RCC Mum On Zambian Flop

THE Roads Contractor Company has refused to disclose how much of the Namibian taxpayers’ money has been spent on its Zambian subsidiary, which has been closed for about five years.

In a written response to questions sent by The Namibian, RCC general manager of business development, property and corporate services Gerson Karaerua said the requested information was of “confidential nature thus I will not provide exact amount RCC has spent”.

The Namibian had asked Karaerua about the total investment RCC had pumped into the bankrupt business.

Cabinet resolved two years ago that N$18 million should be released to RCC Zambia to honour outstanding debts but the parastatal’s management is now tight-lipped about the investment of public funds into the project.

Karaerua admitted that although the subsidiary was closed in 2009 for “business reasons,” the parastatal is still paying the salaries of two security guards, one administration employee and a consultant who are looking after its assets.

He said the parastatal did not regret setting up a branch in Zambia and that its objective was to expand road maintenance, rehabilitation and construction projects into SADC starting with Zambia in 2006.

Karaerua also said the status of RCC Zambia is being discussed with relevant stakeholders and no decision has been taken on whether the loss-making venture should be discontinued or not.

“The Zambian operations, however, continue facing difficulties and incurring losses. As a result, the investment in the Zambian operation has been fully impaired,” a 2011 RCC annual report, the last one compiled, said.

The report states that the Zambian subsidiary was being exposed to the weak Zambian currency (the kwacha) in terms of the investments.

The report also shows there was no audit conducted for the Zambian operations by 2011, meaning that since the business opened in 2006 up to its closure in 2009, no audit has ever been done.

“This means there is no reliable financial information to incorporate into the group accounts,” said the same report.

RCC Zambia has a troublesome history. The Namibian reported in 2009 that the RCC could face legal action and possible closure of its Zambian subsidiary if it failed to pay about N$10 million (more than eight billion kwacha) owed to Zambian creditors.

RCC Zambia owed 25 suppliers and service providers about N$8,5 million and about 300 employees were owed N$1,5 million. It closed a few months later.

The company also owed N$160 million in tax, a situation which it said was historical and realised prior to the beginning of the turnaround tax repayment compliance, which started around September 2008.

The Zambian branch is not the only bankrupt subsidiary of RCC. The other is the Bricks and Concrete Industries (BCI) which has been closed since last year also continues to pay workers who are were sent home. RCC has also been accused by the unions of failing to remit the money deducted from workers as pension contributions.

The broke BCI that initially had 100 workers was bought by government in September 2005 to produce and supply concrete products such as bricks, pavers and ready mix concrete.

Source : The Namibian