Parastatals still on mega salaries

via Parastatals still on mega salaries | The Herald October 27, 2015

Farirai Machivenyika Senior Reporter—
Nothing much has changed in the way parastatals and State-owned enterprises are run regarding corporate governance, with management still paying themselves salaries and benefits way above the Government directive. This is despite the setting up of a National Code on Corporate Governance on how parastatals and State enterprises should be administered.

Auditor-General Mrs Mildred Chiri also revealed in her 2014 narrative report how State enterprises and parastatals continue to flout procurement procedures, resulting in them losing millions of dollars. Mrs Chiri cited the Environmental Management Agency, the Health Services Board and the Zimbabwe Mining Development Corporation among enterprises that paid unauthorised board fees and management salaries and benefits.

Management at some of the enterprises were paying themselves allowances not reflected on the payroll to avoid paying tax, in contravention of the Income Tax Act. “A number of entities were paying board fees and management salaries and benefits, which were not authorised,” said Ms Chiri. “For example, EMA, whose board passed a resolution to increase its own fees without the parent ministry’s approval, the HSB which approved fuel allocations to its board members without Treasury’s concurrence, Zinara which awarded its CEO a monthly salary and representation allowance increase which were above the contract stipulated rates, ZARNet which paid its CEO a monthly housing allowance whilst paying monthly rentals for his residence, ZMDC which gave non-executive directors a total of 2 940 litres of fuel and holiday allowances of $27 450 each without the parent ministry’s approval and POSB which paid board fees that were above those approved by the parent ministry by $26 868.”

Mrs Chiri said Zinara provided home security to seven managers amounting to $94 964 and other benefits that were not in their employment contracts. She said entities like Petrotrade, ZARNet and the Civil Aviation Authority of Zimbabwe were operating without declaration of interest registers, raising the possibility of conflict of interest.

“Some entities did not have declaration of interest registers while in some cases board members were not declaring their interest before meetings,” said Mrs Chiri. “Best practice requires that board members and management should declare interests, if any, before a board or management meeting.

“Weak control environments existed in such entities like Zinara which made payments amounting to $4 157 937 which were not supported by authorised payment vouchers, ZMDC which had various expenses amounting to $3 163 091 in its Corporate Social Responsibility ledger account that had no breakdowns or acknowledgements of receipt from the beneficiaries, Liteford Engineering which was operating without books of accounts, Parirenyatwa Group of Hospitals whose inventory management system did not generate drug expiry and aged analysis reports, and National Aids Council’s implementing partners which dispensed expired drugs.”

Mrs Chiri said the National Railways of Zimbabwe was using outdated policies and procedure manuals covering finance and operations that were published as far back as 1954. On procurement, Mrs Chiri said she had noted a lack of due diligence to non-compliance with regulations. “Zinara procured 40 motorised graders through tender for $8 040 800 and procured 40 additional graders from the same supplier at the same price without going to tender in contravention of procurement regulations which require purchases of $300 000,” she said.

“The same supplier was also engaged without going to tender to develop a $54 million vehicle licensing system.” Mrs Chiri queried how the HSB spent $526 583 on hiring cars for use by management when the funds could have been used to buy them the vehicles. “Marange Resources similarly paid repairs and maintenance allowances to management for using their private vehicles for business purposes,” she said. “The cumulative allowance paid to an average of nine was $349 397.

“The entity bought Isuzu double cabs for other managers at a cost of $49 000. The repairs and maintenance allowances paid were equivalent to the purchase price of seven motor vehicles.” Mrs Chiri said seven Marange Resources managers who were sent on forced leave by Government to pave way for investigations into their conduct in February 2014 had received $1 166 472 in gross earnings as at December 31, 2014.

She said some of the parastatals had poor revenue collection systems, resulting in huge debtors on their financial statements.