The five accused persons were charged with criminal abuse of duty as public officers as defined in section 174 of the Criminal Law (Codification and Reform) Act [Chapter 9:23].
The allegations against them were that between 3-23 May 2017, at ZINARA, the five accused had unlawfully, and in common purpose with each other, in the exercise of their functions and contrary to their duties as public officers, engaged third party companies to source foreign currency on the informal market on behalf of ZINARA.
This was in their capacities as Finance Director, Finance Manager, Accountant, Regional Engineer North, and Director Administration and Human Resources of ZINARA.
The companies in question whom they were said to have sourced were Access Finance (Pvt) Ltd, Grayriver (Pvt) Ltd, and Caudless Trading (Pvt) Ltd.
The five accused were said to have made payments amounting to US$2,940,558=69 to these three companies as consideration towards the servicing of a loan owed by ZINARA to the Development Bank of Southern Africa (DBSA) without authority of ZINARA Board of Directors for the purpose of showing favour to these three companies.
The first accused, Simon Mudzingwa Taranhike is the Finance Director of ZINARA. The second accused, Shadreck Matengabadza is the Finance Manager. The third accused, Stephen Matute, is the Accountant. The fourth accused, Givemore Tendai Kufa, is the Regional Engineer North, whilst the fifth accused, Precious Murove, is the Director Administration and Human Resources of ZINARA.
Each pleaded not guilty to the charge.
Their core defence was that the payments were not made on behalf of ZINARA but on behalf of Infralink (Pvt) Ltd (Infralink), and that, as such, ZINARA lacked locus standi in the matter.
Their resultant standpoint was that they could not have abused their duties as public officers when they were transacting on behalf of the private company.
Furthermore, they argued, that, in view of the circumstances surrounding the payment of the monies in settlement of the loan, the ZINARA Board itself, through its lawyers, had since withdrawn charges.
Additionally, they asserted that the payments made were with the full knowledge of the Chief Executive Officer (CEO) of ZINARA at the time they were made, and that, in any event, they had acted with the full mandate of their principal - Infralink.
They also drew attention, in their defence, to the letter written to the National Prosecuting Authority by their lawyers on behalf of the ZINARA Board, prior to the commencement of the trial.
The letter highlighted that the Board was never appraised of the criminal charges against its officers. Furthermore, there was no Board resolution from ZINARA authorising anyone to institute a criminal report. It additionally highlighted that ZINARA and Infralink are, at law, two separate legal entities and that ZINARA had no locus standi.
The letter equally emphasised the context under which the payments had been made, and, in particular, the dire contractual consequences of failure to pay. It concluded that:
“The ZINARA Board fully accepts that it is lawfully bound to assist the National Prosecution Authority in combating corruption and criminal conduct and would not spare any effort or resource in supporting the prosecution of a deserving case. However, the ZINARA Board's impartial consideration of the facts at hand has prompted the need to alert the National Prosecuting Authority on the needless damage that may arise to the standing of ZINARA in circumstances where, in its view, no palpable wrong was done.”
The State took a different view.
It proceeded on the basis of being the dominus litis, and, that, the accused persons had a case to answer.
The Background
The Government of Zimbabwe, through the Ministry of Finance and the Ministry of Transport, obtained a loan from the Development Bank of Southern Africa (DBSA) in 2011 for the sum of US$206 million. This was to be used in rehabilitating the road from Plumtree to Mutare.
ZINARA, which is a statutory entity involved in road maintenance, was the Ministry of Transport's nominee.
A private company called Infralink (Pvt) Ltd was formed as a special purpose vehicle for implementing the agreement and for receipt and remittance of the funds for repayment purposes.
ZINARA is a 70% shareholder and Group Five, a private entity, is a 30% shareholder in Infralink.
The latter nominated NMB Bank as the Bank through which repayment of the loan was to be made.
For purposes of servicing the loan, ZINARA ring-fenced certain revenue streams and toll gate collections on the Plumtree-Mutare road. It would collect this money for onward transmission to Infralink. In turn, Infralink would service the loan with the Development Bank of Southern Africa (DBSA).
This worked until foreign currency became a challenge in Zimbabwe.
Although bond notes were deposited into the account, these only operate within Zimbabwe. ZINARA began to experience serious challenges in remitting foreign currency to Infralink. NMB which was Infralink's bank, was unable to assist in securing the scarce resource. The result was that Infralink soon plummeted into unstainable repayment arrears as the debt continued to mount and mount.
It was against this background that the five accused persons are said to have used illegal means to service the debt in that they had sought to use companies outside the country to use their own monies whilst being reimbursed here in Zimbabwe at a premium.
THE STATE EVIDENCE
Judith Kateera, who was the then Permanent Secretary in the Ministry of Finance and a Board member of ZINARA as well as chairperson of its Finance Committee, gave evidence.
According to her, at a meeting on 22 March 2017, the Finance Director, the first accused in this matter, had brought it to the Committee's attention that the loan obtained by ZINARA from the Development Bank of Southern Africa (DBSA) had accumulated arrears of US$14.5m and was attracting penalties of 200% over the 6% annual rate.
At a third Finance Committee meeting, held on 12 June 2017, the arrears had accumulated to US$21m.
The Finance Director reported, at that meeting, that, the Reserve Bank of Zimbabwe had only availed US$2.5m for purposes of repaying the arrears. Concerns had been raised that the debt was unsustainable and would threaten the very existence of ZINARA.
It was at this meeting that the first accused person had proposed that permission be granted to approach those on the market who could help extinguish the debt.
As chairperson of the Committee, her response had been that this would contravene the Money Laundering Act. The resolution, according to this witness, was that the Ministry of Transport, as the parent body, was to be approached for them to further engage the Ministry of Finance and the Reserve Bank of Zimbabwe. She had subsequently learnt of the unauthorised payment to Grayriver (Pvt) Ltd when the police approached her.
Albert Mugabe, who was then the chairperson of the ZINARA Board, told the court that the issue of the repayment of the loan was a regular issue on the ZINARA Board agenda.
He confirmed the challenges that NMB Bank had encountered in procuring US dollars despite the account being populated with bond notes. It was under these circumstances that the US dollars had been obtained outside the normal bank structures and used to service the runaway debt although the Board, which had oversight over polices, had not authorised the sourcing of foreign currency from third parties.
He agreed, in cross examination, that, making the payment did indeed relieve ZINARA of some of the penalties and that he would therefore not be surprised if the executive had sought ways to reduce the burden on ZINARA. He was not aware of any personal benefits that any of them had received.
Nancy Masiyiwa, the CEO of ZINARA, told the court that she had assumed office as head of ZINARA in September of 2016.
She described the core Executive team at ZINARA as consisting of herself, the director of finance, the human resources director, the technical director, and the corporate secretary. She is the one who chairs the Executive. The Executive reports to the Board of Directors. The CEO is the one who prepares the agenda for the Board and also presents the ZINARA report from the executive to the Board.
In terms of the actual day to day working structure between ZINARA and Infralink she highlighted that the chairperson of the ZINARA Board is also the chairperson of the Infralink Board and the corporate secretary for ZINARA is also the corporate secretary for Infralink. She further explained that the CEO of ZINARA is also the CEO of Infralink and that the financial director for ZINARA is also the same for Infralink. Group Five, Infralink's counterpart, has two representatives on the Infralink Board.
Amongst the accused persons, only the Finance Director sat on the Infralink Board.
She also highlighted, that, in reality, the Infralink Board rarely met as Infralink, and, if there were issues to be discussed, these were discussed by way of round robin.
Regarding the loan to the Development Bank of Southern Africa (DBSA) which was to be paid by Infralink through funds received from ZINARA, it would generally be discussed by the Executive within ZINARA where the Finance Director would give an update. It would also be discussed by the ZINARA Board.
According to her testimony, the Infralink Board rarely met as a Board. The overlapping Board members had gone to South Africa as Infralink Board members to discuss the restructuring of the loan sometime in March 2017.
She confirmed that, in June, the Finance Committee had indeed shot down the proposal to pursue foreign currency on the open market.
She told the court that the schedule of payments made by the accused was only brought to her attention when the serious fraud squad engaged her in June. Her evidence was that these payments should have been escalated to her office.
Whilst she admitted having asked the Finance Director, at the beginning of that year, to engage innovative thinking in raising funds to pay the debt, she had not said procedures should not be followed. She was unable to comment on whether the accused persons had received any benefits.
Patrick Takawira, the Treasure Director at FBC Bank, who was introduced to the second accused, Shadreck Matengabadza, by Mr Njanji from CBZ, which was ZINARA's bank, also gave his evidence. Its gist was that he, in turn, had introduced the two to Dr Hokonya, a business consultant who knew people who could pay in foreign currency outside the country and had capacity to assist.
Dr Hokonya, who had sourced the companies that were able to pay in rands confirmed that he had been introduced to the second accused, who, on behalf of ZINARA, had confirmed that they were looking for people who could effect payment on their behalf outside the country.
He had also received confirmation from the second accused that the Development Bank of Southern Africa (DBSA) in South Africa were agreeable to payments being made in rands in South Africa.
Solarwatts had been sourced to make the payment. It needed a receiving account in Zimbabwe to receive the payment from ZINARA. Solarwatts had indicated that the payment was to be made to a company known as Grayriver (Pvt) Ltd and had provided an account for it held at CBZ.
Solarwatts was supposed to pay an equivalent of US$250,000 to the Development Bank of Southern Africa (DBSA) on behalf of Infralink. This they had purportedly done in South Africa and ZINARA, in return, paid $300,000 into the Grayriver CBZ account here in Zimbabwe.
According to this witness, the other $50,000 was for commission from which he was to have received $25,000 as introduction fees. He told the court that he had paid his assistant, Chandler Moyo, whom he worked with, a sum of US$12,500 but had been unable to get his US$12,500 as the account had been subsequently frozen soon thereafter.
Chandler Moyo's evidence did not add much other than confirming that he did indeed assist Dr Hokonya in relaying information to and from the various players. He also revealed, that, after being paid his $12,500 the second accused had taken a loan of $2,500 from him which he had repaid.
Mr Shadreck Chezani, the investigation officer, was the final State witness.
He told the court that the matter had been anonymously reported to the police in May 2017. Interviews had thereafter been carried out at ZINARA and had established that something was not proper. A successful application to freeze the Grayriver account had been made. The investigation unearthed that four transactions had been made from the Grayriver account following the payment into the account of $300,000. Investigations had also established that the withdrawals had been fast and furious.
Besides the $12,500 paid to Chandler Moyo, a person purporting to be Honest Kugotsi had also made withdrawal. They had established that the particulars of the real Honest Kugotsi had been used and that the real person had nothing to do with the matter.
About $14,000 and another $60,000 had been used to purchase goods using his name.
Another fictitious person named Mckenzie had also withdrawn from the account. A fourth transaction involving $40,000 had also been made impersonating one of the directors of Grayriver (Pvt) Ltd, Magaisa Sobuza, who had in fact died in 2014.
He told the court that a total of $131,000 had been spirited away by the time the account was frozen and that the remainder of the amount remains frozen in the account.
Whilst a Munyaradzi Paraiwa had stepped forward to lay claim, the police had been unable to get hold of a person by that name at the address given.
Importantly, whilst a company called Grayriver (Pvt) Ltd does exist, the Investigating Officer explained that the account had initially been opened by one Collins Mupimbo who had been given certain documents by Mr Bruce Michael Blake from Grayriver in their business dealings to assist with opening an account for Grayriver at CBZ. The account had been opened. However, Mr Blake of Grayriver had discovered, some two weeks prior, that he could not use the account as he was being denied access.
The Investigating Officer also told the court that all the payments purportedly made on behalf of Infralink, through ZINARA, were still under investigation.
In particular, they were still investigating whether fraud and theft had been committed by any of the accused persons.
The rationale for bringing the matter to court when investigations were still in progress was said to be the fact that the focus of the complaint at this point was a separate one of criminal abuse of office in that the accused persons had acted negligently without authority.
He confirmed, in cross-examination, that the initial charges that they had filed were for theft and fraud but that they had since changed the charge to abuse of office since they realised, in the course of investigations, that the ZINARA Board had not authorised the payments....,.
