected the audit report purporting fraud and plunder of donor money at the union. Following days of consistent media bombardment of malicious details of alleged fraud and plunder of “donor resources” amounting to K34 million alleged to have been perpetrated by senior management, the ZNFU board held a Special meeting to consider the preliminary audit report commissioned by SIDA and carried out by Elasto Mambo of EMM Corporate Partners.

After a lengthy meeting, the Board found that the report has serious inconsistencies and lacked credibility, and that it didn’t give any substantiated evidence of fraud of both ZNFU and donor funds.

The ZNFU board resolved to completely set aside the “so called” Special Audit Report and to request the Zambia Institute of Chartered Accountants (ZICA) to appoint a high level panel of independent experts to review the terms of reference of the audit.

The panel would also interrogate the professional conduct of the auditor and the auditee as well as review the entire audit process and findings with a view to appointing an independent auditor to be agreed upon by all parties.

“The board further observed that the auditor had inadequate understanding of the ZNFU operations and its partnership arrangements with the donors under the Core Support,” states the Board resolution, which was read by ZNFU first vice president Richard Lisimba. “Therefore, the preliminary report does not give any substantiated evidence of fraud of both ZNFU and donor funds.”

Among those who attended the Special Board Meeting were ZNFU president Dr Evelyn Nguleka, First Vice President Richard Lisimba, Directors Andrew Moffat, Ashok Oza, Dave Gordon, Joseph Lungu, Doreen Mwanza as well as Trustee Guy Robinson.

As indicated earlier by sources close to the happenings, the audit report is a manifestation of ugly fights for ownership of about 4% shares in Zambia National Commercial Bank Plc.

When Rabobank was allowed to buy 51% shares in ZANACO, the Dutch firm offered close to 4% shares in the bank to farmers of Zambia through ZNFU. At that time, ZNFU did not have US$700,000 that was required to purchase the shares. ZNFU then approached Livestock Services Cooperative Society for a US$700,000 loan to purchase the shares.

In that respect, the four directors at Livestock Services, whose kingpin is Dick Muijs, a Dutch national, proposed a Special Purpose Vehicle (SPV) be established to protect the interests of Livestock Services. An SPV is a subsidiary company with an asset/liability structure and legal status that makes its obligations secure even if the parent company goes bankrupt.

This SPV that was created is called Lizara Investments Limited, and it would exist for as long as ZNFU owed money to Livestock Services. It would then be dissolved when full payments were made by ZNFU to Livestock Services.

ZNFU managed to liquidate the debt in record time of five years and then demanded that the SPV be subsequently dissolved so that the shares in ZANACO could be transferred to the rightful owners, the farmers of Zambia.

But the four directors insisted that, according to provisions they made, Lizara would not be dissolved and that they would remain directors of Lizara Investments until the age of 75. They even provided for an arms-length clause stating that ZNFU and Livestock Services would have nothing to do with the shares until then, and that even if one of them died, their estate would take over, which defeated the entire SPV arrangement.

Now the shares are worth US$9.1 million and the four directors are fighting to grab full control of the shares and enjoy dividends to the exclusion of the rightful owners, but the ZNFU management is not yielding to their demands, hence the fights.

It has been established that the idea of the audit report was to smear the ZNFU executive director and side-line management, which has been guiding the board on Lizara Investment issues.

Going forward, the ZNFU board has resolved to take the Lizara matter to the ZNFU Council, the supreme policy organ of the union, to make a determination. According to a notice circulated to Council members, ZNFU has proposed to hold the Council meeting on 15th February 2016. The Council meeting is expected to consider the audit report and Lizara issues.

It has since been established that among those who attend ZNFU board meetings, there are moles and rogue elements that have interest in Lizara, who are working in complicity with Lizara directors and feeding wrong information to donors. The resolution by the ZNFU board to refer the matter to ZICA, an independent body, appears to have unsettled those who want the ZNFU executive Director to be nailed. But it is important the audit process wins its credibility and legitimacy it deserves, so it would be prudent that all parties follow this transparent, fair and independent route.

ZNFU operations are partly funded by donors, SIDA, EU and the Finnish under the Core Support Programme, as well the union’s own resources. The money is thrown in a basket and programmes and budget are drawn together by all partners. This arrangement has worked well until Lizara issues cropped up.

The government is urged to take an interest in the Lizara shares and ensure that the shares benefit the Zambian people as intended by Rabobank rather than leaving them to be grabbed by some greedy elements.

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