via PSMAS in US$40m tax evasion scandal | The Herald March 15, 2014 by Takunda Maodza
Rich pickings by former Premier Services Medical Aid Society group chief executive officer Dr Cuthbert Dube and other senior executives may not have been taxed since 2009, it has emerged.
This past week, the Zimbabwe Revenue Authority temporarily garnished PSMAS bank accounts over tax arrears of more than US$40 million.
The garnishee order was almost immediately lifted after PSMAS reportedly paid US$2 million and offered Zimra an “acceptable” payment plan.
Documents in The Herald’s possession show that Zimra alerted banks on the garnishee order.
The banks in turn alerted their employees on the development through circulars.
Reads one cautionary circular from management at a local bank to employees dated March 10: “We advise having received a garnishee order from Zimra on Premier Service Medical Aid Society (PSMAS) for US$40 611 916.41. The garnishee order may only be cancelled or withdrawn on advice from Zimra.”
The garnishee order was lifted the same day after PSMAS paid US$2 million and made a pledge to service the debt.
Another circular was sent out to bank staff that same day, reading: “Zimra garnishee order placed on the following client has been cancelled with immediate effect — Premier Service Medical Aid Society. Posting restrictions placed on the accounts have been removed and transactions should now be processed in the normal manner.”
A source told The Herald the debt was related to tax evasion.
“It is to do with the huge salaries and bonuses that management earned since 2009. So it comprises income tax and withholding tax. PSMAS hurriedly paid US$2 million and made a payment plan,” the source said.
PSMAS acting chief executive Dr Farai Muchena yesterday said, “There is no garnishee. They had intentions to do so but it did not go through. It was over outstanding payments.”
Asked on the US$2 million payment to cancel the garnishee order, Dr Muchena said: “I would need to confirm that with our finance department, but at the moment we do not have that capacity.”
He said PSMAS was working with Zimra to rectify “some of the figures”.
Dr Dube reportedly earned US$500 000 monthly in what has become known as the salarygate scandal, while his 14-member management team also pocketed mega salaries.
In total, top executives took home US$1,1 million out of PSMAS’ monthly staff obligations of US$2 million.
Dr Dube’s earnings last year amounted to US$6,4 million, while the total executive wage bill was US$18.6 million.
PSMAS group operations executive Mr Enock Chitekedza got about US$2 million in 2013 while other executives pocketed slightly above a million dollars each.
Zimra did not respond to written questions from The Herald yesterday, but Dr Muchena denied the debt was related to the salaries saga.
PSMAS is heavily indebted and as of December 3, 2013, it owed service providers US$38 million.
It has committed US$16 million every month for settling claims with various service providers.
PSMAS has 802 072 members of which 671 133 are civil servants.
COMMENTS
With this kind of behavior, Zimbabwe is going nowhere.
No details given of who owes ZIMRA this money. Did PSMAS deduct the tax & not pay it or was no tax deducted from the executives? If the latter it has nothing to do with PSMAS who are heavily indebted & not paying service providers. Or are the real culprits the executives who should be prosecuted for tax evasion. Please stop this subterfuge!!!
Tomana said there is nothing wrong. The problem with Dube is ,he forgot to pay his handlers.
The same happened to Mawere.
Plse sent an Audit team Dr Parirenyatwa,Psmas cant pay for Executives ,they must go to jail
if psmas did not deduct the PAYE then the fault is theirs and it is their loss because it is the the employer’s duty to collect the tax on behalf of Zimra (deduction at source). let them pay the tax, ndiko kuti next time vangware.
Can not blame PSMAS for an individuals income tax.If one is a responsible citizen and tax has not been deducted from your salary,the onus is on you to confront your employers and have the situation normalised.However if the employer deducted and did not foward the funds and you have payslips to prove this, then I would think you are safe from prosecution.
So let me understand this, parastatals earn huge salaries from the taxpayers money, then don’t pay tax, get penalised by the taxman, and the taxpayer pays the penalty????