Telecel Zimbabwe CEO Angeline Vere faces the boot amid revelations the board is unhappy over her failure to cobble a recovery plan to extricate the third largest mobile operator from losses, Business Times heard this week.
Vere was appointed CEO in 2015 to steer the ship but at that time the majority shareholder was a foreign company.
Under her watch, the mobile network operator was relegated to third from second in terms of subscriber base with its numbers dwindling ever since.
According to industry statistics, Telecel's subscriber base dipped 12,3 percent in the fourth quarter of 2018 whereas its competitors Econet and NetOne recorded gains of 1,9 percent and 5,2 percent respectively.
Management attributes the poor performance to weak capitalisation.
Insiders this week said that management had given its workers a salary increment without full board approval. Telecel also made re-authorisation for annual service level agreement with its key vendors such as ZTE, Huawei and Obopay to the tune of nearly US$1m.
According to Telecel's procedures any order above US$100 000 requires full board approval.
Management, insiders said, had failed to circulate to the board the 2019 updated budget and failed to deliver the 2019 management and business performance report in line with good corporate governance processes.
"It's is clear management has failed. We have purported board resolutions when the full board had neither met nor deliberated on issues. Yes weak recapitalisation has played a part but the CEO has failed," the source said.
ICT Postal and Courier Service minister Kazembe Kazembe said he "will not comment on the Telecel issue".
Government is controlling shareholder in Zimbabwe's third largest mobile network operator with 60 percent.
The remainder is owned by Empowerment Corporation, a coalition of indigenous groupings.
Government, through ZARNet acquired 60 percent in Telecel Zimbabwe in 2016. It is represented on the board by Mawindi and Selby Hwacha.
Another government appointee Barbara Rwodzi resigned last year after winning the Chirumanzu seat in the National Assembly during the July 30 elections.
Empowerment Corporation is represented by James Makamba (Telecel board chairman) and entrepreneur Jane Mutasa.
Makamba was unavailable for comment. Mutasa said she was not aware of the discussions in relation to the ouster of Vere.
"We have no issue with the CEO. What dominates and occupies the mindset of the board is the implementation of the 5-year strategy and restructuring of the company," Hwacha said.
Mawindi said he is unhappy with the performance of the company.
"On my part my position is very clear and that I'm not happy with the performance of the company and I'm of the opinion that the CEO is not competent enough to lead the company and has reneged on her responsibilities to inform the board of critical and important resolutions which have a material impact on the financial position of the company including re-authorisation of annual service contracts with key vendors and awarding salary increases of 20% to employees without full board authorisation," Mawindi said.
" She has also failed to demonstrate her capacity and capability to lead by struggling to lead the charge in coming up with a turnaround plan which only materialised after the intervention of the board."
Mawindi said under normal circumstances failure to adhere to company policy and procedures on such things as salary increases for employees, contracts and purchase order approvals in accordance with the existing schedule of authorisation "leads to automatic termination since this is a serious breach".
It is understood that while Government's representatives on the Telecel board have tried to engender good corporate governance practices, it was not shared by their colleagues from Empowerment Corporation.
According to documents seen by this publication, Makamba told a board meeting held in April last year that his son did a TV campaign for the company and had a new proposal for the Telecel to market its services during his POV video flightings.
It was resolved that Hwacha would consider the proposal and give a recommendation.
At the July 3 board meeting, Vere advised the members that Hwacha had written to Zororo Makamba concerning his request for the POV sponsorship highlighting the financial constraints that the company was facing.
"(Mr) Hwacha indicated to the board the need to adhere to proper corporate governance in respect to related party transactions," said minutes of the meeting seen by this publication.
Last year, Telecel's auditors warned that the mobile network operator was facing a huge potential tax liability emanating from the thin capitalisation and accrued management fees.
The members requested Hwacha to analyse the legal opinions that management and KPMG had obtained and map the way forward with management and the auditors.
According to the Income Tax Act, accruing management fees are seen as deemed dividends and hence liable to withholding tax.