Debt leaves Zim Cricket in dire straits

HARARE - Cricket in Zimbabwe is facing a bleak future and could continue to lose its best talent as the game’s governing body, Zimbabwe Cricket (ZC), faces up to the financial effects of years of mismanagement and the conflict of interests harboured by some of its key officials. This conflict appears to have hampered the debt-ridden organisation’s hopes of making a fresh start after the ICC refused to bail ZC out of its debt hole, leaving it with no option but to cut cricket operations back to the bone.

Contrary to reports that claimed ZC had turned down a loan offer from the ICC during the ICC’s April board meeting, Wisden India has learnt that a proposal put together by David Richardson, ICC’s chief executive, and Faisal Hasnain, the chief financial officer, was in fact rejected by the ICC’s Finance and Commercial Affairs Committee. The decision has left ZC, who had requested a loan of $18 million from the ICC, with a pile of debt and no obvious way forward given that the personal interests of some of its board members could also affect decisions on the game’s future.

The conflict issue stems from the fact that Peter Chingoka, the ZC chairman, Wilson Manase, the vice-chairman, and Ozias Bvute, the former managing director, all sit on the board of Metbank, the local financial institution from which ZC took out the majority of its loans at eye-watering interest rates. 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 bank. ZC borrowed the money from Metbank at rates exceeding 20 per cent in spite of the knowledge that the ICC could provide loans at international rates. This left ZC in a debt spiral that has forced it to cancel incoming tours and defer payment of players’ match fees, resulting in several player strikes over the past year and the disruption of the domestic season.

The conflict of interests has created issues in the past – most notably in December 2011 when ZC received a $6m loan from the ICC that was designed to retire some of their debt, and left it in a non-interest-bearing account with Metbank for almost five months. Metbank therefore benefited from its ability to loan the money out to third parties, while ZC suffered because its debt to the bank rose by around $300,000. The full details were reported in March this year, but some members of the ICC Finance and Commercial Affairs Committee had already been aware of this mismanagement for more than a year. When Richardson’s proposal was put before them in April, ZC’s prior record would inevitably have had a bearing on the committee’s decision to reject it.

Neither ZC nor the ICC were willing to discuss the committee’s rejection of the proposal, citing strict confidentiality.

Now the conflict of interests held by Chingoka, Manase and Bvute could affect decisions about the future. ZC has technically been insolvent since at least 2011, yet any decision to wind up the organisation and start anew could be influenced by individual interests. For starters, Manase and Bvute both handed over personal title deeds as surety when ZC began borrowing money, and so both men would stand to lose their properties if ZC failed to repay its loan to Metbank.

Equally pertinent is the fact that Metbank’s large exposure to ZC has left the financial institution vulnerable, something that Chingoka and Manase may be mindful of in any ZC decision-making. In early April, the bank confirmed a loss of $1.8m for 2013 with Manase admitting that non-performing loans were weighing down the bank’s overall performance. The announcement came a week after it was revealed in parliament that the National Social Security Authority had sold Metbank’s head office in order to retrieve a $25m loan that the bank had failed to repay.

The prospect of winding up ZC is also complicated by the fact that any new association formed to take its place as the body responsible for running cricket in Zimbabwe would be subject to approval by the Sports and Recreation Commission (SRC), a governmental body that oversees all sports associations in the country, and would then need to apply for re-entry into the ICC.

A ZC spokesperson said that a new business plan was being finalised for board consideration later this month, but that the organisation was “not aware of the possibility of insolvency”. A request for an interview with Wilfred Mukondiwa, the managing director, to discuss the current financial situation as well as plans for the future was deferred until after the ZC board meeting.

However, as a result of ZC’s debts and its failure to secure a new ICC loan, cricket in Zimbabwe is undoubtedly set to suffer. The number of franchises in the country will fall from five to four next summer after the Southern Rocks franchise was disbanded, while the number of professional cricketers employed by the remaining franchises is set to tumble and franchise heads have been told that first-class games are now likely to be played over three days instead of four. Player salaries are also expected to drop, which could lead more players to look for opportunities elsewhere. Last year Craig Ervine turned down a winter contract and the prospect of international cricket to play for Lisburn CC in Northern Ireland, while Kyle Jarvis left to take up a Kolpak deal with Lancashire.

Richardson had suggested some cost-cutting measures as a way for ZC to find its way out of financial penury. These were in part premised on the financial plan that Richardson and Hasnain had put together, in which they had renegotiated ZC’s loans with local banks and devised an ICC loan package that would have taken ZC back into a positive financial position by 2016. However, the bailout package needed approval from the ICC finance committee and the ICC board, and when it fell at the first hurdle, all of those negotiations and plans amounted to nothing. Now that their high-interest debts remain in place, ZC may require even more radical measures than those proposed by Richardson. It seems inevitable that there will be an adverse effect on the national team who, despite beating Pakistan in their last Test match, have generally struggled to compete on the international stage.

Despite the disturbing state of the game in Zimbabwe, the players have been excluded from any discussions over future plans. The Zimbabwe Professional Cricketers Association, which is set to be ratified as a full member of the Federation of International Cricketers’ Associations (FICA) at FICA’s annual general meeting in Australia later this month, has not been consulted over the potential changes to cricketing structures. Furthermore, its representative Eliah Zvimba told Wisden India that it took more than two months for ZC to accede to a meeting over a memorandum of understanding. The MOU includes, among other things, details of ZPCA funding, selection, contracts and remuneration for players, a timetable of regular meetings between ZC and ZPCA, and an agreed dispute resolution and grievance process.

The two parties finally met last week to discuss the document, with ZC asking for time for their lawyers to look over it – despite Zvimba having emailed it to ZC staff at the beginning of March. Asked to comment on the issue, a ZC spokesman said, “We do not understand Mr Zvimba’s assertion that we are stalling on the MOU. We have stressed our willingness to work with ZPCA. Our lawyers have advised us to do a thorough job regarding the MOU, and the need to incorporate existing policies and structures. This is not an overnight job.”

The one organisation that ZC is required to comply with is the SRC, an entity with wide-ranging powers. Zimbabwean sports associations are obliged to submit financial statements and reports at specific times for the SRC to review and provide feedback and, under the SRC Act, the commission has the power to suspend boards that do not comply. To date the SRC has preferred to work with ZC in a bid to achieve a positive outcome. At the time that the issue of ZC’s misuse of the ICC loan was being reported, Charles Nhemachena, SRC director general, said the SRC had been “constantly engaging ZC both at management and board levels with the aim of assisting the association to resolve the challenges it is currently facing.” – Wisden India

Comments (2)

FOR SALE HP- TONER CARTRIDGES 05A, 10A, 11A, 12A, 13A, 15A, 24A, 35A, 36A, 42A, 49A, 51A, 53A, 55A, 61A, 64A, 70A, 78A, 80A, 85A, 90A, AND MANYMORE 0772 678 311


Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.