Industry ministry in $24m scam

via Industry ministry in $24m scam – DailyNews Live 19 August 2015

HARARE – The Industry and Commerce ministry has been implicated in a $24 million scandal after it offered loans to struggling Ziscosteel (Zisco) and the Industrial Development Corporation (IDC) without following due process, a report from the auditor and comptroller general shows.

In her narrative report on appropriation accounts and miscellaneous funds for the financial year 2014, auditor general, Mildred Chiri, said the Mike Bimha-led ministry disbursed funds to two parastatals without loan agreements.

“In my 2013 report, I observed that the ministry issued loans to Zisco and IDC amounting to $12 658 331 without signing loan agreements. The problem persisted in 2014 with the ministry further issuing $11 663 363 to the same parastatals without loan agreements. Therefore, the legality of the loans could not be ascertained,” she said.

Chiri also noted that in the absence of legally-binding loan agreements, repayment of loans may become difficult to enforce.

“Thus ordered loan agreements between the two parties to legalise the transactions and ensure that terms and conditions of the loans were clearly specified,” she said.

According to the report, management from the two parastatals said draft loan agreements had already been prepared and were awaiting Treasury’s input.

The latest report comes at a time when Zimbabwe’s cash-strapped government is constantly bailing out loss-making parastatals, at the expense of capital projects.

Recent media reports indicate that troubled Zisco — with an estimated $300 million debt — is seeking new investors following the pull out of India-headquartered Essar Africa Holdings Limited.

The Indians, who took a controlling stake in the State-controlled giant which was once one of Africa’s largest integrated steelworks in 2011 and rebranded it to NewZim Steel, are believed to have been frustrated by government delays in consummating the deal.

Meanwhile, the IDC’s loss position worsened to $22 million in the full year to December 2013 from $20,8 million the previous year, with the institution’s auditors raising the red flag over its going concern status.

According to IDC auditors at the period, KPMG, the group’s and corporation’s current liabilities exceeded current assets by $51,2 million and $16,9 million respectively.

Founded in 1963 to spearhead the growth of the country’s industry, the State-owned, self-financing corporation has investments cutting across all sectors of the economy.

According to the IDC 2013 annual report, performance of the corporation as a stand-alone entity without its subsidiaries worsened as it posted a net loss of $54 million from a $2,7 million loss the previous year.