Farmers World ‘secretly auctioned’ to a tax haven

A Mauritius domiciled investment fund, Phatisa, has acquired one of Malawi’s arguably number one agro- processing group of companies, Farmers World, in a secret deal which has send goose pimples among the company’s 3,000 employees in its 110 branches spread across Malawi, Malawi 24 can reveal.

High level sources confided to us that Farmers World Directors Jimmy and Chris Giannakis will be relocating to Australia, the country of their birth.

Fears of retrenchments and the closing of some branches is palpable within the company’s corridors as the new owners are frantically gobbling out a blue print to rescue the loss making Group, sources disclosed.

What has raised eye brows among the employees, are three pronged high level developments that have taken place within Group since January 2016.

The termination of the MK600 million pension fund contract which Vanguard Insurance had been managing for years and its controversial transfer to NICO Insurance without the employees’ Pension Trustees consent.

The unprecedented appointment a General Manager, Andrew Divaris, who seem ‘to be learning everything on the job’ and has taken over from one of Malawi director, Jimmy Giannakis.

And the appointment of a Briton Nagel Seabrook as the Group financial Director. Divaris and Seabrook have taken over from Jimmy and Chris as Director and Group financial Director respectively.

Farmers World Group of Companies, which our sources say has been operating in the ‘red’ for a number of years, comprises of Farmers World Ltd, Agora Ltd, Demeter Agriculture Ltd, Demeter Seed Company, Fuel Crops Demeter, Grain Securities Ltd and Malawi Fertilizer Company.

While there are no official figures mentioned in the ‘trade off’, but a scrutiny of Phatisa’s portfolios in Africa, show that the Farmers World Group of Companies, has been for years under the armpit of the Meridian international Group.

Paradoxically, the Meridian international Group, is one of Phatisa’s six African portfolios and raked in through a management buyout and expansion in 2014.

A management buy-out is an acquisition in which the acquiring group is led by the company’s own management and executives. In other words the company is bought by its own management rather than by another company or by a group of outside investors.

The Meridian international Group, comprises of Meridian, Transalt, Trancargo, Farmers World Limpopo, Farmfos and Mozambique Fertilizer Company.

Other Phatisa’s portfolios in Africa include Farming and Engineering Services Malawi, Goldenlay Zambia, Feronia DRC, Continental Beverage Company Cote d‘lvoire and General Plastics Kenya.

Malawi24’s Investigative Desk sought to get comments and or clarification on issue and send the following questions:

1. What percentage of shares/stakes did the Farmers World group of Companies dispose off to Meridian in 2014

2. Now that Phatisa has bought off Meridian, Why has Farmers World kept its employees in the dark on these take overs?

3. Who has hired the Zimbabwean GM Andrew Divaris and GFD Nagel Seabrook? Phatisa or Farmers World?

4. Is this an indication that you are pulling out and paving way for management? if not?

5. Why has Farmers World decided to change employees’ Pension Managers, Vanguard Insurance to NICO in violation of section 58 – 60 of the Pension Act?

6. The fact that you and your brother Chris want to leave for Australia, the country of your birth, does that mean Farmers World Group of Companies is now run by a Mauritius based Company?

7. Now that the Farmers World Group of Companies is in news hand. What will happen to its 3,000 workforce? 110 branches? Because it a fact that the Farmers World Group of Companies has been in the ‘red’ for a number of years?

After 24 hours Jimmy Giannakis through his Executive PA Washawekha Malizani responded as follows: “Thank you for your email sent to Mr Giannakis of Farmers World.

“Please note that your current understanding of issues at Farmers World are not accurate and tomorrow’s meeting will help clarify all your questions”

Alongside Bermuda and Luxembourg, Mauritius is a recognized tax haven where major Banks stash illicit cash according to non-profits U.S. Public Interest Research Group Citizens for Tax Justice and International Business Times.

The World Bank study of Illicit Financial Flows in Malawi and Namibia estimates that revenue lost to corruption and tax evasion accounts for between 5% and 10% of the GDP. Illicit Financial Flows include practices used to reduce tax liability and diminish a country’s revenue, such as tax holidays or transfer pricing.

Malawi lost close to MK300 billion due to illicit Financial Flows, about 17 per cent of its GDP, according to  the June 2015 Global Financial Integrity report. The lost funds could have paid the Civil Service wage bill for one year.