US embassy cable - 02HARARE1577

UNCLAS HARARE 001577 
 
SIPDIS 
 
DEPT FOR AF/PD, AF/S, AF/RA 
NSC FOR JENDAYI FRAZER 
LONDON FOR GURNEY 
PARIS FOR NEARY 
NAIROBI FOR PFLAUMER 
 
E.O. 12958: N/A 
TAGS: PREL, PHUM, KPAO, ZI 
SUBJECT: MEDIA REPORT  -- GOVERNMENT-OWNED NEWSPAPER 
COMPANY SUSPENDED FROM STOCK EXCHANGE 
 
 
1.   The Zimbabwe Stock Exchange (ZSE) has suspended 
    Zimbabwe's largest newspaper and publishing company, 
    the government-controlled Zimbabwe Newspapers 
    (Zimpapers) Group.  The company, publishers of "The 
    Herald" and five other titles, was suspended on 
    Monday, July 2 for violating the bourse's regulations. 
    The Government of Zimbabwe owns 51 percent of 
    Zimpapers shares and exercises tight editorial control 
    over the company's newspapers. 
 
2.   According to ZSE chief executive officer Emmanuel 
    Munyukwi the suspension is the result of Zimpapers' 
    failure to hold an annual general meeting (AGM) and 
    submit an audited financial statement.  Munyuki said 
    the suspension was to "safeguard the shareholders." 
 
3.   A Zimpapers spokesman said the delay in producing 
    an audited financial statement and presenting it to 
    shareholders was due to "capacity inadequacies."  He 
    also blamed a disagreement between Zimpapers and its 
    auditors over whether to use the official (Z$55=US$1) 
    or parallel (Z$650=US$1) exchange rate in assessing 
    the burden of Zimpapers' 500,000 British pound debt to 
    an UK-based computer company.  The spokesman said that 
    these problems would be resolved and the company's 
    shares would be trading again by July 5. 
 
4.   Comment:  Zimpapers' unaudited financial report 
    was published in May to great fanfare in the 
    government-owned newspapers.  The unaudited report 
    showed a $Z30 million profit in 2001 in the wake of a 
    $71 million loss in 2000.  Given the continuing 
    decline of both circulation and advertising among 
    government-owned papers, the upbeat May financial 
    report raised questions.  Zimpapers' explanation of 
    its suspension from the ZSE answered some of those 
    questions.  End comment. 
 
SULLIVAN