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Zimbabwe Cricket mismanaged $6m ICC loan

Tristan Holme and Liam Brickhill

March 3, 2014

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Peter Chingoka, Ozias Bvute and Wilson Manase on the Metbank's board of directors page
Peter Chingoka, Ozias Bvute and Wilson Manase on the board of directors page on Metbank's website
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A protest over salaries by Zimbabwe's cricketers has again brought to the fore Zimbabwe Cricket's financial problems, which have continued despite at least US $9 million being loaned by the ICC to the board. ESPNcricinfo can reveal that one reason for the financial mess is that ZC's top leadership apparently used a $6 million loan from the ICC to enrich a bank on whose board they sit and ignored a key condition of the loan.

The issue also raises an apparent conflict of interest: ZC chairman Peter Chingoka, vice-chairman Wilson Manase and former managing director Ozias Bvute all sit on the board of Metbank, one of Zimbabwe's leading banks. While Chingoka is a non-executive director on the Metbank board, Manase is chairman of the board and Bvute is a major shareholder in the institution.

ZC said the main purpose for the ICC loan was to service the current facilities with local banks so that it could borrow again but the plan was upset by the status of the financial market. Chingoka also said it was "wrong and malicious" to allege loss of money when Metbank themselves were owed the most amount of money. The ICC, meanwhile, has declined to respond to specific questions.

Recent effects of that debt have been public knowledge: last September, ZC called off a proposed visit by Sri Lanka on financial grounds and the current domestic season was delayed by two months after players went on strike over unpaid wages. That matter raised its head again in negotiations over payments for the upcoming World Twenty20, which have been deadlocked but due to resume on March 3.

ESPNcricinfo has learnt that from 2009, ZC took out US dollar loans from Metbank at interest rates of more than 20% - and possibly as high as 24% - despite knowing the ICC could arrange loans at international interest rates far below those that Metbank was offering.

In December 2011, after learning of ZC's high-interest loans from Metbank, the ICC loaned the cricket board $6 million with one rider: the money should be used to immediately retire ZC's existing debt. Instead ZC deposited the money in a non-interest-bearing account with Metbank for more than five months. Metbank would have benefited from the interest accruing on their high-interest loan to ZC, as well as from having ZC's money in the non-interest-bearing account available to loan to third parties. ZC would, by the same deal, have lost out twice.

The ICC loan was received by ZC on December 14, 2011; on January 18, 2012, ZC repaid $75,000 to Premier Bank, and another $50,000 to the same institution on March 15. It then repaid $1,758,211 to Interfin Bank on April 23, 2012 and $829,167 to FBC Bank on May 3.

Bvute accused of alleged insurance fraud

  • Ozias Bvute officially stepped down as ZC's managing director in June 2012, but in a press release issued at the time, Peter Chingoka confirmed Bvute would remain involved in the organisation. "I am delighted to confirm that his expertise will not be lost entirely to the game as he has accepted our request to be on hand to offer advice and consultation, particularly with matters pertaining to the commercial opportunities in the game," said Chingoka.
  • In February 2013 Bvute was appointed chairman of the board of Air Zimbabwe, the country's state-owned national carrier. Under his leadership, the board appointed Metbank as Air Zimbabwe's principal banker. The airline has since become embroiled in a series of corruption scandals, leading Transport and Infrastructure Development minister Obert Mpofu to sack Bvute and the board three weeks ago, saying it had failed to observe good corporate governance. A week later Bvute was accused of complicity in an alleged multi-million dollar insurance fraud by a sacked Air Zimbabwe secretary during a court hearing in Harare.
  • Bvute did not respond to a written request for comment, despite promising to do so during a telephone conversation.

It was not until May 25 that $3,287,623 was repaid to Metbank. With that amount sitting in a non-interest-bearing account for five months and 11 days, Metbank could have earned in the region of $300,000 by loaning it out to third parties at an interest rate of 20%. ZC would have paid around the same amount in interest on its loan from Metbank, which was attracting interest of more than 20% over that time period. Metbank could therefore have benefited by more than $600,000 from the two effects.

The knock-on effect of those decisions was that ZC's debt spiral continued, to the extent that the board had to seek a second ICC loan last month, worth $3m, so that it could pay the money owed to its contracted players, umpires, scorers and other employees. It was also able to announce its squad for the World Twenty20 after receiving an extended deadline from the ICC, and domestic cricket resumed last weekend.

The ICC knew about these indiscretions since at least March 2013, but did not take any action against the individuals involved. However, its latest loan came with the condition that ZC move its principal accounts away from Metbank, which it has now done. Media reports suggest the ICC is preparing to pay off ZC's debts to Metbank; that money will then be deducted from ZC's annual benefits from the ICC, which could amount to $25m over the next three years.

The malaise in Zimbabwe Cricket's finances has been a feature of the last decade. When Bvute took over the organisation's reins following Vince Hogg's resignation in 2004, ZC was $10 million in the black. The 2012 audit of their accounts shows net liabilities of $14,267,152, and total liabilities of $19,081,421.

The exact cost of the financial mismanagement to ZC is difficult to calculate because it is unclear how much they owed Metbank when the $6m loan from the ICC was granted. Media reports in Zimbabwe estimated a further $15 million will be needed to erase the cricket board's bad debt to Metbank.

It is also not clear whether ZC explained the conflict of interests involving Chingoka, Manase and Bvute when that loan was agreed upon, although the ICC should have been aware of it since the trio are listed as directors on the Metbank website and the facts are also stated in ZC's annual audits. The ICC would not have known that Bvute was a major shareholder unless it had been informed as such by ZC.

Asked to explain the reason for the delay in paying off the loan, Chingoka told ESPNcricinfo: "Zimbabwe Cricket postponed utilisation of the ICC loan proceeds. Given the unstable financial market situation then, there was a risk that utilisation of the ICC loan proceeds was likely to result in ZC's bankers failing to finance the renewed bank facilities. Zimbabwe Cricket's main purpose for the loan was to service the current facilities with local banks so that ZC could borrow again. However, as a result of the status of the financial market then, such an initiative was no longer achievable. Meanwhile, temporary extension for the other bank facilities had been sought on the understanding that payment for the facilities will be done once the liquidity situation improved. So it is wrong and malicious to allege loss of money when Metropolitan Bank themselves were owed the most amount of money."

Chingoka did not, however, answer questions on why ZC borrowed money from Metbank when it could have borrowed from the ICC at lower interest rates, or why ZC did not deposit the ICC loan into an interest-bearing account.

He did answer a question on the potential conflict of interest involving its top officials. "Non-executive directors (including Chingoka and Manase) at ZC guide the organisation's strategy and policy whilst operational issues e.g. relationships with banks, are for the management of the organisation." Bvute was managing director of ZC until June 2012.

Asked about the misuse of the ICC loan, an ICC spokesman said only that the organisation does not comment on financial matters relating to its Full Members. A further request for comment on the latest $3m loan, and the prospect of ZC being bailed out of its debt, received the same response.

Were the ICC to pay off the debt to Metbank, it would likely be helping to bail out the bank as well as the cricket board. Metbank has faced mounting liquidity issues over the past five months, which came to a head towards the end of last year when many customers were unable to access the money in their accounts. According to one newspaper report in January, the Reserve Bank of Zimbabwe has been monitoring Metbank under the Troubled and Insolvent Bank policy since November 2013. The report said that ZC's outstanding debt to Metbank was $15m, and that this large exposure was a prime reason for the Reserve Bank's concern over Metbank.

Liam Brickhill is a freelance journalist based in Cape Town. Tristan Holme is a freelance cricket journalist who divides his time between South Africa and Zimbabwe.

© ESPN Sports Media Ltd.

Posted by grahaam on (March 5, 2014, 17:45 GMT)

I beleive Mugabe is the patron for ZC but was appointed a long time ago when things were different and he was encouraging a continuation of colonial pastimes in Zimbabwe ..citing the need to keep certain skills healthy in Zimbabwe notably farming...this did not last long.. And nor did his love of cricket!

Posted by stormy16 on (March 5, 2014, 17:00 GMT)

Another pathetic administration bungle while the players and game stands aside and no one is accountable. Its just plain unacceptable the administrators (not just Zim) are using cricket for to enrich themselves while the game and players are neglected. Yes easy to criticize and what is the solution especially in a place like Zim? All I can say is someone needs to stand up for the players and the game and Zim has some quality players who would challenge a few teams - if they only got a fair go to compete.

Posted by Nutcutlet on (March 4, 2014, 19:39 GMT)

Purportedly, the President of Zimbabwe, Robert Mugabwe, is a cricket enthusiast. Unfortunately,thist seems to mean nothing when it comes to looking after the national side. There again, there are other issues that take priority when you are in charge of a country that ranks 157/177 on the Corruption Index of the much respected Transparency International organisation. (I'd like to think that this will see the light of day, because it is a balanced and constructive point.) I grieve for the cricketers of Zimbabwe; they have been ill-served by their masters.

Posted by   on (March 4, 2014, 16:14 GMT)

hope you learnt you lesson ICC !

Posted by kc69 on (March 3, 2014, 22:33 GMT)

What ICC can do is 2 things.

1.Dissolve ZC board.Ask plyers to play under ICC flag (as in olympics).Until the goverment of zim intervenes and forms a new board and takes legal action against accused.

2.setup a panel to monitor fundings given by ICC in past and future for all countries.

3.Recommend such players to be included in various leagues such as IPL, BBL, Ram slam etc.With big 3 boards taking responsibility of them.

Else foget about promoting cricket it will soon be extinct.

Posted by SCC08 on (March 3, 2014, 20:39 GMT)

@ZCFOutkast - let's be honest. There's not much leadership/ management in any Zimbabwe department. Only a few interested in self enrichment to the highest degree while the natural riches get squandered, so these rich get richer. Africa in general really. Problem starts right at the top. Don't disagree unless you have lived in Africa. #expat

Posted by grahaam on (March 3, 2014, 19:35 GMT)

Quite simply we all knew this was going on , on the basis that there was a good balance available in 2004, why was the administration changed? There was a good domestic structure , international fixtures and envied academy, ..and most of all a healthy bank balance..Vince Hogg resigned under duress and the rest is History...Vince was the last cricket man until that sad day in 2004 ZCU/ZC or whatever you want to call it, never had financial problems, only the arrival of non cricket people changed that . The whole purpose and mission changed the very moment some arrived, as one of the biggest earners of foreign currency in Zim at that time it was obvious that this would attract attention.

Posted by   on (March 3, 2014, 19:24 GMT)

What a Shame, Seriously What a shame for Cricket. Zimbabwe was the best rising team in the beginning of the century producing players like Flower Bros, Heath Streak etc. It could have left behind WI and NZ at least if they kept on improving but money and politics have ruined everything for them. And now Big3 involving money and politics in ICC, I see no good future of world cricket.

Posted by   on (March 3, 2014, 18:42 GMT)

@ ZCFOutkast ....Nobody wants to help them , but happy to criticize.

Posted by sysubrceq0 on (March 3, 2014, 18:39 GMT)

@Ahmed Habib - One bad season does not indicate the capability of the team, IND is best sub-continent team outside sub-continent from last 15 years. Won more trophies and series outside compare to PAK & SL. Pak with all bowling power did not won a single game in CT13, always whitewashed in AUS did not draw a single game and same with SL, never won a series in ENG. here and there won odd matches in ENG, WI, NZ & SA. Indian team is in transistion phase wait till those guys get some experience.

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