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Big Saturday Read: A Broken System - Zimbabwe's Road to Perdition

July 27, 2019

The previous BSR demonstrated the egregious looting and corruption in state-owned entities. These are entities that are run by unelected persons who are appointed by the government. The revelations drawn from the report of the Auditor General shocked and appalled many citizens and followers of the Zimbabwean tragic story.

This week, the BSR takes another step, looking into the running of government ministries and departments and how they use public funds. As with the last BSR, data for this article is drawn from the report of the Auditor General. It is a voluminous document running for more than 500 pages, detailing the financial affairs of each Ministry.

Almost all ministries have Funds that are designed to meet specific objectives. These Funds are administered by fund administrators within the ministry. For example, the Health Services Fund under the Ministry of Health and Child Welfare, the School Services Fund under the Ministry of Primary and Secondary Education and the Basic Education Assistance Module under the Ministry of Labour and Social Welfare. When the government allocates money in the national budget, these funds are also given their share. Therefore these funds are also part of the audit report.

It is not possible to present everything in the audit report and still make this an easy and accessible read. As with the last BSR I have chosen to organise the data under the major themes that emerge from the report as a whole. Reading the 548-page report, one is struck by certain commonalities which define the way in which our government is run. One word which aptly captures how the government is run is abysmal. The system is broken and it needs a fundamental overhaul.

The battle between politicians is often over who should be in charge of the state. Less debated is the question of what’s actually wrong with the system of government. A study of the Auditor General’s report reveals a fundamental rot at the core of government. It is a deep institutional problem which means even if you replace current personnel with a new lot very little is likely to change unless the institutional culture and practices also change.

One reason for Mnangagwa’s failure to make headway since he took over in November 2017 is that the institutional culture and practices under his predecessor’s regime have persisted under his rule. This audit was for 2018 when Mnangagwa was already in charge yet nothing has changed from previous audit findings. The pattern of deep institutional weaknesses is still the same. The leakages are on a grand scale so that however much money is poured into government very little of it trickle down to serve public needs.

I will start with major features common across ministries before highlighting the more blatant cases of mismanagement and abuse of public resources. The cases in the second section will reveal one but more often more of these themes.

Common themes

No risk management or disaster management systems

The ministries and funds they administer have no risk management policies and consequently there are no risk assessments that are performed. Good corporate governance requires entities to manage risk. It also requires them to do regular risk assessments and to have disaster management systems. Also called business continuity, disaster management enables entities to continue running their business in the event of a disaster.

All successful organisations have risk management policies, carry out risk assessments and develop business continuity plans. For the most part, the Zimbabwean government runs without any risk management policies, does not risk assessments and has no business continuity system. In this regard, it is telling that the highest office in the land, the Office of the President and Cabinet, has no risk management policy.

Poor asset management

Despite holding vast numbers of public assets, there is a conspicuous absence of asset registers at government ministries and funds that fall under their administration. They do not maintain registers of assets which exposes them to fraud, misappropriation and other forms of abuse. In some cases assets such as motor vehicles are registered in names of individuals or companies. Other have no registration books while some are used without logbooks. In short, it’s a haphazard system which leaves public assets open to abuse.

Diversion of Funds

Another common occurrence is the diversion of funds for purposes other than for which they are supposed to be used. This usually happens between a parent ministry and entities that fall under it. The typical arrangement is that the parent ministry “borrows” money from an entity, such as a fund that was set up for specific purposes.

There are at least two problems with these diversions. The first is that money intended for a specific purpose is diverted to other purposes. Consequently, those who ought to have benefited under that Fund lose out. For example, funds from the Zimbabwe Prisons and Correctional Services Fund which are meant to cater for prison inmates’ medical treatment were diverted to pay prison staff medical expenses. This had been happening for more than 5 years, virtual theft from the most vulnerable and weakest members of society who are entirely dependent on the state.

Undocumented Expenditure

By far the most common and dangerous feature is expenditure that is not supported by documentation. Going through the Auditor General’s report, there is no government Ministry or Fund that is innocent of this charge. This means transactions are done, often running into thousands and sometimes millions of dollars, without any supporting documents.

The result, as the Auditor General pointed out is that there is nothing to show that the transactions were authentic or that goods and services that were paid for were actually delivered and if so, that the delivery was as per the agreement. As we will see in the second part, multimillion dollar contracts were not supported by any written documents. So-called loans were paid out or settled without any supporting documents.

Under these circumstances, it is not surprising that there are many instances of dodgy deals in which goods and services were paid for but there was no delivery. This results in vast leakages of public funds.

Overall, the absence of documentation raises doubts over the existence of the transactions. It also raises questions whether public funds were used for proper purposes. Finally it also raises doubts as to whether the public funds or goods were given to the right persons.

Dodgy loans

There are Ministries or Funds that disburse loans to specific target groups, often the youths, women, small and medium enterprises under the guise of empowering them. Some loan facilities are common in the area of agriculture where inputs, irrigation and projects are funded by way of public loan facilities. However, common characteristics are that these loans are never repaid or recovered and there is often no follow-up at all.

Critically, there is usually no supporting documentation to prove the existence of the loans. As the Auditor General says there is no way of knowing that the loans were actually given to intended and purported beneficiaries. What are first presented as “revolving” funds are exhausted after the first round of disbursements. 

There is also a high risk that these funds, which often crop up in the run-up to elections are devices used by the ruling party to lure voters and could therefore fall under vote buying schemes which are a form of election bribery. In any event, using funds for political purposes is an abuse of public funds.

Ghost workers

The reality of ghost workers is all too apparent from the financial numbers relating to costs of employment. This is because the wage bill on the various Ministries books is often different from the bill at the Salary Services Bureau. There is no reconciliation of figures which leaves a balance that is unaccounted for. In each case there is a variance which shows that there might be a misstatement or fraud.

Procurement failings

The government is probably the biggest buyer of goods and services across the country. Public officers in charge of public funds have opportunities to take advantage of their position to grant contracts to their friends and associates or even to themselves through corporate vehicles.

This is why there are elaborate rules that govern public procurement. They help to prevent conflicts of interest and also ensure that the government gets good value for money.

That’s why the rules require major projects to be put to tender so that competitive bids are submitted and the government can choose the best and cost effective offer.

That’s why a public officer is also required to get at least three quotations from different suppliers before concluding a deal to buy a good or service. There must be written contracts and other documentation such as payment vouchers, receipts and delivery notes must be kept.

Conspicuous in the running of ministries and departments is a systemic violation of public procurement procedures. In some cases there are no contracts, even for multimillion dollar projects. In most cases there are no receipts, payment vouchers, delivery notes or records of assets.

Despite the existence of the Procurement Regulatory Authority of Zimbabwe (PRAZ) the public sector continues to view procurement rules with little to no regard whatsoever. What appear to be small contacts even for a few thousand dollars add up into hundreds of millions across the public sector and over time. The tiny leakages add up into a flood when put together.

Direct payments but no reconciliation

The Audit report shows a systematic practice whereby Treasury pays creditors of Ministries directly but there is no communication with the individual Ministries. Consequently, there is no reconciliation between the Treasury figures and the individual Ministry’s figures.

For example, Treasury made direct payments worth $5.4 million to service providers on behalf of the Ministry of Defence but there were no confirmations or reconciliations to support the payments which left the AG unable to validate the payments. As she pointed out “if suppliers do not acknowledge payments, dual payments might occur without detection”. Without receipts from service providers one can never be sure that direct payments were made to the proper persons. 

Non-compliance with rules

A study of the AG’s report shows extensive non-compliance with the Constitution, relevant legislation and rules established by the government itself. All the shortcomings revealed in the report are not for a lack of rules. Indeed the Treasury has elaborate rules detailing the basics of public financial management. They are just not followed. 

Non-compliance is a culture, not a random aberration. The fact that there is no penalty for non-compliance has made the rule-based system a mere paper tiger. Public officers know that nothing will happen to them if they violate the rules and they violate them with reckless abandon.

For example, the Ministry of Finance is a habitual offender when it comes to non-compliance with rules for reporting to Parliament which is supposed to provide oversight and controls. It is supposed to report to parliament regarding loans government would have taken and guarantees it would have given. It is a requirement that these reports be provided to parliament at least twice a year. Accounting the AG, the provision has not been complied with in 2015, 2016 and 2017. The Public Debt Management Office acknowledged this non-compliance.

It is important to add that the constitution also requires such loans and guarantees to be reported with 60 days of conclusion and up to now the Minister has never provided such reports to Parliament whenever such facilities are taken. 

Lack of Controls

While the law provides for controls and oversight in public finance management, they either do not exist or they are weak. Therefore in many cases staff continue to draw Travel and Subsistence allowances even though they don’t comply with rules that require them to account for previous advances of allowances. No wonder then that T&S is one of the most abused facilities. We will also see that there is no maintenance of asset registers which leaves public assets open to misappropriation and abuse.

One of the key organs of controls is an audit committee in an organisation. The rules requiring the establishment of such committees are generally ignored across the public sector. The majority of departments do not have functional audit committees. The Ministry of Finance, which is supposed to lead by example in matters of good corporate governance, was reported to have a “non-functional” audit committee. Despite being constituted in 2017, the audit committee had never met, even once. It was a mere window-dresser. 

The law requires at least two meetings of the Audit Committee per year. Without an audit committee most government departments are running without internal oversight. It is hardly a surprise then that there are so many violations which go without restraint.

Having set out the broad themes, I will now give some concrete illustrations drawn from the Auditor General’s report.

Part B

District Development Fund

This is a Fund under the Office of the President and Cabinet designed to help in the development of districts across the country. It had a pre-paid facility for fuel with Zuva a fuel company. Fuel worth $64226 was withdrawn from that facility but the DDF has no record of this withdrawal. Instead it relied on the Zuva service stations that were disbursing the fuel.

According to the Auditor General “I could not vouch for all such fuel expenditure as being a proper charge to the public funds” She adds that the risk is that “fuel withdrawals may be made for purposes other than those of the Fund”.

Interestingly the management of DDF did not dispute the AG’s findings. Instead, they acknowledged the possibility of abuse and proposed to deduct reimbursement from the wages of individuals who abused the facility. It’s a clear case of corruption. The response is not good enough. There’s enough ground to investigate criminal abuse of public finds in this case.

Dodgy Digikad

The Ministry of Labour and Social Welfare entered into a contract with a company called Digikad Zimbabwe Private Limited for the supply of biometric cards. The Ministry borrowed $500 000 from NSSA for this purpose and paid Digikad in advance.

However by September 2018 Digikad had only supplied 50000 cards leaving a balance of 200000. In order to repay NSSA the Ministry diverted 500000 from the Public Assistance Programme meant to support vulnerable groups. Incredibly, Digikad is suing the Ministry for specific performance!

The Ministry should never have entered into such a big deal without the funds. The Auditor General is using the Ministry to pay back the funds to the Public Assistance Programme and to pursue the delivery of outstanding cards from Digikad. This deal needs further investigative scrutiny by ZACC.

War Veterans Fund

The fund pays school fees for children of war veterans. While it is paid directly to the schools some was paid into individual accounts. However, there is no documentation such as receipts to confirm and verify payments that were made. As the AG says, “in the absence of supporting documentation, it would be difficult to verify the authenticity of the transactions”.

The risk is aptly stated in the AG’s statement that “expenditure incurred without valid supporting documentation exposes public resources to dual payments, misappropriation and abuse”.

Undocumented Debt Servicing

Treasury paid $1.97 million to service debts but it did not provide source documents to support the claim. Treasury said it relied not on source documents but on schedules provided by the RBZ which allegedly had the source documents.

The AG rightly stated that she could not confirm the “correctness, completeness and classification” of the expenditure. Ironically, the Treasury was in violation of its own rules which require payment vouchers to be properly supported before any payments are done. If the rule-setter cannot comply with its own rules it’s not surprising that everyone else in government does not care for the rules.

In the 2017, Treasury had paid $1 million to settle debts of the Zimbabwe Asset Management Company (ZAMCO) and said it had done so in error. It promised to recover the payment. However, according to the AG nothing had been done to recover the money. It’s possible this money could sink without recovery.

Why hasn’t Treasury taken steps to recover the money from ZAMCO? It would be worth knowing which of ZAMCO’s creditors were paid. Perhaps it was not an error after all, but a deliberate transfer of funds through ZAMCO to pay specific persons. There is no reason why a broke government would not pursue a million dollars that was reportedly paid in error. One would expect more urgency in correcting the error, which is curiously absent in this matter.

Private Lender or mere Middleman?

In 2016, government entered into an agreement with a “private lender” whose name is not mentioned, to finance an agricultural inputs programme. The private lender would provide loans to farmers who would collect inputs from GMB depots across the country.

In 2018, two contracts were concluded for the provision of inputs for winter wheat production ($58.6 million) and maize and soya bean production ($353.7 million). The program would be funded through issuance of Treasury Bills (presumably to the private lender). However, the government also made an advance payment of $182.5 million to the private lender. There are several problems with this arrangement:

First, the Auditor General found no evidence of “detailed guidelines, procedures and the nature of accounting records” which would be used and maintained by participants to ensure the existence, accuracy, completeness and valuation of the transactions”. This compromised transparency of the program.

Second, there was no evidence that the inputs procured were actually disbursed to the farmers and that they were reconciled to the loan amount.

Third, there was no evidence that the inputs were delivered to the GMB for onward distribution to the farmers. There is nothing to show that the inputs were given to the target community.

This meant that there could be under-delivery of the inputs by the lender. More importantly there was a conflict of interest because the lender which was doing the procurement having received payment from government was also involved in the distribution of inputs, without a third eye monitoring and verifying the transactions.

The program raises fundamental questions as to the actual role and relevance of the private lender since the government was in fact providing funds to the lender to procure the inputs and then distribute to the farmers. What was the point of the private lender other than as a conduit for receiving money from government, procuring the inputs and then distributing them? Is this not something that the government could have done itself without the need for a middleman? Was the “private lender” in fact a mere middleman?

Pedstock Loan Scheme

In 2016, the Ministry of Agriculture entered into an agreement with Pedstock establishing a scheme called the Pedstock Facility Phase 1. Under this scheme 80 farmers were to be given irrigation equipment worth $10.8 million.

However, by 2018 the Ministry had recovered just $94 753 (1 percent recovery rate). The beneficiaries were not billed and their identity is not disclosed. The Auditor General highlights the risk that these loans may never be recovered.

The Ministry’s response was that the Department of Irrigation does not have capacity to make recoveries and it was recommending that the loans be passed on the Agribank to pursue the debtors.

This reads much like the old RBZ Farm Mechanisation Scheme where elites got agricultural equipment and never paid back until the debt was eventually passed on to taxpayers when the government assumed the debt. It’s important to know who the beneficiaries were. ZACC must demand a list of beneficiaries and publish it. They must carry the cost. It should never be passed to taxpayers.

Special Maize Production Programme under the Sakunda Facility (Command Agriculture?)

This is described as an $18 million Sakunda Holdings Facility Phase 1 scheme. Loans worth $16.3 million were given to 233 farmers but there has been no recovery of the loans. The Auditor General found no evidence of a billing system for the beneficiaries and no evidence that they were invoices.

There is also no verification that a company called Maka Resources Private Ltd which was engaged to rehabilitate irrigation infrastructure actually did the work. $1.7 million from the Sakunda Facility was supposed to support the Department of Irrigation by purchasing vehicles and equipment. However no vehicles or equipment were ever bought.

There is also no evidence of this agreement as the AG was not given the relevant documents. As the AG states, “I was unable to determine how the loan facility operated since I was not provided with the Term Sheet or Loan Agreement between Sakunda Holdings and the Government”.

Without recovery of the loans the state has to dip into taxpayers funds to service the debt. The AG has asked for the provision of the Loan Agreement or Term Sheet for audit purposes. The Ministry’s response was to merely say it had noted the AG’s observation and that slow progress has been due to lack of an approved Term Sheet”.

This is scandalous. It means the Ministry which is charge of the scheme and a party to it does not even have the Loan Agreement or Term Sheet with Sakunda Holdings. ZACC must look into this scheme and demand sight of the Loan Agreements and beneficiaries. The nation deserves to know how public funds were used in this scheme.

Solutions Motors No. 1 - Motor Vehicles 

On 19 December 2017, the Department of Irrigation entered into an agreement with a company called Solution Motors for the purchase of 10 vehicles. The contract was worth $518850. The full amount was paid in advance.

However, Solution Motors delivered 6 vehicles which did not meet specifications. The Department of Irrigation took them anyway, the breach notwithstanding. The remaining 4 vehicles were never delivered. The outstanding vehicles worth $207540. Curiously, the Department of Irrigation did not seek redress to recover the money or specific performance from Solution Motors.

For its part, Solution Motors pleaded lack of foreign currency as the reason for non-delivery, even though it had received advance payment from the Department of Irrigation. It never reimbursed the Department of Irrigation the value of the vehicles that were paid for but never delivered.

Solution Motors No. 2 - Plant and Equipment 

On 5 December 2017 the Department of Irrigation entered into a contract with Solution Motors for the purchase of plant and equipment which included excavators, tipper trucks, motorised compactor and a water bowser. The contract was worth $958 665 which was paid in advance.

However, at the time of the audit in 2018, plant and equipment worth $515 650 had not been delivered. The AG also found that there were no registration books for the equipment that had been delivered and was therefore unable to verify actual ownership. The reason given for the absence of registration books is that Solution Motors has failed to provide Customs Clearance Certificates.

The net result is that at law the Department of Irrigation does not own the plant and equipment. If there were a dispute over the property public funds are at risk since the government has no proof of ownership.

The two Solution Motors cases raise important questions. As the AG pointed out it is doubtful that Solution Motors had the capacity to supply the goods, particularly the plant and equipment and the vehicles.

The beneficial ownership of Solution Ownership needs investigation so that the persons behind this company which has obviously benefited from public funds are identified. It is important to pursue and recover the public funds sunk into Solution Motors.

How was Solution Motors awarded two major contracts within the space of two weeks, contracts upon which it dismally failed to deliver? Did it go through proper public procurement procedures? Was due diligence performed to ensure that Solution Motors had the capacity to deliver?

After all, Solution Motors got the money to purchase the goods. It was no more than a middleman for the government department but even then it failed to deliver and kept the money. There can’t be a more blatant case of theft or at least, abuse of public funds.

It’s worth noting that both cases happened soon after the coup that toppled former leader, Robert Mugabe. Mnangagwa was only a few weeks in office. Who are the people behind Solution Motors? That’s should be a good starting point for ZACC to investigate but clearly there’s something rotten in these deals and public funds have been siphoned.

The Hydrogen Generator

The Meteorological Services Fund bought a “hydrogen generator” from a French company, Meteo France International for €474 000. It paid $100 000 towards the deposit but it was not enough so there was no delivery. When did this transaction happen? In 2006. That’s 13 years ago.

As the AG ruefully stated, the hydrogen generator “may never be delivered”. The $100 000 will be lost forever. The Ministry of Environment could only say “follow ups are still being made on this issue” pleading lack of foreign currency. The truth is the poor country has probably lost the $100 000 for good.

Pumps that never came 

In Mutare, 2 syringe infusion pumps were bought in November 2017 but they were never delivered and there was no evidence of seeking redress from the provider even though they were paid in advance. A nearby facility, Russel General Hospital was reported to have received less supplies than it paid for and again there no evidence of follow-up. These examples are just a microns of the bigger picture in this sector across the country.

The health system is a complete disaster. The entire country has just 282 ambulances and of these only 134 are described as functional. Hospital staff say most are just vehicles, without specifications to accurately describe them as ambulances. The Ministry regularly borrows money from Funds such as the Health Services Fund depriving these already depleted funds of capacity to deliver.

The Chinese gift

The Chinese will take interest in a precious donation made to the government through the Ministry of Agriculture. The AG was making a follow up on the matter. Through a grant the Chinese government donated 36 tractors, 30 vehicles and 200 motorbikes.

The AG found that these donated assets were never recorded in the Master Asset Register of the relevant department. There was also no documentation for the Grant Agreement which meant the AG could not verify the terms. There was also no information as to how the assets had been distributed.

The question then is on the whereabouts of these donated assets. Who got them? It’s hard to tell because as stated they are not even recorded in the asset register. In the absence of information, one is left with the impression that they must have disappeared down the black hole of corruption and patronage. Still, it’s another point of investigation.

Disguised donations?

The Ministry of Justice went into a “donation arrangement” with a South African company, described as “Gloew Trading”, which was the donor. In terms of the arrangement, Gloew Trading was to donate 4 million litres of diesel to the Zimbabwe Prisons and Correctional Services.

To this end the Ministry got a waiver of duty to the tune of $2.5 million. In other words the donated fuel would be brought into Zimbabwe without paying duty. The National Oil Infrastructure Company (NOIC) would provide storage facilities and CMED would provide transport services.

The Ministry’s records showed that it had received 39 010 litre of diesel by 31 December 2018. However, CMED the official transporter shows 672 500 litres of diesel had been withdrawn from the NOIC storage facility. Furthermore, the AG found no documentation to show how 642 490 litres of this fuel was used and what it was used for.

The AG rightly highlighted the risk that the fuel may have been diverted into the commercial market. If the suspicion is correct, it means someone fraudulently took advantageous the waiver of duty to bring fuel duty free under the guise that it was a donation. The AG highlights that the government may have been prejudiced of revenue to the tune of $2.5 million in unpaid duty on the fuel because of the Certificate or Waiver issued on grounds that it was a donation to government.

Was this in fact a fraudulent scheme carried out under the guise that it was a benevolent donation to the government? The issues raised by the AG warrant further investigation and scrutiny. The Ministry said the donor was compiling the documents. This is arguably a suitable candidate for ZACC and law enforcement agencies to investigate.

ZIMRA donations to social welfare

ZIMRA, the country’s tax authority made a donation of several goods to the Ministry of Labour and Social Welfare. They included bales, sacks and bags of goods. However, these donated goods were not properly recorded in a manner that ensures accounting and transparency. They were simply recorded as bales, sacks and bags or by quantity or weight. Furthermore, some of the deliveries were made in the absence of relevant Ministry personnel.

The AG reported that upon physical inspection, some of the bales, sacks and bags were open and goods were all over the place suggesting tampering. The goods at one location were in a poor state and there was no evidence of stock checking. There was no explanation to why these goods had not been given away to vulnerable persons in social welfare.

Instead they were exposed to bad storage conditions and misappropriation. There was also a similar case reported at the Ministry of Home Affairs where a vehicle was also donated but the AG observed that it was kept in bad conditions. That car could have been put to good use.

The Ministry of Defence also received several donations which included a bus, computers, televisions, refrigerators, radios, printers, recorders and chairs. However, none of these assets were recorded in the asset register, which exposed them to the risk of theft and misappropriation.

Undocumented loans

The Auditor General reported three loans amounting to $19 million which were advanced to three companies in 2015 but they were not provided for examination. Despite raising the need to avail these agreements, if they exist, the Auditor General has never seen them.

Two of the institutions that received the so-called loans are the Industrial Development Corporation ($4.2 million) and ZISCO (($3.7 million). The third organisation which got the biggest loan amounting to $11 million is called Farmer’s World. As the Auditor General rightly stated, the authenticity of the loans remains doubtful when there are no loan agreements.

The Ministry did not respond to the Auditor General’s concerns. Why would the government be reluctant to provide these loan agreements if everything was done in good faith and the loans actually exist? We know ZISCO and IDC are state companies but who owns Farmer’s World? What service did it provide to the government, if any? Has this loan been repaid?

Undocumented payments to service providers

Treasury made direct payments worth a combined total of $10.9 million to two service providers namely Academy Sales of South Africa ($6.9 million) and Zimbabwe Power Company ($4 million) but there was no documentary evidence to support the payments. The AG reported that because of the absence of documentation she “could not establish the nature of the services that were paid for”. This risks the possibility of unauthorised expenditure. 

The direct payments violated payment and procurement procedures set by government itself. The proper way as the AG advises is that payments to service providers must be made from the line ministries. Where Treasury makes direct payments it should provide supporting documents for the payments and the ministry should do reconciliations.

These direct payments leave important questions hanging: what was the payment to ZPC for? Remember, ZPC paid millions of dollars to Pito Investments for goods that were never delivered? Who owns Academy Sales of South Africa and what service did it provide to be paid $6.9 million?

The ZRP Retention Fund paid a total of $417 662 for goods but there was no documentary evidence to back those transactions. Some of the equipment bought was still undelivered. The AG was therefore unable to verify whether the goods were received and indeed whether the transactions made economic sense. She also raised the risk that payment may be made for goods that are not received.

The Ministry did not dispute the AG’s findings but instead said it had written to the service provider called Amazing Ville Technologies to deliver the outstanding goods. This is an all too typical response of government departments. They have to be reminded by the AG to demand service or settlement from service providers even though they would have already paid for the service.

Undocumented loans to parastatals and local authorities

The Auditor General found that Treasury advanced loans to parastatals and local authorities to the time of $68 million but there were virtually no supporting documents. Furthermore, the figure for similar loans in another report called the Statement of Public Financial Assets was recorded as $1.2 million leaving a huge variance of circa. $66.9 million which suggests a material misstatement of Loan advances to parastatals and local authorities. This can easily be resolved by availing supporting documentation and doing reconciliations.

Disguised election largesse

At the women and youth affairs ministry, abuse of public funds often take the form of funding “projects”. None of the funds poured into these projects is ever recovered. It’s telling that most of these projects crop up in the periods before elections, suggesting vote-buying antics by the ruling party. They know the money will never be returned.

The Women’s Development Fund gave $33566 to 16 projects but they all collapsed within a year. No due diligence had been done on the beneficiaries and there is a possibility of fraud, nepotism and misappropriation. It would be good to identify these projects and the beneficiaries of the loans. The AG reported that some civil servants had benefited contrary to the rules against conflicts of interest. The Ministry simply said it would deduct money from their wages. But it’s a clear case of abuse of public office and funds.


The report also revealed that $506 138 in loans were disbursed to youths. It was not recovered and the Ministry admitted that it was unrecoverable. In the Ministry’s words, “the youths who benefited did not have adequate training on projects and hence most of the projects failed at infant stage. There is no hope for recovery”

What they don’t reveal is that these were campaign gimmicks and vote buying was done under the auspices of youth empowerment. The government has done this before and will do it again and come up with the same excuse.

Undocumented Borrowings

The government stated in its Summary of Transactions of the Consolidated Revenue Fund that it had borrowed $566 million represented by Treasury Bills of $356 million and external loans of $210 million. However there was no documentary evidence to back these borrowings. More importantly, the $566 million figure differed significantly from the figure stated in the Statement of Public Debt which is $1.9 billion (a massive difference of $1.3 billion).

Clearly there was no reconciliation of figures resulting in material misstatement of borrowings, especially in regard to Treasury Bills. It also suggests a lack of coordination within the system of government, further credence to the view that the left hand has no idea what the right hand is doing.

There were no supporting documents for an government investment of $3.4 million into cooking-oil manufacturer Olivine. There was no share certificate or other documentation.

Various ministries including Defence and Industry and Commerce did not keep a register of  utility bill payments, which meant errors may not be detected and public funds end up being wasted.

At the Ministry of Defence, the AG found no supporting documents for expenditure worth $4.1 million which meant she could not “validate the expenditure. Of this amount, $1.2 million was stated under the heading of “other expenditure” a broad and indeterminate category which accommodates abuse and misappropriation of funds. As the AG states, “Processing payments without adequate documentation exposes public funds as it will be difficult to validate the expenditure”. The Ministry blames a new filing method for the missing documentation, which is a less than convincing excuse.

The Special Gold Unit Fund under the Ministry of Mines had a total expenditure of $313 507 which was unsupported by documentation which left the AG unsure whether expenditure was authentic and a proper charge on the fund.

There was no document to support loan agreements between the Ministry of Agriculture and Sakunda Holdings.

Three Toyota Prados bought by the Ministry of Agriculture in 2017 were not registered. The explanation was that they were still working on “the paperwork”. At least 9 vehicle registration books were missing. While the Ministry claimed that two of the vehicles had been sold, there was no documentary evidence availed to the AG. Also when the different departments were merged as part of one Ministry there was no stock-take of vehicles to ensure they were all accounted for, raising the risk of leakages through misappropriation.

Diversion of Funds

The Standards Development Fund which falls under the Ministry of Industry and Commerce advanced $158 000 to the parent Ministry. The Ministry claimed it regretted the transfer of funds from the Ministry and that it was clearing the debt and had so far paid $84 986.

The Ministry of Labour and Social Welfare was a major culprit of diverting money from specific funds. It took $232 985 from the Disabled Persons Fund while the National Rehabilitations Centres Fund advanced $26 000 to the Ministry. The Ministry also took $6 294 from the Child Welfare Fund meant for vulnerable children.

In energy, $17.2 million from the Strategic Fuel Reserve Fund was unconstitutionally paid to the Zimbabwe Power Company and the ZETDC. 

 

There is much more of this actross the board, funds meant for specific purposes that were diverted to the parent Ministry - from NSSA, POTRAZ and many other institutions. Some of the charges against Minister Mupfumira who has just been arrested relate to the diversion of funds. The truth of the matter is she is not the only Minister who has done that. A study of the Auditor General's report shows that at leats 90% of ministers, past and present have done precisely the same things. They have used public funds from departments or Funds under their Ministries in that manner. They have often used the excuse that Treasury has been slow to avail funds to them.

 

However, some may have used that process to abuse public funds to pursue their own interests, which means they have abused public funds under the auspices of meeting the public good. This is why it's important for ZACC to investigate all cases in which public funds meant for specific purposes have been diverted to parent ministries as "borrowings" or other purposes. 

Conclusion

After studying the AG’s reports in great detail, I have come to the conclusion that the system of government is so fundamentally flawed that what is needed is not merely a change of leaders or more money but a root and branch overhaul of the governmental system as a whole. it's not fit for purpose. the leakages are systematic and widespread. They are not a result of individual failings alone. Its a systemic failure. The government is institutionally corrupt. 

Indeed, you can get a well-intentioned individual into this system but unless the institutional culture and practices are changed, they too will end up doing the same corrupt things. They will surely fail because the system is broken. It’s partly why the GNU between 2009 and 2013 did not succeed in this area of reform. New men and women came into government but the system never changed. Zimbabwe is in dire need of political reforms but long term, the country desperately needs institutional reforms at the heart of the state: the government machinery; how government is run.

 

the system is weak, ineffective and corrupt. It leaks in a bad way. The rules exist but nobody follows them. It is truly tragic. If you ask Ministers past and present, they will find grounds to justify their conduct. They will never accept that they were wrong; that this is not the way to run government. They would never use the same metthods to run their businesses because they know it's wrong. But they care less with public funds. 

External stakeholders who have an interest in helping Zimbabwe, especially those in the development, finance and donor community, must take time to study the AG’s reports in order to gain proper insight into how the system is fundamentally broken. You can pour vast amounts of money into Zimbabwe but given what I have observed it is akin to pouring water into a bucket with a leaking base. It doesn't work. The system is fundamentally broken and it needs urgent fixing. Without that, Zimbabwe's road to perdition is well and truly assured. 

WaMagaisa

 

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