Ten million dollar insurance scam exposed at Air Zim

via Ten million dollar insurance scam exposed at Air Zim | SW Radio Africa by Tererai Karimakwenda on Monday, January 27, 2014

A financial audit company, hired by new management at Air Zimbabwe, has uncovered an insurance scam that netted about $10 million for senior staff, according to the state-owned Herald newspaper.

The report alleges that Air Zim’s company secretary, Grace Pfumbidzayi, authorised fraudulent payments to Navistar Insurance Brokers in a four-year aviation insurance scam.

Pfumbidzayi is alleged to have acted in cahoots with Air Zim’s acting group chief executive officer Innocent Makore. and together they are accused of having prejudiced the company of millions of dollars. Other senior staff members have also been implicated.

The money was allegedly paid out to Navistar “for services rendered”, and invoices were provided, but no services were rendered.

The Secretary for Transport and Infrastructural Development, Munesu Munodawafa, is also alleged to have acted to protect Pfumbidzayi, who is said to be his niece. But Munodawafa is not named as a beneficiary of the scam.

The audit report, dated December 28th 2013, was compiled by BCA Forensic Audit Services after a new board at Air Zim became suspicious of insurance premium payments made between April 2009 and April 2013.

According to the Herald, Pfumbidzayi switched insurers in that period and ditched Marsh Insurance brokers for Navistar, who then charged nearly 10 times what Marsh had been charging for insurance. In addition, the switch by Pfumbidzayi was done “unprocedurally, illegally and in violation of the tender procedures”.

The BCA auditors are reported to have described some of the payments made to Navistar as “outrageous” and recommended that those involved be prosecuted. They also suggested that President Robert Mugabe be informed of the scam, “due to its magnitude”.

The former Mayor of Harare and MDC-T shadow Minister for Transport, Elias Mudzuri, told SW Radio Africa that he was shocked at the magnitude of the theft at Air Zim, as it almost equalled the budget of an entire ministry.

“Sometimes you think that civil servants are professionals who are there to serve the nation. But this shows that some of these people at parastatals are there to milk the companies instead of making them run. But these people never get arrested. Instead it’s the small criminals that are prosecuted,” Mudzuri said.

He explained that in Zimbabwe there exists a culture of not holding public officials accountable for their actions. This is how they are able to get away with stealing millions and not be prosecuted.

Mudzuri added: “There is no order and I always get annoyed when people cry about corruption but they are doing nothing to ensure there is proper accountability and transparency. Look at ZBC and the Medical Society where all MPs get insured.”

Mudzuri was referring to recent revelations that Cuthbert Dube, a senior manager at the Premier Medical Aid Society, was receiving a monthly salary of over $200,000. Exorbitant salaries for senior staff were also exposed at the state-broadcaster, ZBC. Both institutions are owned by government.

Mudzuri said: “The chief executives of these companies have to answer for what is happening. It is their duty to make sure the blood of the institution runs. And government should do something to make sure that all these parastatals are accountable.”

According to the Herald, Navistar chairman Patrick Chingoka told the auditors that he was not aware of the fraudulent payments made to the company and recommended a criminal investigation into dealings by management at the insurance company.

In 2013, Air Zim dealt with a series of strikes by staff who were demanding better wages and working conditions. The national airline also faced massive debts and had an airplane impounded by creditors in London. The insurance scam deals a further blow to the company at a time when government is trying to lure tourists back to the country.