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Senior Court Reporter
TOBACCO Industry Marketing Board chief executive officer Meanwell Gudu appeared in court yesterday on allegations of abusing tobacco inputs scheme which was meant to benefit small scale farmers.
Gugu appeared at the Harare Magistrates Court jointly charged with former TIMB CEO Evaristo Matibiri and Stewart Shanyika, a former Head Special Projects on criminal abuse of duty charges.
They were not asked to plead to the charges and were each released on $200 000 bail to September 28.
It is alleged that in 2018, the Reserve Bank of Zimbabwe introduced a Tobacco Financing facility which was aimed at supporting small scale tobacco farmers with farming inputs and working capital in a bid to improve tobacco productivity, ensure viable production of Flue Cured Virginia Tobacco of export quality and to increase the size of national crop.
On September 10, 2018, a Memorandum of Agreement (MOU) was signed between Reserve Bank of Zimbabwe (RBZ), as the provider of the funds for the facility, Agribank (now AFC Commercial Bank) as the agent of RBZ and TIMB, as the borrower.
TIMB was to procure inputs, provide funds for capital expenditure and was to disburse the inputs to small scale tobacco farmers.
RBZ released US$86 800 000 into Agribank for financing the facility (Tobacco Inputs Credit Scheme).
The Memorandum of Agreement provides that the RBZ would set up a facility to support the funding of small scale tobacco farmers.
It stipulates that the interest rate to be charged to the beneficiaries would be 10 percent per annum of which TIMB would get five percent, Agribank two percent while RBZ three percent.
The MoU provided that TIMB would utilise the facility for the purpose of on lending to small scale farmers in Zimbabwe for them to use for funding of working capital and capital expenditure with the view to enhance tobacco production.
Repayment period was 15 months for working capital and 36 months for repayment of borrowed capital.
After signing the MoU, RBZ released funds into AFC Commercial Bank in local currency and TIMB used the money to source foreign currency from players in the tobacco industry like Zimbabwe Leaf Tobacco, Chidziva and Curverid Tobacco.
TIMB initiated a tendering process for the supply and delivery of tobacco inputs.
Grow Agriculture won the tender for supplying Compound C and Potassium Nitrate and ZFC supplied Ammonium Nitrate.
For 2018/2019 and 2019/2020 farming seasons, TIMB identified potential and eligible small scale farmers for TICS funds and disbursed the inputs and funds to individual farmers.
Before the 2020/2021 farming season, the trio working in connivance allegedly went to enter into agreements with four contractors-Bigway Leaf Tobacco, Ethical Leaf Tobacco, Central Leaf Tobacco and Bindura Tobacco, which were allegedly hand-picked out of 27 contractors in the Tobacco Industry.
They were allegedly corruptly designed to support the four contractors with inputs from the RBZ funded scheme for on lending to their contracted tobacco growers thereby giving them a competitive advantage over the other contractors.
The four contractors would now get inputs for free to lend to their contracted farmers at an interest and buy the grown tobacco from the farmers as if they had funded the farmers themselves.
The contractors are not tobacco farmers, but companies licensed on the understanding that they have their own resources to fund tobacco farmers, who in turn, would sell the grown tobacco to them.
During the 2020/2021 tobacco farming season, inputs worth US$2 803 376 were disbursed to these four contractors with US$352 040 disbursed to Bigway Leaf Tobacco, US$651 864,42 disbursed to Ethical Leaf Tobacco, US$772 100,54 disbursed to Central Leaf Tobacco and US$1 027 371,04 disbursed to Bindura Tobacco for on lending to their contracted farmers.
It is said that not all invoices were submitted by contractors to TIMB for capturing, resulting in US$660 345,04 worth of inputs given to the contractors during the season remaining unaccounted.
To date the contractors still owe TIMB US$1 791 046,15 from the 2020/2021 season.
In addition, the agreements entered into by the trio and the four companies pegged interest at 14 percent per annum.
From the 2020/2021 season, Bindura Tobacco received inputs worth US$1 027 371,04, which it has not repaid back fully.
It also allegedly failed to account for inputs worth US$291 895,63.
Despite the company’s bad record, in 2021/2022 season, Gudu and Shanyika signed another MOU with Bindura Tobacco and disbursed inputs worth US$215 055,00.
The court heard that to this date, Bindura Tobacco also failed to account for US$96 640,97 worth of inputs and still owes TIMB US$102 314,03 from the second contract.
Investigations carried out established that for a company to be registered as a contractor it must demonstrate the capacity to be able to fund each of its contracted farmers a minimum of US$500 worth of inputs per half a hectare and US$1000 worth of inputs per hectare.
It is alleged that the trio gave the four companies free inputs meant for small scale farmers so that they could give them to their contracted farmers, who would sell the grown tobacco to them and repay the loan to the companies at an interest rate of 14 percent instead of 10 percent to TIMB according to conditions of the scheme as directed by RBZ.
Meanwell Gudu and Tsitsi Murahwa, the Head Human Capital and Administration also separately appeared in court on allegations of employing a person to Human Capital Partner- Talent and Organisational Development post without proper qualifications.
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