Cross urges SEC to investigate Meikles

Respected economist and businessman Eddie Cross, a shareholder in the Meikles Group of Companies, has written to the Securities and Exchange Commission (SEC), detailing controversial developments at the hospitality and retail outfit over the years.

John Moxon: accused of criminal abuse of office.
John Moxon: accused of criminal abuse of office.

Cross alleges that the group is planning to pull most of its investments out of Zimbabwe. John Moxon, the group’s chair, has in the past publicly accused Cross, who is also MDC-T MP for Bulawayo South, of leaking information about Meikles.

In the letter, Cross expressed concern at the manner in which the directors of Meikles were managing the company affairs. He said he had received advice from several senior government officials over the “criminal abuse of the control that the Directors of the Company have been guilty of in recent years.”

Heavy funding

This could signal a fallout between Moxon and other directors on one hand and the Zanu (PF) government on the other, despite the chairman reportedly heavily funding Zanu (PF) campaigns in the past.

“In my view they (directors) have damaged the company, externalised assets and put at risk the employment and welfare of not only 7,000 workers but the interests of many hundreds of investors,” wrote Cross to the chairman of SEC.

He said as a minority shareholder he had not paid particular attention to the affairs of the group until Meikles approached him to help recover a debt from the Reserve Bank of Zimbabwe.

Meikles was recently temporarily suspended from trading on the Zimbabwe Stock Exchange for allegedly inflating the debt, which Moxon fixed at some $90 million even though government insisted it was in the region of $56 million.

Delisting

“It is rumoured in Harare that the directors are considering delisting and taking both the hotels in the company that remain in the Group – Meikles Hotel in Harare and the Victoria Falls Hotel – as well as the Tanganda Tea Company into Mentor Africa Limited.

“This would leave only TM Supermarkets, now substantially owned by Pick and Pay of South Africa, as assets in the Meikles Group in Zimbabwe,” alleged Cross.

Mentor is a subsidiary of Meikles that has bases in South Africa and the British Virgin Islands, a tax haven and is reported to owe the mother company millions of dollars that it has failed to return over a long time.

“Local and international shareholders are being prejudiced by these manoeuvers which are not in their interests and in addition, threaten the continued viability of the company in Zimbabwe as a going concern. If allowed to proceed it is doubtful that non-family shareholders in the Group would realize 10 per cent of the value of their shares,” said Cross.

He accused unnamed RBZ senior staff of colluding with Moxon and other directors in all the controversial transactions Meikles has entered which he said “can only be explained by a corrupt relationship.”

Sorry story

“This sorry story culminated in the attempt by the Group, with the collusion of Reserve Bank staff, to inflate the debt owed to the Group by the Bank by over $50 million dollars in 2013/14 financial year. This action could have prejudiced the State to the extent of at least $35 million,” said Cross.

He called on SEC to undertake a full investigation of the transaction and make the results public.

Cross also accused Moxon of opaque investments in the Cape Town based Coolbay Investments and Rebhold Limited, also domiciled in South Africa where it was listed on that country’s bourse.

“At the time that the Meikles Group invested in Rebhold Limited no disclosure was made to shareholders or even senior management and directors of Meikles that Coolbay, a family owned company, was in fact the largest single investor in Rebhold. Under the rules of basic good governance, this relationship should have been disclosed,” he said.

In 2012, the entire Meikles family holdings in the Meikles Africa Limited Group were transferred to Gondor Capital Limited, located in the British Virgin Islands (BVI), making it a foreign-owned company without Zimbabwean exchange control approval.

No idea

In 2012 the Meikles Group in Zimbabwe announced that they were selling their entire interests in the Cape Grace Hotel to Mentor Africa Limited at a valuation of $20,8 million together with a sum of $6,8 million in cash, in return for a 35 per cent stake in the company.

Shareholders still have no idea what other assets or activities might be held by Mentor while no effort has been made to determine these by the auditors.

“In the 2013 and 2014 company accounts, the investment in Mentor Africa is listed at cost without any attempt to consolidate its turnover or profits into the accounts of the Meikles Group. For some reason the Meikles auditors have accepted this state of affairs.

“To me, these complex manoeuvers can mean only one thing, that the Directors of Meikles Limited are engaged in a sophisticated exercise to move their interests off-shore to a recognised international tax haven and to take out of the Zimbabwe companies balance sheet, substantial assets in the form of both cash balances and capital assets,” he added.

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