TWO former Air Zimbabwe executives were beginning a combined 20 years in jail last night for “bringing the company to its knees” in one of Zimbabwe’s biggest corporate fraud scandals.
Air Zimbabwe lost nearly $10 million between 2009 and 2013 in a “well planned and well executed” aviation insurance fraud, which a magistrate said was “pre-planned” by its top executives who circumvented laid down procurement procedures.
Relatives of the former CEO, Peter Chikumba, 60, and the airline’s suspended company secretary Grace Pfumbidzayi, 50, wailed uncontrollably as a Harare magistrate handed down the sentences following their conviction for criminal abuse of office at the end of their high-profile trial on Thursday.
Pfumbidzayi’s sobbing sister cried out: “Maihweee kani Mwari imi madarireiko, ko vana vake ndonovaudza kutiiko? Ndovaudza kuti mai vavo vayendepiko? Kudakwashe ndomutiiko, ndarwadziwa kani [Oh mother, dear God why did you let this happen? What will I tell her children? Where do I say their mum went? What will I do with Kudakwashe? I’m hurt].”
Regional magistrate Fadzai Mthombeni sentenced Chikumba and Pfumbidzayi to 10 years each before conditionally suspending three years. They will each serve an effective seven years.
In jailing the duo yesterday, Mthombeni appeared to invite prosecutors to pursue fraud charges against the pair.
“What the two accused persons did cannot be tolerated and they must be punished accordingly,” she said. “There was a lot of prejudice caused to Air Zimbabwe (Pvt) Ltd by the actions of the two, although the State did not go deeper and dig out the fraud charge.”
She added: “Lots of companies are collapsing because of crimes committed by people holding high positions in the companies and abusing those positions.
“The courts must put a stop to that and punish the offenders to send a clear message to the society. These two convicted persons brought the airline to its knees.”
The two shamed executives’ lawyers, Admire Rubaya and Advocate Webster Chinamhora – instructed by Andrew Muvirimi – notified the court of their intention to approach the High Court for bail pending appeal against both conviction and sentence.
“Good luck,” was Mthomben’s reply.
Pfumbidzayi and Chikumba bled the national flag carrier of millions of dollars in a fraudulent aviation insurance deal after they appointed Navistar Insurance Brokers in opaque circumstances as the airline’s local broker.
The airline, which previously paid Marsh Insurance Brokers 125,000 euros (about $171,000) per annum in brokerage fees, suddenly found itself paying Navistar 300,000 euros (about $410,000) per quarter, translating to 1,2 million euros (about $1,6 million) annually — nearly 10 times what Marsh was charging.
The upward spike in premiums was not matched by any commensurate increase in Air Zimbabwe’s fleet size or expansion of its route network. In fact, some aircraft were grounded at the time.
An audit report by BCA Forensic Audit Services, which triggered the arrests, also implicated Pfumbidzayi’s uncle, the permanent secretary in the Ministry of Transport and Infrastructural Development Munesu Munodawafa, for “conflicted” interference in trying to expedite payments to Navistar.
Working with other senior managers, Pfumbidzayi actively pushed through “fraudulent” payments to Navistar. Once, when there was a delay of a $305,000 payment, Munodawafa wrote to Air Zimbabwe asking them to expedite the payment. The auditors concluded Munodawafa – a former principal director in the former Vice President Joice Mujuru’s office – was “conflicted”.
Delivering judgment on Thursday, magistrate Mthombeni said the crime was well planned and well executed.
After hearing the guilty verdict, Pfumbidzayi wept in court and told the magistrate: “Whatever I did, and no matter how misguided it was, I did it in good faith. The court found out that it amounted to a criminal conduct and for that I apologise for my actions.”
Joined by Chikumba, they pleaded for a non-custodial sentence, stating that they were even ready to perform community service.
In aggravation, prosecutor Daniel Muchimbiri urged the court to impose a custodial sentence, arguing that the pair had been convicted of a serious crime which attracted a prison term of up to 15 years.
The convictions have been welcomed by anti-corruption fighters who, however, remain sore that Navistar bosses beat fraud charges on a technicality after being tried before a different magistrate.
Harare magistrate Noel Mupeiwa acquitted Givemore Nderere, 46, Vukile Hlupo, 46, and Orten Mawire, 61, of fraud, stating: “The State missed it when it decided to separate accused one, which is Navistar, from the three accused persons. Navistar was put on judicial management, consequently all judicial proceedings against it were suspended. The State then decided to proceed with the trial of the trio.”
Prosecutors are studying the judgment with a view to launching an appeal.
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