Source: Inept bosses cost Zinara US$200m | The Herald November 19, 2018
Tendai Mugabe Senior Reporter
The Zimbabwe National Road Administration (Zinara) has suffered a financial loss in excess of US$200 million due to incompetence and lack of expertise by its senior managers to negotiate contracts beneficial to the State entity. It is believed that the managers were also helping themselves to hefty perks, leading to a call for a lifestyle audit of the executives.
A committee set up by then Transport and Infrastructural Development Minister Joram Gumbo to study the Grant Thornton audit report exposed shocking incompetence by Zinara senior managers.
In its executive summary, the committee recommended that the managers be charged for incompetence and falsification of qualifications.
For instance, with regards to the Plumtree-Mutare highway project by Group Five which was financed by a US$206 million loan facility from the Development Bank of Southern Africa, the project ended up costing over US$464 million due to preventable additional costs incurred in servicing the loan.
In its final report to Minister Gumbo, the committee recommended that: “Disciplinary measures be taken against Mr Moses Juma for incompetence, negligence and inefficiency as evidenced by dereliction of duty with regards to disbursements made on special projects without technical input, purchase of pre-fabricated office material without board approval and the recruitment of Mrs J. Maphosa as human resources manager single-handedly.
“Disciplinary action against Mr Precious Murove for falsification of qualifications and Engineer Kufa, the southern region engineer, for incompetence, negligence and inefficiency as evidenced by dereliction of duty with regards to the disbursement made on special projects without technical input,” reads the report.
“A police report be made against Mr Frank Chitukutuku (former chief executive) for an investigation to be launched into the possible commission of criminal abuse of office with regards to the exercise by him of undue influence in the engagement of contractors for special projects without following proper procurement procedures.
“The committee recommends a lifestyle audit for all the Zinara executive and management.”
The Plumtree-Mutare Highway project, according to evidence from the committee report, exposes one of the biggest financial losses to Zinara due to incompetence by the management.
Zinara is paying an unexplained three percent capital fees to a company called Santanah Holdings of South Africa for facilitating the DBSA US$206 million loan facility. For the US$206 million DBSA loan, a capital raising fee of US$6 198 000 was paid to Santanah.
The committee said: “Over and above these payments, the committee has since established that Zinara is also paying administration fees on an annual basis. For the period under review (2011 to 2016), a total of US$22 733 196 was paid to Santanah/Sela/Golden Road as administration fees.
“The committee further established that a total of US$33 281 196 was paid as administration and capital raising of US$24 241 719.”
With regards to another agreement by a company called Golden Road, the committee said oral evidence from Zinara showed that the State entity was paying three percent of US$145 000 000 for a purported loan procured on behalf of Zinara.
Zinara is also paying 1,3 percent of the US$145 000 000 every six months being facilitation fee due to Golden Road.
Oral evidence presented to the committee revealed that: “Golden Road did not secure a US$145 000 000 loan for Zinara and the agreement between Zinara and Golden Road was not approved by the board.”
The committee stated that: “Zinara is precluded from borrowing money by the Road Act without ministerial approval and the provision in the agreement purporting to procure a project loan for Zinara is ultra vires rendering the contract invalid.”
There were other several contracts for the so-called special projects running into millions of dollars where Zinara suffered serious financial prejudice.
Of all the Zinara executives who were involved in these contracts, only Mr Juma was brought before the courts and is currently serving a two-year jail term.