State enterprises bleed to death

via State enterprises bleed to death – The Zimbabwe Independent October 24, 2014

JUST as Zimbabwe has a well-documented history of crafting well-intentioned policy documents, which are rarely operationalised, the Comptroller and Auditor-General’s Office has consistently produced yearly reports revealing gross public finance maladministration and graft, but government has consistently failed to act on them.

The reports expose inefficiency, lack of capacity and in some cases brazen corruption and abuse of office by government officials and heads of state-owned enterprises which continue to be bleed an already overburdened fiscus.

Despite the exposures which in cases are shocking, it is business as usual as government ministries, parastatals and local authorities continue to be havens of mismanagement and corruption, with transparency and accountability — two hallmarks of good governance — in short supply, leading to the loss of millions of dollars in public funds.

Hopes that government, which regularly reprises its “zero tolerance to corruption”, would use to plug loopholes while also instituting investigations aimed at bringing wrongdoers to book, have all but evaporated as government appears unmoved to act, reducing Auditor-General Mildred Chiri’s reports to a costly annual ritual.

Chiri’s role can be compared to that of South Africa’s Public Protector Thuli Madonsela who, in contrast, has brought sleepless nights to South African President Jacob Zuma and the ruling African National Congress, especially on the need to account for government funds used in upgrading Zuma’s Nkandla homestead.

Madonsela presented her investigations on the Nkandla scandal to the South African parliament which demanded Zuma pay back the state funds.

Similarly, Chiri first presents her findings to parliament which, however, seems uninterested in debating the findings or demanding action so that those implicated in the reports answer for their actions that have brought parastatals and state enterprises to their knees. Maybe this is because the reports implicate most ministries.

In a recent report, Chiri slammed government ministries for flouting governance and procurement rules leading to abuse of funds, state assets and the diversion of resources for unauthorised use.

The audit revealed variances of up to US$170 million between collections recorded by Treasury and amounts collected by line ministries, pointing to either under-statements or over-statements of revenues received.

Political analyst Dumisani Nkomo said the Zanu PF government has a long history of not taking action especially on issues that point to the wrongdoings by the party’s bigwigs.

“This has always been the case for as far back as 1996 when the government’s economic policy blueprint, the Zimbabwe Programme for Economic and Social Transformation (Zimprest) outlined a framework for the shedding off loss-making parastatals, but alas no action was ever taken. It is a case of policy inertia and lack of political will because if government takes action, then several Zanu PF bigwigs will be imprisoned for gross financial abuses in government departments,” Nkomo said.

President Robert Mugabe is seen as taking advantage of his coterie’s misdeeds and patronage network to keep their loyalty and maintain his stranglehold on power.

Inaction by government could be attributed to the fact that most parastatal heads and board members as well as heads of government ministries are connected to Zanu PF in one way or another, including through the military, analysts argue.

Zanu PF is not ashamed by this relationship as shown by the party’s central committee report to the party’s 14th annual people’s conference held in Chinhoyi last December. The report proposes that staff to key parastatals like the National Indigenisation and Economic Empowerment Board should be “people with the relevant political will”, which basically means they should be Zanu PF-aligned.

Another analyst Rashweat Mukundu said concerns raised by the Auditor-General’s report should be dealt with by Mugabe who is the government’s chief executive officer.

“These are the issues that one hopes the President would focus on and ensure that the law is empowering enough for action,” Mukundu said. “So far the Auditor-General’s Office is a toothless bulldog which produces damning information year in year out and no one listens or takes action. This is real corruption with evidence, not the rantings we have been hearing from some wannabe politicians over the past two weeks.”

Mukundu added: “However, Mugabe cannot resolve or empower the Auditor-General’s Office to court-martial the corrupt officials because they are appointed on a patronage basis.”

Another analyst Pedzisai Ruhanya agreed with Mukundu that the current crop of leaders heavily depends on the state to support their lavish lives.

“There has always been a conflation between state and Zanu PF to such an extent that party officials cannot survive outside the state,” Ruhanya said. “Lack of this distinction between party and state makes it difficult for Mugabe to rein in his officials found guilty of financial abuse in state enterprises.”

Ruhanya added: “The Comptroller and Auditor-General’s Office has no whip. The office just makes recommendations. Lack of action against those implicated in corruption runs in Zanu PF’s DNA. The party has its own leadership code of 1984 (which banned party members from owning businesses and property), and more recently the Corporate Governance Framework, but lack of political will has resulted in massive corruption and abuse of state properties.”

Mugabe railed against corruption last year soon after securing another five-year term in the July 31 general elections. He even named an official in a corruption scandal, as well as revealing that two of his cabinet ministers had demanded a US$10 million bribe from South African investors. But true to form, Mugabe has failed to act.

So, despite the audit reports prepared every year, no-one has been brought to book, which analysts say perpetuates corruption and the looting of public resources at struggling state enterprises.

Instead, bad governance practices and outright theft continue to flourish with further evidence of the flouting of corporate governance procedures ranging from “improperly constituted and understaffed boards of directors and board committees” to impropriety in the procurement of goods and services, according to Chiri.