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ZMDC executives financial scandal deepens

THE financial scandal rocking state-owned Zimbabwe Mining Development Corporation (ZMDC) has deepened amid further revelations that the company’s suspended top managers, including CEO and general manager Dominic Mubayiwa, invested millions of dollars in the money market while the corporation’s mines were being closed.

A confidential ZMDC report in possession of the Zimbabwe Independent show that Mubayiwa and his suspended colleagues are being investigated for investing at least US$9 million in the money market while they let ZMDC-owned mines shut down due to lack of capital.

As reported in the Independent last week, ZMDC is also is investigating the suspended Mubayiwa and three other company executives over the alleged siphoning and shady usage of US$40 million in gold and diamond proceeds.

“Each time they were asked about the US$12 million taken from gold proceeds to open a diamond mine, the US$30 million raised from diamond sales between October 2008 and April 2010 and the US$9 million invested in the money market while mines closed down, they just raised dust and failed to provide clear answers,” a senior ZMDC official told the Independent. “They didn’t provide clear explanations, they just raised bull dust.”

Documents show that Mubayiwa and his colleagues invested millions of dollars in fixed return securities in banks and asset management companies. The records show that between March and April, Mubayiwa and his team poured money into Premier Bank, Kingdom Bank, BancABC, Interfin, Fidelity Asset Management and Premier Asset Management.

“Proceeds from diamond sales were invested with financial institutions instead of being utilised to capacitate the gold mines,” the report says. “The primary function of the Zimbabwe Mining Development Corporation is to invest in the mining industry in Zimbabwe on behalf of the State and not to invest on the money market. Part III, Section 20 of the ZMDC Act clearly articulates the primary function of the corporation,” the official said.

The report, titled ZMDC — Forced leave: The General Manager Mr Dominic Mubayiwa and Three Others to Facilitate Investigations into Allegations of Misconduct, says “thorough investigations into the utilisation of the corporation’s funds are now being carried”.

According to the ZMDC report, the investments in the money market included:

  • US$403 176.44 at Fidelity Asset Management invested on 22/03/10 which had a maturity date of 16/08/10)
  • US$1 064 577.36 at Premier Asset Management put at 15/04/10, maturity date 30/07/10
  • US$1 064 577.36 at Premier Bank 16/04/10, maturity date 29/07/10
  • US$742 000 at Kingdom Bank invested 22/03/10, maturity date 29/07/10
  • US$1 800 00 at BancABC deposited on 20/04/10, maturity date 29/07/10
  • US$2 000 000 Fidelity Asset Management put on 28/04/10, maturity date 18/10/10 and,
  • US$2 055 000 at Interfin on 27/04/10, maturity date 28/12/10

Repeated efforts to contact Mubayiwa this week over the issue were unsuccessful.

However, sources said while it was not clear why the ZMDC management chose to invest in the money market while mines were closing down, usually heads of state enterprises do that to get the returns from such investments. Mines were also allowed to shut down so that they could later be sold for a song, the sources said.

While the suspended ZMDC officials invested funds in the money market, mines were shutting down. Sandawana mine has virtually closed due to lack of working capital.

“The management chose to invest on the money market instead of capacitating the corporation’s mines,” the report says. “Kamativi mine has proven huge tantalite and lithium deposits in its dumps. About US$3 million is required to exploit these deposits. Income generated from selling the minerals will then be used to fully operationalise Kamativi. However, management chose to invest in a bank instead of investing in the mines.”

ZMDC under Mubayiwa also failed to pay government serious dividends although it had money in the fixed return securities.

“The first ever dividend of US$1 million was in March 2010 and US$3 million dividend paid on July 26 2010 was only made after the board insisted to management that one of ZMDC’s responsibilities was to generate revenue for the fiscus,” the report notes.


Dumisani Muleya

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