High Court orders forensic audit into Eddison Zvobgo’s business empire

The Commercial Division of the High Court has ordered the audit of the late politician Eddison Zvobgo’s business empire under Zvobgo Holdings after the siblings accused their uncle and other siblings who are controlling the empire of looting.

The late veteran minister’s oldest son Jonas and his sister Esther sued flamboyant businessman Eddison Mudiwa Zvobgo junior and his uncle Professor Rungano Zvobgo alleging oppression and prejudicial treatment.

They complained that Eddison and Rungano “flagrantly enjoyed the fruits of the business at Applicants’ expense” and are now living in abject poverty.

In case HCHC440/22 filed in November 2022 at Harare, the Applicants petitioned the court to order a forensic audit of the vast business empire and interdict Eddison and Rungano and their employees from impeding such audit.

ln the order by Justice Jacob Manzunzu he ordered the respondents to avail all documents and records of the business to the auditor upon demand.

fThe hearing of the case was delayed after another judge of the commercial court recused himself from hearing the matter.

Jonas and Esther told the court that Eddison and Rungano “use their majority shareholding as cover for deliberately weak corporate governance and malicious abuse of power for personal gain.”

According to the documents, The applicants said, Eddison wields so much power because he is a shareholder, director on all the boards, managing director of the holding company and some of its subsidiaries, he is also the company secretary.

They said in all these roles, he had treated the Applicants, his half siblings with contempt “fanned by Rungano”.

“Despite acknowledging the conflict inherent in playing all these positions at once in an affidavit filed in case HC2443/21, (Eddison) has ignored calls to cure the conflict,” they submit.

The Applicants complained that Eddison had physically attacked one of the shareholders at a shareholders meeting on May 13″ last year when taken to task over a loan application and a dubious consent order in another case.

The matter was reported at Rujeko Police Station which they alleged the police ignored the case.

They argued Eddison lives a movie like life in the hotel but still draws out a monthly housing allowance.

They also complained that Eddison and Rungano were hiring and paying their friends and associates to provide goods and services to the company and its nine subsidiaries without board resolutions or transparent contracts for those engagements.

The applicants argued that the majority shareholders had repeatedly used their majority to defend and conceal grossly negligent and imprudent business decisions.

The duo had also deployed company lawyers to threaten the minority shareholders on behalf of the majority shareholders.

The applicants argued that the hostility of the company’s lawyers against them was symptomatic of the hostility of the majority shareholders instructing them.

Jonas and Esther told the court that the majority was in firm control of the business but had exposed company assets to various creditors.

They, further argued that even if they wanted to leave the company and sell their shares, in the absence of any sort of documents speaking to the financial health of the company, the minority shareholders do not even know the value of their shares.

The audit, they argued will cure the starvation of critical information occasioned by the majority’s refusal to account for its control of the company.

The empire arising from the distribution of the late Eddison Jonas Mudadirwa Zvobgo’s estate which has nine subsidiaries that includes, the popular Flamboyant, Chevron and Fairmile Hotels.

The shareholding at the root of the present dispute was allocated to all the Zvobgo children through a High Court judgement HH96/2006.

The files compiled by the Executor of the late Zvobgo’s estate one Madondo show clearly that at the time of his death the politician owned close to thirty five houses in Masvingo’s Mucheke suburb which sources say may have been illegally disposed of and the proceeds are allegedly nowhere to be found in the company’s books.

The court records show that Eddison and Rungano filed a notice of opposition through their lawyers Scanlen & Holderness which had only one opposing affidavit deposed to by Professor Rungano Zvobgo who averred that he is the Chairman of the board of Zvobgo Holdings.

The Applicants’ legal practitioners have since written to Eddison requesting that he convenes an urgent shareholders meeting were they seek to secure resolutions to commence criminal investigations against those fingered in looting company assets and appointing one among them to act for the company for that purpose.