Three Cotton Company of Zimbabwe (COTTCO) bosses have been hauled before the court on fraud allegations after they reportedly sold lint worth over $2 000 000 under the pretext that they were selling it to a company that had been acquired through pre-financing as is the norm.

According to Statutory Instrument 150/2008 of the Exchange Control [Cotton] order, all lint must be acquired by a customer through pre-financing.

Pius Manamike, acting managing director, Brighton Chibhamu treasury, Lameck Machumi, sales and marketing officer allegedly misrepresented facts to individuals who were contracted to monitor the release of the said lint and ensure that it was released to the right customers.

The trio appeared before Harare Magistrate. Rumbidzai Mugwagwa and were released on bail on condition that they pay $500, report once a week and not interfere with State witnesses.

They were also ordered not to visit their offices as part of the bail conditions.

The matter was remanded to December 7.

Prosecuting, Sebastian Mutizirwa alleged that COTTCO was incorporated in 1994 as the successor organisation of the Cotton Marketing Board and it was subsequently privatised in 1997.

The company operated under this structure until 2015 when government allowed management through the executive team to run operations at COTTCO.

The executive team included Manamike as the acting managing director, Chibhamu as the head of finance, Maxmore Njanji as the head of operations and Benedict Mugumeni who is the complainant as the head of corporate services.

Allegations are that sometime in May 2017, Manamike and Chibhamu entered into a Memorandum of Agreement with Cotton Pro Company to supply lint totalling to 8 000 tonnes on a 90 day credit facility against the Statutory Instrument prerequisites.

The Memorandum Agreement was taken to Ecobank for registration whereupon the bank indicated that they only process documents for companies which had done the pre-financing hence the bank could not assist Cotton Pro Company in acquiring that credit facility with them, the court heard.

It is the State’s case that between September 8 and October 17 last year, the three accused persons knowing that they could not obtain cotton lint through Ecobank, misrepresented to Ecobank that they needed release orders for the release of lint to Devcote Louis Dreyfus and Mambo Commodities which had pre-financed the growing of the cotton.

Meanwhile, Ecobank had already deployed Sacotec Collateral Securities to all Cotton Depots throughout the country to ensure that cotton lint was released to approved merchants.

Upon receiving the release order, it is the State’s case that the three accused persons further misrepresented to Sacotec Collateral Securities staff based at Gokwe, Kadoma and Sanyati COTTCO depots that the cotton lint was destined was destined for export to Devcote Louis Dreyfus and Mambo Commodities which resulted in a total of 1 106 tonnes of cotton lint being fraudulently released on the instructions of the accused.

The matter came to light when an internal audit was carried out and a report was made leading to the arrest of the three.

The trio allegedly got away with $2 212 613 and of that amount, $707 249.31 was recovered.

M&T