Financially-crippled agricultural development and Marketing Corporation’s (Admarc) acting chief executive officer (CEO) Felix Jumbe has protested his suspension by the board alongside two directors to facilitate investigations, saying the justification is flimsy.
In a letter dated November 10 2020 reference number 112/board/staff communication to staff at the State produce trader,
Admarc board chairperson Alexander Kusamba Dzonzi said the suspension of Jumbe, director finance Harold Mwala and director of operations Garnet Gwembere was until further notice.
And in a written response to The Nation questionnaire, Dzonzi justified the suspensions, saying the Admarc board resolved to suspend the trio to pave the way for investigations to be conducted with transparency, professionalism and humility.
He said: “The new board resolved to institute this type of audit to quickly establish the quantifiable position of Admarc in areas of payroll, business model and loan procurement to ensure that the new board understands the exact state
of the Admarc they have been asked to run and its current strategic positioning.” of the Admarc they have been
The board has since appointed Dhlelisile Matondo Phiri as acting CEO, Gerald Ganizani as acting director of finance and Michael James Mnenula as acting director of operations.
But in a telephone interview yesterday, Jumbe acknowledged receiving a suspension letter from the board, but said reasons for his suspension were not correlating with his position as acting CEO at the parastatal.
He said: “According to reasons in the suspension letter, they
say it should pave the way for an investigation into Admarc loans, the business model of the corporation and that they want to look at the payroll.
“But then if you look at such reasons that have been given, they are not making sense. For the loans, I found the loans already there and for the payroll, I don’t even have a hand in that. So that is all I can say.”
Jumbe was engaged as Admarc acting CEO earlier this year in a move some governance analysts questioned as he chaired the very board of directors that appointed him into his new role.
The suspension of the Admarc trio comes a day after Tobacco Commission (TC) suspended deputy CEO Levi Phelani to pave the way for an Office of the Ombudsman investigation into his recruitment.
The TC board also terminated the contract of director of human resource and administration Emily Banda Egolet purportedly because her recruitment in June this year did not follow procedures.
The suspension of the Admarc executive management members also comes at a time when the institution is also playing a role in the ongoing Affordable Input Programme (AIP), an ambitious inputs subsidy programme of the new Tonse Alliance administration led by President Lazarus Chakwera.
Comment ing on the suspensions, agriculture policy and development expert Tamani Nkhono-Mvula said such changes have a huge potential of disturbing implementation of the programme and other operations.
He said: “There is some crucial and strategic information that is held by top management and if all are removed at the same time there is a potential of losing some of this institutional memory.
“I just hope that those that have taken over were part of the decision-making processes so that nothing is lost and also external partnerships and processes are not disturbed.”
The developments also come a week after Chakwera directed boards of parastatals to fire individuals that were drafted into the public service based on political loyalty or abused office.
In August this year when Jumbe was at the helm, Admarc said it needed K300 billion for re-capitilisation to help the institution run its operations, including buying of farm produce.
Jumbe, in an earlier interview with The Nation at the time, said the biggest challenge Admarc has been facing in buying maize and in its operations, among others, is that although some reforms have taken place, there have been no deliberate programmes to re-capitalise the parastatal.
In June this year, when Admarc management also met four Parliamentary committees on Agriculture, Food and Security, Budget and Finance, Industry and Trade and Public Accounts, Jumbe said the parastatal needed about K222 billion for re-capitilisation.
The calls for re-capitalisation, however, came as the 2020 Malawi Government Annual Economic Report prepared by the Ministry of Finance indicates that Admarc’s performance has varied for the previous five years.
The report indicates that Admarc’s revenues in 2018/2019 financial year fell below the 2017/18 position with K131.97 billion reported, of which actual sales were K16.9 billion while the cost of sales were K15.2 billion, translating into a gross profit of K1.8 billion
The report states that this loss was because all revenues for commodities were below budget as Admarc did not achieve export sales budgeted for legumes.
In addition, the report indicates that Admarc’s debt ratio is at 47 percent while debt-to equity ratio-the financial ratio indicating relative proportion of sharehodlers equity to debt-is at 87 percent, as of June 2020.
The parastatals liquidity position in the 2018/19 financial year was barely on the margins at a current ratio 1:1 while leverage was at 72 percent as measured by debt/equity proportions.
At mid-year, however, the current ratio had worsened to 0.91:1 and it was projected to further worsen to 0.71:1 by June this year, indicating its inability to meet short-term obligations as they fall due.
Last month, however, Ministry of Finance authorised Admarc to borrow K22 billion from commercial banks to buy farm produce from farmers