Source: Auditor-General’s report: Public officials to face heat | The Sunday Mail June 30, 2019
Harmony Agere and Brian Chitemba
Sunday Mail Reporters
Public officials in several State-owned enterprises (SOEs) and Government departments might soon face the music after the Auditor-General, Mrs Mildred Chiri, uncovered continued dereliction of duty and deep-seated malfeasance, especially in accounting procedures and procurement processes.
Local authorities are rapped for continued malpractices.
The audit was for the year ending December 31, 2018.
The new political administration, which is currently reforming SOEs, has already promised remedial action to stem continued malfeasance in public entities.
At a press briefing last week, Mrs Chiri ominously indicated that some of the discrepancies, particularly related to procuring goods and services, may have been occasioned by outright criminal activities and have since been referred to Zimbabwe Anti-Corruption Commission (Zacc).
The Sunday Mail has established that Government will soon write letters to all parastatals and departments emphasising the need to act urgently on the recommendations, not only of the new audit report, but on legacy issues that have been raised in the past.
The acts of omission or commission are understood to be bleeding State coffers.
As of May 31 2019, 76 SOEs and parastatals out of a total of 179 entities had not yet submitted their financial statements for audit by Government.
Some of the shocking details uncovered by the Auditor-General’s Office include the case where the Zimbabwe Electrification Transmission and Distribution Company (ZETDC) — a unit of the Zimbabwe Electricity Supply Authority (Zesa) — has not yet taken delivery of transformers nine years after making a US$4,9 million payment to Pito Investments.
“The same contractor was paid in advance an amount of US$561 935 by the Zimbabwe Power Company in 2016 and has not delivered,” said Mr Chiri.
“In addition, ZPC paid R196 064 in 2016 to York International for gas that has not been received.”
ZETDC was previously advised to pursue the delivery of goods and services already paid for but did not implement the recommendations.
The case mirrors the rot in most public entities as they continue haemorrhaging millions of dollars from botched deals.
GMB was flagged for a similar deal, where it made an advance payment of $1 million in 2016 for goods and services that were never delivered.
Air Zimbabwe could not escape the attention of auditors for murky accounting practices.
Expenses worth more than $14 million could not be accounted for.
“The company could not provide supporting documentation for operating expenses amounting to $13 million and petty cash expenditure amounting to $654 587,” said Mrs Chiri.
“The airline had an unexplained suspense balance of $27 million. The company has not accounted for all aircraft,” read part of damning report.
Cash withdrawals amounting to $173 162 could not be traced to the books of accounts.
The Auditor-General flagged a curious case involving examination management body Zimsec, which continues to outsource printing services even after splashing US$3 million on its own printing press in 2016.
The parastatal notably spent US$2,1 million for printing the June and November examination papers the following year.
The money splurged on outsourcing the service is significantly more than the US$1,3 million that was needed to commission its own printing press.
“I noted that the printing press was installed in 2018 after a part payment of US$3 million, leaving a balance of US$1,3 million,” said Mrs Chiri.
“Due to the outstanding balance, the council (Zimsec) could not commission the printing press. As a result, the council had to outsource the printing of O Level June and November 2017 examination papers at a cost of $251 367 and $1 million, respectively.”
Another case involves Allied Timbers, which operated eight bank and EcoCash accounts that were, however, not registered in its name.
In fact, some of the accounts were opened under names of individuals.
NSSA’s questionable investments, some of which were made against financial advice, have come under scrutiny.
More than $80 million was reportedly put at risk after it was invested in troubled banks.
Added Mrs Chiri: “NSSA invested in Treasury Bills (TBs) amounting to $20 million with Metbank during the year despite the fact that the Authority’s risk and management department had recommended against this investment,” said Mrs Chiri.
“The bank had a nil trading limit due to the fact that its risk of default was high and was deemed to be financially weak.”
NSSA further placed $62,3 million worth of TBs with the same bank after reaching an agreement that NSSA’s board would advise Metbank on how the TBs would be used.
However, a NSSA officer subsequently instructed Metbank to use TBs with a face value of $37, 4 million without authorisation from the board.
Auditors indicated alleged malpractices at the Pig Industry Board, Civil Aviation Authority of Zimbabwe, Minerals Marketing Corporation of Zimbabwe and Zimbabwe United Passengers Company.
Local authorities are similarly in the eye of a storm for lack of transparency and accountability.
As of May 2019, only three out of 92 local authorities had audited financial statements.
There are multiple cases of alleged malpractices.
For example, the Auditor-General criticised the Harare City Council for wasting ratepayers money by hiring equipment for $222 950 instead of repairing its own at a cost of $159 969.
“The asphalt plant which mixes tar was not functional. It required $159 969 to bring it back into service. The council in turn sought services from private companies for tar mixing and in the process incurred $222 950. However, I could not comprehend the economic rationale of the council’s decision,” said Mrs Chiri.
Council management, however, conceded that they had made a wrong decision.
Auditors questioned Harare City Council’s penchant for borrowing after it sourced US$32,5 million to pay salaries without approval from the Ministry of Local Government, Public Works and National Housing.
“Service delivery might be compromised if council borrows for recurrent expenses such as salaries of employees,” added Mrs Chiri.
Local authorities in Gweru and Mutare were rapped for the same practice.
Minister of State for Presidential Affairs in charge of Implementation and Monitoring Dr Joram Gumbo said Government would remind public officials on the need to action the recommendations from the reports.
“Normally, there is a procedure to be followed when implementing reports.
“There are various reports, not just the Auditor-General’s report, made for ministries and various State enterprises.
“But I would not want to point fingers and say such and such is to blame because most of the ministers we have now are new.
“Some of them may not be aware of the reports that were made before they came in.
“But what I am going to do through my office is to write to responsible ministries reminding them of any outstanding policy reports that may need to be implemented.
“It is something we will do in a respectful manner.”