Looting frenzy at PSMI exposed

via Looting frenzy at PSMI exposed – The Zimbabwe Independent July 17, 2015 by Constantine Chimakure

A LOOTING frenzy has engulfed Premier Services Medical Investments (PSMI), a subsidiary of Premier Service Medical Aid Society (Psmas), where large sums of money have reportedly been squandered or siphoned by its top directors through overpriced car acquisitions, insurance fraud and huge salary perks.

PSMI, a group of medically related strategic business units wholly-owned by Psmas, operates health care clinics, dental services, medical laboratory, radiology, hospitals, ambulance, pharmaceutical, rehabilitation, optometry and renal services.

Formed in 2003, PSMI has more than 100 services centres across Zimbabwe.

The latest disclosures come at a time when PSMI has failed to pay its workers for the past three months amid accusations of maladministration and corruption.

This has prompted workers to write to former Psmas interim manager Gibson Mhlanga asking him to institute an audit at the medical insurer’s investment company — a move that has triggered panic among the company’s directors.

Documents seen by the Zimbabwe Independent show that at the centre of the latest scandal are the medical services company’s managing director Farai Muchena, finance director Victor Chaipa and operations director Tafadzwa Gutu, who earned extortionate salaries and benefits.

The three directors were earning over US$100 000 monthly in salaries between July 1 2012 and February 2014. Muchena earned a gross US$3,6 million (US$180 000 a month), Chaipa US$2,3 million

(US$130 000 a month) and Gutu US$1,8 million (US$100 000 a month) — a combined total of US$7,7 million. Muchena, Chaipa and Gutu’s salaries were later reduced to US$40 000, US$35 000 and US$35 000 respectively after the ouster of Psmas chief executive Cuthbert Dube over the salarygate scandal. Dube reportedly earned about US$500 000 monthly.

Muchena, Chaipa and Gutu’s US$7,7 million total earnings excluded benefits and allowances.

“Over the past three months, employees have learnt that US$1 million is enough to cover the wage bill for the junior staff yet top management — constituted by only three people — takes 45% of the total wage bill as salaries on top of the plus or minus US$60 000 they get as incentives quarterly and another 40% of their inordinate salaries they get as allowances.

“Contractually, they are entitled to expensive vehicles for themselves and wives,” reads a letter dated July 7 2015 written to Mhlanga by the Medical Professional and Allied Workers Union.

The letter, copied to the Chief Secretary in the Office of President and Cabinet Misheck Sibanda and Health minister David Parirenyatwa, among others, also says there is massive abuse of loan and vehicle facilities at the company.

As a result, Sibanda has since ordered a forensic audit at PSMI to investigate the reported looting of the company.

“Employees are also concerned about the inscrutability shrouding the facility obtained from Ecobank in May 2015 meant for employees’ salaries. There are unconfirmed reports pointing that the facility was abused and diverted for personal loans amongst management,” the letter says. “As such employees are asking if you may intervene and reveal the truth about the Ecobank (Zimbabwe Ltd) facility through availing acceptable authentic proof indicating that the money is still in the account as claimed by management.”

The letter also says a loan facility of US$80 000 for the extension of the intensive care unit at Claybank Hospital — a wholly-owned subsidiary of PSMI which offers 24-hour service for all emergencies — might have been diverted to personal use.

The letter indicates PSMI is also saddled with US$9 million debt to FBC Bank.

“Management is failing to secure drugs at PSMI pharmacies, including the most essential ones required for basic survival by those with chronic infections,” it says.

Most vehicles for PSMI management and pool cars, documents show, were not registered in the company’s name until a month ago when talk of forensic audit started. The vehicles were over-priced during acquisition to facilitate looting.

“There was over-pricing of vehicles acquired for management through a company called (name supplied), eg, a Toyota Corolla VVTI (bubble shape) second-hand, year 2001 acquired in 2012 at a price of the latest version of the Toyota,” reads one of the documents sent to Psmas by disgruntled PSMI workers. “Second-hand 2006 Toyota Camry was bought at US$32 000 which is the price of the latest model of the Camry.”

Besides over-pricing of vehicles, PSMI managers are accused of insurance fraud.

“Vehicles were insured at very high prices, for example, a Toyota Fortuner was insured at US$130 000, more than double its price in order to push up figures for insurance payment,” reads the document. “Dr Muchena’s Toyota LC200 was valued at US$155 000 whereas a similar brand new car does not exceed US$100 000.”
Besides the Toyota LC200, Muchena has six more other cars insured by PSMI.

“An African Century (micro-finance) facility of US$1 224 159,53 was used further to acquire more vehicles and that list has two brand new E300 Mercs, number plate ACI 3915 and ACI 3916. The ACI 3915 belongs to Dr Muchena and the other vehicle is not in the company asset listings,” the document reads.

“This was done despite that Dr Muchena had already the following vehicles in the company insurance listings belonging to him: AAE 2007, ACG 9662, AAN 4017, ABT 2481, ABI 7779 and ABP 7486. This was done when the company was already facing drug shortages and management employees are disgruntled after being given vehicles older than the company policy permits at astronomical prices.”

The PSMI situation prompted Psmas, through Mhlanga, to push for a forensic audit to get to the bottom of the matter. This, according to sources, did not go well with PSMI directors who started questioning his continued stay in office. Mhlanga completed his mandate on June 12 after the appointment of Henry Mandishona as Psmas managing director on May 1 after the society abolished the position of group chief executive following the controversial departure of Dube last year.

In a letter to the Medical Professional and Allied Workers Union on June 24, Muchena refused to avail PSMI bank statements, saying they were “highly confidential”.

Muchena however dismissed the allegations adding he was at peace because he had done nothing wrong.

He denied owning seven cars saying his contract entitled him to two cars, a four-by-four and a sedan.

“These are false allegations by a few employees that are being abused by evils,” he said. “We are a value-driven organisation and everything we do is above board. We have been engaging workers’ representatives and they know what is happening.”

Muchena, who said he was in Chiredzi meeting workers, said the letter was written by the Medical Professional and Allied Workers Union and not PSMI employees.

He said a member of the union who was employed by his company was being used to fight him.

Muchena alleged the member was being used “by evils who wanted to walk over dead bodies”.