Moxon’s Meikles suspended from ZSE over alleged fraud

The Zimbabwe Stock Exchange on Monday temporarily suspended hotel and retail group, Meikles Limited, from the bourse for allegedly inflating a debt it was owed by the Reserve Bank of Zimbabwe (RBZ).

The RBZ debt to Meikles accrued from 1998 when government used most of the money that was due to the group for pressing national needs.

Prior to that, Meikles had applied to use an offshore tranche of $40 million to fund an external project, but the RBZ turned it down and instead directed the company to transfer the money back to Zimbabwe.

Meikles transferred more than $42 million and received close to $22 million over subsequent years, using the money to acquire a vehicle called Cape Grace in South Africa.

The remainder was used to fund government activities and programmes and Meikles did not receive anything until June 11 2014 when RBZ paid back $49.6 million to Meikles.

“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,” added the statement.

Meikles, through its chairman, John Moxon, claimed that RBZ owed it some $90 million.

This was recently queried by Munyaradzi Kereke, an MP and former advisor to Gideon Gono, who left his post as RBZ governor in 2013.

The alleged overstatement of the debt was seen as a misrepresentation of the Meikles financial position on the bourse and Kereke alleged that it was meant to manipulate stock trading.

Kereke, who sits in the finance and economic planning parliamentary committee, said the RBZ debt to Meikles stood at $34,1 million as at December 2008 and could not have gone up 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.

“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,” he added.

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Post published in: Business