Breco's Fodya subsidiary suffers huge losses, espionage saga rages on

HARARE - Breco International (Breco)’s tobacco subsidiary has reportedly lost nearly 70 percent of its production to “thefts” — highlighting the extent of the damage caused by regional contraband dealers to the local tobacco industry.

Although John Bredenkamp's Fodya (Private) Limited (Fodya) has confirmed suffering “huge losses” due to a combination of factors, it has refused to attribute those losses to an alleged “espionage and hijacking” scandal that has gotten cigarette multinational BAT Zimbabwe (BAT) in a twirl.

“It has, however, been evident in both our production capacities and revenues that Fodya has experienced a visible drop in business over the last 12 months,” the company noted in a statement on Thursday.

“Whilst we continue to export to many African countries and beyond, the decline in volume can be attributed to many points, inclusive of supply chain disruptions,” it said, adding reports of its possible closure and threats to its going concern status were false.

With the industry bleeding R100 million-plus worth of tobacco products, Fodya is one of the local processors to have been badly hit by the unfolding saga along Cutrag, Adam Molai's Savanna Tobacco (Savanna) and Tradnet.

Crucially, Fodya says, though, that its “market intelligence” shows that “some activities have been undertaken by third parties… to disrupt our operations”.

“These reports, which have been in the media lately, are not unique to us. At this stage, we can only assume that it would be for anti-competitive reasons as to why these alleged third parties would have embarked on this action,” it said.

The company also stressed that it was looking for more information on these issues, with a view of seeking legal recourse and this would be done via collaborations with the relevant authorities.

As it is, Fodya has been scouting for new opportunities abroad to counter or negate those losses, officials indicated this week.

About two weeks ago, President Robert Mugabe stoked debate about this unraveling saga after fingering Lovemore Manatsa’s BAT for allegedly employing dirty tricks in outmanouvering competitors.

However, the Zanu PF leader’s involvement in the drama has raised eyebrows after information that he is related to Molai - a respected businessman.

On his part, Molai — who is married to Mugabe’s niece — says his relationship to the state president was inconsequential, as it does not deal with the issues at hand. Besides, he has never abused his relationship to Mugabe for commercial gain, he added.

“I believe the president is (leader)… of all Zimbabweans, not excluding his relations. We have had similar calls from other national leaders from across the political divide also wanting to find out more about reports they have read in the papers, prior to the president’s comment,” he told the Daily News this week.

“I believe it is immaterial for the victims of such acts, any self-respecting national leader would have commented on such a salient issue that had journalists encouraging the authorities to act. The entire cigarette industry has been severely affected by these espionage acts,” Molai added.

The Savanna boss’s company believes multi-nationals or any other monopolies “cannot be allowed to attempt to perpetuate their hegemony through bullying tactics and extra-legal processes”.

“Given such strong publicity on such an issue, would you have expected any leader attending a function where either BAT or any of the victims are involved, to ignore this?” the Savanna founder and executive chairperson queried.

While companies such as Fodya face a reported “closure over to these acts of sabotage”, Savanna has lost nearly R18 million to these robberies. As things stand, Zimbabwean authorities have launched a probe into the on-going espionage and smuggling saga, although there are logistical and foreign policy limitations.

On the other hand, BAT has vehemently denied involvement in the saga.

The Zimbabwe Stock Exchange-listed company says it does not export any cigarettes — as such its products are not exposed to the alleged risks of syndicate hijackings and blackmarket trading.

“BAT… strongly denies any involvement in industrial espionage and/or any illegal activity that may be linked to other local tobacco manufacturers,” it said in a statement this week.

“Whilst BAT is a subsidiary of a global multinational corporation, its cigarette operations and management control are confined to the manufacture, marketing and distribution of cigarettes for domestic consumption within the borders of Zimbabwe,” it said, adding that their operation only exports semi-processed tobacco leaf.

The Western-backed company supports open and fair competition by basing “its competitive strategies on legitimate market research”, and not illegal tactics.

For instance, the approval of BAT’s indigenisation plan not only shows the company’s compliance with the country’s laws, but also commitment to Zimbabwe, Manatsa said. - Eric Chiriga

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