Don’t blame penalties for bankruptcy, says expert

The corporate governance rot that pervades state-owned companies precipitates most of their downfalls, a governance expert has said, ignoring views that sanctions were to blame for their failures.

Zimbabwe has been under Western embargo since 2000, when advanced countries began raising red flags over human rights abuses.

The government blames the subsequent collapse of the economy on sanctions, but critics say bad policies and lack of consistency as well as corruption are to blame.

Angel Mukuvisi, who spoke to directors at an Institute of Directors of Zimbabwe (IoDZ) workshop in Kariba, said policy measures have closed markets to companies like Cold Storage Company (CSC) .

He said poor governance was also at the root of the unrest that haunted Ziscosteel and Air Zimbabwe.

“There is a company called Air Zimbabwe. In the 1980s, there were (a lot of airplanes),” Mukuvisi told the directors.

“(Before his collapse), you wouldn’t have eaten meat until you ate CSC meat.

“We have a whole big city in the center of Zimbabwe called Redcliff with various suburbs, all established on the basis of one company, Ziscosteel.”

He added: “What happened to these companies? Why did they collapse? They (the government) would talk about sanctions, but I’m not talking about sanctions.

“The story of the CSC’s collapse is fundamental.

“It was a matter of governance. Someone said ‘I’m going to leave the Commonwealth, keep your Britain and I’ll keep my Zimbabwe’.

“Then the response from the Commonwealth was ‘keep your beef’.”

Mukuvisi was referring to the late former President Robert Mugabe’s call in 2002 for England, a former colonial power, to leave Zimbabwe alone.

The country then left the Commonwealth in 2002 after the group of 54 nations decided to extend the sanctions regime.

“We talked about the 17 planes, most of them were there to pick beef and deliver it daily to the Commonwealth,” he said.

“I still remember in Bulawayo, we were phoned by CSC officials asking us to come and get some beef before it spoiled because Zimbabwe was out of the Commonwealth.

“It was the straw that broke the camel’s back for CSC.

“We talked about Ziscosteel, it had four blast furnaces and the government, through its governance, said maintaining these furnaces was a waste of money; you can skip a few years until, due to non-routine annual maintenance, the furnaces stop working.

“It was the end of Ziscosteel.

“You will find that all of these companies basically collapsed mainly because of bad governance.

“In terms of governance, when the tone at the top is not good, all is not well.

“It doesn’t matter how effective the controls you have.”

Some of the companies that collapsed due to poor corporate governance nationwide, according to Mukuvisi, included Bulawayo Merlin and Barbican Holdings, the company controlled by current finance minister Mthuli Ncube – which he has created before a series of bank failures broke the markets. between 2004 and 2008, causing the collapse of several institutions.

Zimbabwe has witnessed an increase in cases of corporate governance violations as evidenced by board disputes, corporate scandals, abuse of power and corruption, particularly in the sector audience.

Poor corporate governance has devastating consequences for Zimbabwe’s economic development, experts say.

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