Namibia: Meatco Loses 1 400 Cattle

AN investigation into the Meat Corporation of Namibia revealed that the company's management failed to employ strict tactics to prevent the loss of around 1 440 cattle.

Meatco is a state-owned meat-processing and marketing entity, set up to sell products to the local and international markets on behalf of Namibian farmers.

An audit report seen by The Namibian shows that the parastatal's management started talking about the missing cattle around 2014 when they estimated that 1 440 cattle worth N$8,2 million could not be traced. Audit firm Ernst & Young was appointed last year by Meatco to look into transactions involving private meat producer Johannes Jooste, who was accused by Meatco of failing to account for the estimated 1 440 cattle through his company Big J Feedlot.

Meatco and Jooste entered into cattle sales agreements in the past. One relates to cattle being put in feedlots, and the farmer would be paid based on the amount of fat added to the cattle. This contract is called the compensation contract. The second is the profit-sharing contract, in which the farmer raises the animals on his farm and shares the profits with Meatco when the animals are slaughtered. Meatco asked Ernst & Young in May 2015 to determine the exact financial losses, the process followed when the parastatal gave Jooste the cattle, and payments made. The auditors were paid around N$200 000 to carry out that investigation.

They concluded this year that Meatco had lost out.

"Total potential financial loss suffered by Meatco across all three contracts entered into with Jooste as a result of the missing cattle amounts to N$6,6 million," the auditors said in their final report.

That amount includes 565 unaccounted-for cattle worth N$2,3 million; 116 cattle which could not be identified in Meatco invoices worth N$1,2 million; and 688 unaccounted-for cattle not in Meatco's care or slaughtered at Meatco abattoirs, worth N$2,5 million.

The auditors found that there was insufficient monitoring by Meatco's management regarding the counting and weighing of cattle, as per contract agreements with Jooste.

"This would have afforded the producer with the opportunity to misappropriate a large number of animals via export and slaughter at various abattoirs other than those that belong to Meatco," the report said.

The audit report further stated that animal movements and status updates at the parastatal were not appropriately monitored by Meatco's management. They should have done this against the Namibian livestock identification and traceability system/animal movement database, the audit continued.

Efforts to get comment from Jooste were not successful, but he denied, through court documents last year, that his company owed Meatco. "In fact, as is evident from what is set out above, the applicant is indeed indebted to the respondent," read Jooste's answering affidavit.

Auditors admitted that it is difficult to hold staff accountable due to the lack of formalised policies and procedures at Meatco.

"Producers should require the submission of audited financial statements on an annual basis," the audit firm suggested.

Another suggestion is for all selection criteria and information used to decide whether a producer would meet Meatco's expectations, to be recorded.

The audit concluded that management was provided with a copy of the draft report, to which they had to respond. The response from management was supposed to be discussed at the board meeting scheduled for 22 June 2016.

The meat corporation has been trying to sweep the news about the probe under the carpet, although board chairperson Martha Namundjebo-Tilahun highlighted the findings in her statement during their closed-door annual general meeting two weeks go.

Instead, Meatco issued a statement without mentioning the audit findings. Namundjebo-Tilahun declined to comment when approached by The Namibian last week, saying the matter is an internal issue.

Her statement, seen by The Namibian, shows that she submitted the findings at their annual general meeting held on 24 June this year.

"The board is in the process of addressing the findings (of the audit) and recommendations as contained in this report," she said.

Meatco is a billion-dollar meat business. According to their 2015/2016 annual report released this year, the parastatal recorded revenue of N$1,79 billion in 2016, 4,1% up from the previous year.

Efforts to get comment from Meatco were not successful.

Source: The Namibian