By Court Reporter
THREE Cotton Company (Cottco) bosses were Friday hauled before the courts after they allegedly swindled the company out of over $2 million.
Pius Manamike (51), who is managing director; Brighton Chibhamu (37), head of finance) and Lameck Machumi (32) the sales and marketing officer, appeared before Harare magistrate Rumbidzai Mugwagwa facing fraud charges.
They were freed on $500 bail each.
As part of their bail conditions, they were ordered to surrender their passports and not to interfere with witnesses in this case or visit Cottco premises.
“You are also ordered not visit No: 1 Lyton Road until the case is finalised,” ruled the magistrate.
According to prosecutors, Cottco is run on a business model built around pre-financing facility entered into with off-shore cotton merchants through an Ecobank guarantee.
Court heard that 70% of the cotton lint is reserved for the off-shore markets and the remaining 30% for the local market.
Their foreign cotton lint buyers were Olam from Singapore, Louis Drefus from Switzerland, Devcote and Mambo Commodities from France.
According to prosecutors, sometime in May 2017, the three connived to defraud the company.
It is alleged Manamike and Chibhamu entered into a memorandum of agreement with Cottco, which was dated May 30 2017 and was to supply 8 000 tonnes on a 90 day credit facility.
The agreement was taken to Ecobank for registration, whereupon the bank indicated that they only process documents for companies which had done the pre-financing.
Based on that, the bank could not assist Cottco Pro Company in acquiring that credit facility with them.
Court further heard between September 8 2017 and October 17 the same year, the trio who knew that they could not obtain cotton lint through Ecobank, misrepresented to the bank that they needed to release orders of cotton lint to Devcote, Louis Dreyfus and Mambo Commodities which had pre-financed the growing of cotton.
“Meanwhile, Cottco Ecobank had contracted Socotec Collateral Securities and deployed them at all cotton depots in Zimbabwe to ensure that cotton lint was being released to approved merchants.
“Upon being given the release orders, the accused further misrepresented to Socotec Collateral Securities staff based at Gokwe, Kadoma, Sanyati Cottco depots that the cotton lint was destined for export to Devcote, Louis Dreyfus and Mambo Commodities,” said prosecutors.
This resulted in a total of 1 106 tonnes of cotton lint being fraudulently released on their instructions.
The offence came to light after an audit was carried out by the internal audit and risk department within Cottco.
Court heard the company suffered an actual prejudice of US$2, 212, 613.
Prosecuting, Sebastian Mutizirwa said only US$7 249 was recovered.
The trio will be back in court on December 7.