Joseph Kanyekanye speaks out
FORMER Allied Timbers Zimbabwe (ATZ) chief executive officer, Joseph Kanyekanye, has spoken out for the first time over circumstances that led to his departure from a company that he built from a concept paper into a multi-million dollar empire; as well as on allegations that he left the integrated business in bad shape.
ATZ officials claimed recently that the timber concern has been operating in the red for five years because of poor performance.
More recently, Kanyekanye was alleged to have prejudiced the taxman through non-remittance of taxes on his benefits and allowances.
The reports went further to speculate that the Zimbabwe Revenue Authority (ZIMRA) was taking steps to garnish his personal bank account in order to recover its dues.
This week, the businessman came out of his shell to respond to the claims. Kanyekanye said ATZ’s financial statements for the past decade do not corroborate claims that the business was under stress during his tenure.
Indeed, financial statements for the period 2002 to 2008 made available to this publication, which was prior to the adoption of the multi-currency regime, indicate that ATZ operated in the black for all those years, except in 2004, when it recorded a loss, which came about when a decision was made to impair the company’s assets.
And when the country transited to multi-currencies in February 2009, it maintained its profitable streak, notching reasonable profits consistently between 2009 and 2013.
In 2013, there was a slight dent on profitability traceable to reduced export earnings arising from the depreciating rand in the group’s main export markets coupled with a decision to close the group’s subsidiary in Botswana due to over extended credit from Chinese suppliers and sub-optimal pricing by fully integrated Chinese firms now in control of that country’s construction industry.
Among the key highlights, the group’s balance sheet grew by 55 percent between 2002 and 2013, with management restricting its gearing to less than five percent.
Arguably, ATZ was the most profitable and least geared timber company in Zimbabwe by the time he left it in 2014.
In 2006, the company not only made profits and paid dividends, but acquired a controlling 51 percent interest in EC Meikles, the largest producer of sawn gum timber in Zimbabwe.
This was a feat for a parastatal which, in 2001, had to start from zero as a concept paper following the unbundling of the Forestry Commission.
Under Kanyekanye, ATZ emerged as dominant force in the timber industry, with three divisions under its control namely northern timbers, southern timbers and Allied Timber Saligna.
Upon gaining traction in the industry, it paid off a debt overhang of US$7,5 million, including shareholder loans that were used to establish forests since 1954. It is also one of the few State-owned enterprises that operate without any recourse to the fiscus.
“This legacy is real and is a result of teamwork and an effective board then that had both the technical, financial and leadership skill-sets to run an integrated forestry company,” remarked Kanyekanye this week.
“Attempts to rewrite this narrative fly in the face of audited results. The assertions attributed to Itai Ndudzo of no profitability in the last five years are incorrect as these audited figures were presented to him on 24 August 2014,” he added.
Kanyekanye also disputed claims that he left the group when there were no export orders at ATZ.
Marketing reports, shown to this publication, indicate that ATZ had been active in Zambia and Botswana, operating healthy export order books in both countries.
It is the Botswana subsidiary, Altim Timbers (Botswana) (Pty) Limited that has been subject of much talk and flak owing to its poor performance, which eventually led to its liquidation.
In 2014, the board of the subsidiary was fired by government, paving way for investigations into allegations of conflict of interest, preferential treatment of customers and prejudice to ATZ.
Kanyekanye said it would be unfair to judge his 14-year-long service to the group on the basis of one experiment which didn’t go according to plan out of the many other successful projects which he successfully spearheaded since September 2001, when he joined ATZ.
He said the Botswana market has been bad for a lot of foreign operators, giving the example of PG, which also found the going tough in that market. In his case, forensic audits commissioned by the Comptroller and Auditor General cleared his team of any wrong doing.
“The preoccupation with Botswana operations is misplaced as the subsidiary was approved for closure by the previous board and shareholders two years before the current board took over,” he said.
“I would like to state that I welcome any forensic audit now and in the future. One cannot invent corruption which I know I never engaged in,” he said, in reference to an audit by KPMG, currently underway.
The audit by KPMG comes on the heels of two similar forensic reports commissioned by the Auditor and Comptroller General and the ATZ board. The first was by BDO Chartered Accountants while the other was done by Proctor Associates.
Both audits did not find any evidence to confirm the allegations that had been preferred against Kanyekanye.
Kanyekanye said the circumstances that led him to agreeing to exit from ATZ were to do with interference in the running of the business which he found unacceptable.
“The decision to stand firm and ensure that I live up to my fiduciary responsibilities as I maintained I did consistently over the years is the reason that some individuals have sought to divert attention from this by using a smokescreen of unproven allegations and innuendos,” he said.
He challenged the current ATZ board to publish its performance since they took over in August 2014, which is a legal requirement anyway.
“There is no doubt that ATZ’s profitability and performance has deteriorated from 2014 to now when the new board took over and imposed their strategies on the group which the CE0 was opposed to.
“It is common knowledge that since the CEO’s departure, workers have not been paid for five to seven months; fires have ravaged Gwendingwe and Chimanimani forests, while production levels are at their lowest ever, co-existing with consumption borrowing amidst disastrous loss of market share locally and outside Zimbabwe,” he said.
“The interests of ATZ’s shareholders will be better served if management could articulate tactical plans and strategies going into the future than launching repeated investigations on issues that had been investigated before with a preconceived objective of substantiating falsehoods,” he added.
Follow us on Twitter on @FingazLive and on Facebook – The Financial Gazette