Home » Business » CMED Prejudiced of U.S.$7 Million

CMED Pvt Ltd has suffered a potential prejudice of about $7 million and not $3 million as earlier reported, in a botched fuel deal in which it contracted First Oil that eventually failed to supply the product, legislators said yesterday.This comes as CMED finance executive Mr Lysius Kunaka, yesterday distanced himself from the deal saying he had queried the prudence of how the deal was structured after two senior company executives signed it in his absence.

This was revealed after Mr Kunaka and CMED workers’ committee appeared separately before a parliamentary portfolio committee on Transport and Infrastructural Development chaired by Epworth Member of Parliament, Cde Amos Midzi (Zanu-PF).

Chegutu West MP, Cde Dexter Nduna (Zanu-PF) said CMED borrowed $3million from ZB Bank to pay First Oil but the money went under, and it had to look for another $3million to pay off the loan and the total amount would translate to $7million when the 11 percent interest rate was factored.

This was after Mr Kunaka said CMED managing director, Mr Davison Mhaka and fuel manager, Mr Benjamin Manjengwa signed the payment of the fuel purchase when he had taken days off after falling ill.

But Cde Midzi cautioned the committee that they had not concluded that there was an actual prejudice of $7million as what had been revealed was a loss of $3million.

“We need to caution ourselves as a committee. We have not concluded as a committee that there was a prejudice of $7million,” said Cde Midzi.

Earlier on, workers’ committee member, Mr Eddie Bangwayi had told the committee that CMED lost $7million considering that it borrowed $3 million from ZB that went under, and it subsequently looked for the same amount to repay the loan together with interest.

“When you came back at work you said you queried the MD, that ‘you have gone ahead and purchased irrespective of the glaring fraud, red flashes that are there according to financial norms. That you have gone ahead and signed away $3 million which will turn into $7 million without due care and abundant recklessness’.

“I want that to be put on record that you queried when there was an opportunity to reverse the transaction. This was a grand scheme of fraud covered by paperwork but due diligence was not there,” said Cde Nduna.

Cde Midzi asked Mr Kunaka if he was satisfied about the explanation given by Mr Mhaka, and if not what action he took to protect his name and integrity as an accountant.

“I was not satisfied but the money had already gone. I suppose all of you have worked with bosses. There have their own style of management. It’s very difficult to keep on querying your boss (saying) why have you done this,” said Mr Kunaka. Highfield East MP, Mr Eric Murai (MDC-T) concurred that the total prejudice amounted to $7million.

Warren Park MP, Mr Elias Mudzuri (MDC-T) asked why CMED continued making payments to First Oil eight days from first payment when no fuel had been delivered by then.

Mr Kunaka said due diligence was made when Petro Trade and National Oil Infrastructure Company of Zimbabwe confirmed in writing that First Oil indeed had fuel in its depots at Msasa.

He said First Oil was one of the listed companies by the State Procurement Board to supply fuel and it was not true that it had no valid import licence.

But Mr Mudzuri disagreed saying the agreement CMED had with First Oil did not provide for delegated assignments of obligations to justify claims that Petro Trade and Noic confirmed that there was fuel.

Source : The Herald

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