via Looting spree at REA | The Financial Gazette – Zimbabwe News by Clemence Manyukwe 13 Feb 2014
THE board and management of the Rural Electrification Agency (REA) is embroiled in a US$4 million scandal whereby they extended to themselves and other connected private citizens loans amounting to close to US$4 million, the Financial Gazette can exclusively reveal. Of that amount, US$2,5 million was extended to connected citizens while nearly US$1,5 million was shared among board members, the agency’s managers and other REA staff, which they used to build houses.
This adds another dimension to the ongoing scandal in which State-run enterprises have been run down by their management and boards through the payment of obscene salaries, perks and the extension of mostly unauthorised loans to executives in what has become known as salarygate. REA functions through the Rural Electrification Fund, established through an Act of Parliament to spearhead the electrification of rural areas. The agency is bankrolled from public funds.
Early this month, Energy and Power Development Minister Dzikamai Mavhaire dissolved eight energy sector boards under his ministry including REA, accusing them of underperforming for the past five years. The REA board was chaired by Engineer John Mberi. The dissolution of the boards was made after the tenure of the State-owned power utility board, ZESA Holdings, lapsed last December.
The other dissolved boards include the Zimbabwe Power Company, the Zimbabwe Electricity Transmission Distribution Company, Powertel, ZESA Enterprises, National Oil Infrastructure Company, Petrotrade and the Zimbabwe Energy Regulatory Authority. There are, however, allegations that over US$2, 5 million of public funds benefitted connected individuals for activities which had nothing to do with electricity generation. These activities included funding farming activities such as maize and groundnuts production.
Mavhaire’s predecessor, Elton Mangoma was also made aware of a US$1,6 million loan scandal that benefitted the REA board, then chaired by Jerry Gotora, before he was replaced by Engineer Mberi during the inclusive government. Mavhaire has not been briefed of this particular case involving Gotora’s board, but is only aware of the alleged dealings of the most recent board dissolved last week.
In an interview this week, Mavhaire confirmed the US$2,5 million scandal and described the free for all situation he found at REA as “pure madness.” The minister said REA was now struggling to recover the monies it had dished out. The parastatal was said to be going around confiscating farming implements such as scotchcarts from defaulters, although his ministry has since ordered REA not to be vindictive as it was the one which had messed up in the first place.
“What I know is that they misdirected themselves and were doing things outside their domain by giving loans to the general public. They created a fund and were loaning the money for farming such as growing maize and groundnuts. What madness is that!” exclaimed Mavhaire. The Minister said an investigation was underway to establish if the board and management had benefitted from the loans to private individuals outside REA.
“I ended up showing them the door. A board should have people with the correct orientation, the correct mental direction,” Mavhaire added.
In a separate interview, Mangoma said he had discovered during his tenure that the Gotora-led board was irregularly giving itself loans. He said a whistleblower had blown the lid on the matter, forcing him to dispatch internal auditors to investigate.
The former minister said the issue was politicised when he flexed his muscles amid claims that a Movement for Democratic Change (MDC-T) minister was victimising civil servants. Mangoma is the deputy treasurer of the MDC-T. At the time, the REA board and management claimed they were being victimised by Mangoma for political reasons, among them carrying out electrification projects for traditional chiefs and the two late Vice-Presidents — Simon Muzenda and Joseph Msika.
This week, Mangoma said while he could not immediately recall how much the board members and managers had given themselves as loans, a report prepared by the Comptroller and Auditor General Mildred Chiri which the Financial Gazette had sight of put the figure at US1,6 million.
Chiri’s report said board members and staff were given loans, some to the tune of US$290 000 per person, under questionable circumstances, but does not allude to the US$2,5 million given to connected members of the public Mavhaire is aware of. Chiri’s report said no loan agreements were signed and no collateral security was provided, leaving public funds open to abuse and fraud.
Mangoma told the Financial Gazette that by the time he left government, his ministry was in the process of recovering the money. “We became aware of the irregular deals, a whistleblower told us,” said Mangoma. Gotora could not be reached immediately for comment.
This week, Vice President Joice Mujuru, criticised the ongoing salarygate scandal and suggested that there was a hidden hand in it, drawing a backlash from the public.
Mujuru, through the Minister of State in her office, Sylvester Nguni, has said the media had selectively covered her speech to “suit an agenda”. President Robert Mugabe constituted a committee recently headed by the chief secretary to Cabinet, Misheck Sibanda in the face of high perks and salaries that some parastatal bosses are getting with a view to coming up with a framework that would stop the abuse and looting of public resources at the State firms.
Precedence has, however, shown that government has over the years condemned corruption, but has failed to walk the talk. The Zimbabwe Anti Corruption Commission has also proved to be a toothless bulldog that has succeeded mainly in going after small fish and leaving out the big fish. Political analyst, Ricky Mukonza, said some of the corruption revealed so far at parastatals point to possible collusion involving some corrupt ministers and top government officials.
“Recent revelations of corruption in parastatals are a cause for concern especially considering that Zimbabwe is suffering from a myriad of financial challenges. If one looks at the exorbitant salaries that CEOs and other executives of parastatals (are earning), one is left with an impression that there was collusion between boards and the Executive,” said Mukonza.