HOTEL group Meikles has been temporarily suspended from trading on the Zimbabwe Stock Exchange with effect from February 16 on allegations of overstating the debt it is owed by the Reserve Bank with the intention of manipulating its price on the stock market, the bourse said on Monday.
Meikles reported a $2,8 million loss for the half-year ended September 30 but said it was owed about $90 million by the central bank, a debt that was accrued as way back as 1998 from transactions related to the group’s dual listing on the Zimbabwe Stock Exchange and the London Stock Exchange.
“The temporary suspension was necessitated by the carrying amount of the asset placed with the Reserve Bank of Zimbabwe (“RBZ”) as disclosed in the Company’s audited financial statements for the year ended 31 March, 2014,” ZSE chief executive, Alban Chirume said in a statement.
“On 13 February 2015, the Securities and Exchange Commission of Zimbabwe received a written submission from the RBZ on the asset’s carrying amount, information which was availed to the ZSE. The ZSE believes that the information received is material and price-sensitive.
“On this basis, the ZSE deems it important to temporarily suspend trading whilst clarity is being sought in the interest of maintaining market integrity through promotion of equal dissemination of information.
“The ZSE has therefore, pursuant to Paragraph 1.4 in Section 1 of the ZSE Listings Requirements, temporarily suspended trading in Meikles Limited’s shares.”
Meikles group has said it was banking on the release of the money to fund its expansion programmes as well as compliance with indigenisation and empowerment laws.
While debating the RBZ Debt Assumption Bill on February 2, Bikita West legislator, Munyaradzi Kereke accused the group inflating figures with the intention of manipulating its price on the stock market.
Kereke, a former advisor to erstwhile central bank governor Gideon Gono who now sits on Parliament’s committee on finance and economic planning, said the RBZ debt to Meikles stood at $34,1 million as at December 2008 and could not have ballooned to $90 million, which Meikles published in its 2013 and 2014 results.
“Meikles published completely erroneous information (whose) implications are far much more in the financial system than just the numbers,” Kereke said at the parliamentary committee hearing.Advertisement
“They created a stock exchange bubble which is tantamount to fraud. When you artificially present falsehoods on the stock exchange you uplift the stock price or keep it where it is when in effect it was supposed to fall. The stock exchange has been tampered with.”
Stockbrokers said the issue was debated by the stock exchange last Friday, leading to the suspension on Monday, but queried why the authorities failed to deal with the matter earlier.
“Meikles have been publishing these inflated figures for a while now and the stock exchange has been aware of this, so why were they allowed to get away with publishing them (figures) and why are they only acting now?” queried a stockbroker.
The central bank owes the private sector and individuals over $1 billion, accumulated through its quasi-fiscal activities at the height of Zimbabwe’s hyperinflation period between 2006 and 2008.
Finance minister, Patrick Chinamasa and the central bank governor have said figures in the debt assumption bill were still being verified.