Online Reporter
Ray Bande
Senior Reporter
A DAMNING forensic audit has exposed a staggering US$38 000 cash theft at Clare Fashions, a company owned by the Roman Catholic Diocese of Mutare.
At the centre of the scandal are Father James Nyanga, the former managing director, and Albert Mabhiza, the administrative assistant.
The Special Financial Review and Forensic Audit, conducted between January and April 2024, revealed a complex web of theft and deception.
The audit report, obtained by this newspaper, shows that Mabhiza demonstrated “clear criminal intention” to defraud the company, while Father Nyanga allegedly acted in complicity.
Despite the severity of the allegations, Father Nyanga has been reassigned within the diocese, raising questions about accountability.
Clare Fashions Pvt Ltd, a private company wholly owned by the Catholic Diocese of Mutare, generates revenue primarily from selling uniforms in Roman Catholic-owned schools.
The report reads: “(a). Prematurely dismissing the AA (administrative assistant), before the onset of investigations. (b). Gross negligence in accounting for both collections and safe draw-downs. While our procedures cannot conclusively pin-point the principal perpetrator nor quantify the loss attached to each party, we note a very strong causal relationship between the AA and the MD’s offices, enough to largely account for the $37 964 loss, above.”
The rot at Clare Fashions has also exposed financial irregularities plaguing some Roman Catholic Diocese of Mutare schools, including St Judes in Nyazura, Regina Coeli in Nyanga, Charles Lwanga in Chimanimani and Mweyamutsvene in Mutare rural.
At Charles Lwanga, the priest who was representing the Responsible Authority, Father Owold Saunyama was reportedly transferred to St Therese in Makoni following the unearthing of financial irregularities.
When contacted for comment, the Education Director of the Roman Catholic Diocese of Mutare, Father Philip Kembo said: “As a church, we have the principle of subsidiarity as a pillar in social justice. This means we utilise existing lower systems to handle matters before involving civil authorities, depending on the nature of the issue.
“In the event of the two mentioned schools (St Judes and Regina Coeli), the church had internal audits, and then handed over the matters to the Ministry of Primary and Secondary Education for external audits. These were done and as per the system, one is given time to respond and then a final report is issued. So, the diocese is not protecting anyone, but just following the laid down laws that have to be adhered to after audits. In the interest of justice and protection of public funds, the diocese will work hand-in-glove with the ministry to initiate legal procedures to recover the lost public funds.”
He added: “The church is not protecting anyone, my brother; but it is also important to listen even to the accused person in the interest of justice. We act and advise SDCs, and those involved to act accordingly and not abruptly, to avoid future lawsuits on defamation and others. In fact, as a church, we should act guided by sections 51 and 70 of the Constitution of Zimbabwe Amendment (No 20) Act 2013. In this case, let us allow the law to take its course rather than throw away the water and the child.”
In a statement, Clare Fashions stated: “The company categorically declines the invitation to validate or participate in the mission to tarnish and defame reputations, and will produce this statement should there be a lawsuit for defamation.”
The statement further read: “Clare Fashions Private Limited is a private business. Its business and internal reports are confidential. The company does not make the allegations, and or insinuations you or your sources make, and categorically denies any of the allegations or insinuations attributed to it.
“As a matter of principle, Clare Fashions refuses to confirm or participate in any allegations of wrongdoing particularly those allegedly made by your unnamed source. The company has processes for constant review and redress, and its business model is progressing well contrary to what your questions allege or insinuate. As standard practice, all audit findings are reviewed and necessary actions taken will remain strictly confidential.
“All matters of employees, past, present and future are confidential including an inquiry or disciplinary processes against any of its staff members or employees. The company declines to discuss or validate anyone’s personal opinion or unverified allegations, especially those that may damage the reputation of others. The company exists separately from the shareholders. Reference to or addressing questions to the shareholder is inappropriate, inconsistent with the law and appears to be motivated by malice. Neither the company nor shareholder initiated contact with you. This raises questions as to the identity and motives of the real complainant on whose behalf these damaging allegations are being made. What harm did they personally suffer? Since you won’t name them, you may bear legal responsibility for any harm resulting from publishing their defamatory allegations.”
Despite the spirited denial by Clare Fashions, the audit report exposed the financial control systems deficiency in the operations of the company.
“It is important to note that: (a). When cash is collected from schools, receipts are not immediately issued, but are later sent from the office. (b). At times funds are collected and receipts are not immediately issued, but are raised months later, usually at the debt collection.“(c). The office acquired a safe on May 9, 2024, whose use began on the 13th. The safe was secured in the MD’s office, so were cash boxes used before the acquisition of the safe (locked in the safe). (d).
A discovery by the FO (Finance Officer), of manipulated cash book entries (engineered by the Admin Assistant), which was reported to the MD around March 27, 2024, which coincided with the verbal termination of his [AA] contract by the MD.
“(e). Prior to that, the AA is reported to have lost one of the safe’s combination keys (which has not been located, to date). (f). Following his immediate termination, we gather that the AA was advised by the MD to avail himself for work till May 31, to address the raised queries and hand over his work.
“(g). We also established that the MD later hired a team of experts to force-open the safe, on May 13, and NO MONEY was found therein, including the last verified US$581 — which was in the cash box, and a disputed US$6 863 in the main safe. The latter was disputed by the MD, who argued that he never carried out cash counts, adding that this was the responsibility of the finance department.
“(h). The revised cash book revealed a closing balance of US$37 964 against a verified zero/nil balance upon opening of the safe. The progression of the above events thus resulted in Clare Fashion’s management advising the board, through a letter dated June 11, 2024,” reads part of the report.
Mabhiza did not avail himself for questioning by the audit team.
“In its scope of limitations, the audit report clearly notes that — we were not able to get hold of the former Administrative
Assistant (Albert Mabhiza) for interviews. Our efforts to get hold of him proved fruitless, as he continuously evaded us. Control Deficiency — The Administrative Assistant was performing incompatible functions, which required proper segregation. These are listed below: (a). AA was receipting cash as well as maintaining the Cash Book. (b).
AA was also the custodian of the cash boxes. (c). AA took part in the cash counts, and became armed with balancing figures. Owing to the control deficiencies identified above, the AA had the chance to (a). Misuse receipted funds: (b). Cover up by manipulating figures in the cash book, to match the cash count certificates’ balances and present a manual cash book balance,tallying with cash counts.
“Audit queries why the AA’s duties were allowed to overlap and continue unsegregated, to the extent of causing the reported financial prejudice of $30 000 to Clare Fashions. We note that the MD or other delegated personnel would collect cash and hand over to the AA (Mabhiza), after which a verification would be carried out, before a receipt is then raised. A porous loophole noted is that the one handing over the cash is not ultimately responsible for verifying the receipted amount, as the receipt is not handed-over to him/her, but retained by the AA. There is therefore no secondary control to verify whether — (a). the receipt is immediately issued, in the first place: (b). the receipt is issued at all: (c). The receipt amount corresponds with the cash book amount. (d). Cash is deposited intact.
“As a result of the above, the following could take place — (a). Non-issuance of a receipt, followed by pocketing of proceeds; (b). Under-casting of received funds in the cash book, and pocketing the difference. In both cases above, the cash count would still tally with the cash book balance, and the anomalies would take long to surface,” noted the audit report, further exposing haphazard receipting of funds.
“Funds are not necessarily always receipted as they are received, but sometimes months after, as shown above — (ii) Receipt sequence not consistent with dates; (iii) Contrary to the official procedure that funds are receipted, as they are received, receipt numbers 58 and 59, above tell a different story altogether. It is clear that though the receipts were issued consecutively, funds were received a month apart. This, therefore creates a window of opportunity for ‘unauthorised loans’. Receipts 1486 and has a much even bigger ‘loan repayment’ period.
“The MD is further advised to be more accountable by ensuring that all cash is receipted on time, and verify receipted amounts. In this regard, a register of cash receipts could be employed as a secondary control (Over and above the receipt book, ordinarily under the cashier’s custody).
“(6). The FO should monitor and ensure that all receipts are issued sequentially, following both date of receipt and book sequence. No receipts should be backdated; (7). Cash should be declared and receipted by the next working day, once collected. (8). The company should encourage schools to directly transfer funds into Clare Fashions’ bank account.
“(9). Cash counts should be religiously carried out and both the MD and FO should actively participate. Evidence of all such counts should then be filed and secured. (The former is the custodian of the safe and by extension, chief steward of the funds, while the latter presides over the company’s treasury function),” reads the report.
