The Sunday Mail
Officials at urban councils countrywide, taking advantage of lax management, defrauded ratepayers and their institutions of US$50 million through fake payment receipts and unspecified cash withdrawals.
The looting spanned four years.
It has also emerged that some municipalities are operating without mandatory asset registers while Mutare City Council inflated its payroll, apparently to facilitate siphoning of funds.
The receipting scam occurred from 2009 through to 2013 and went unnoticed largely because the affected councils did not audit their books during that period.
The Urban Councils Act (Chapter 29:15) mandates local authorities to audit their financial statements within 180 days of a particular financial year-end.
According to the Comptroller and Auditor-General’s 2013 Report, nearly 90 percent of councils breached this legal requirement.
In Harare, the report reveals, cashiers allegedly stole US$7,2 million after conniving with IT specialists to generate fake receipts using “anonymous computers”.
An extended audit test showed that 1 386 receipts amounting to US$3 251 180 were “fictitious” while seven computers were used to generate fake receipts valued at US$3 075 751.
The IT experts allegedly connected virtual receipting machines to the billing system, meaning processing was activated without any physical connection.
Machine 43 issued 40 fake receipts; machine 123 produced 2 359 receipts worth US$571 031; machine 133 (US$1 024 795 receipts); machine 142 (US$1 188 275 receipts); machine 143 (US$108 082 receipts) and machine 210 (US$81 465 receipts).
The alleged fraudsters also took advantage of the absence of bank and debtors’ account reconciliations by the City Treasurer’s Department.
Further, 51 702 receipts were cancelled outside normal procedure and council was prejudiced of US$6 956 494.
Town House officials failed to satisfactorily explain this receipt cancellation.
The report reads, in part: “The extended audit tests of the selected machines discovered 11 244 duplicate receipts amounting to US$631 053. There was duplication of receipts used as proof of payment from the machines selected.
“These receipts would be such that the same receipt number could be used on different customers with different amounts and different dates.”
Chitungwiza, Marondera, Mutare and Kadoma councils as well as Ruwa and Lupane local boards also failed to compile bank reconciliation statements.
Chitungwiza’s statements lacked supporting documents while US$32 615 appeared under “unidentified cash withdrawals” and US$944 021 under “unidentified transfers”.
It is understood the Treasurer’s Department failed to validate these transactions which were also untraceable due to the absence of an audit trail.
Chinhoyi Municipality lost US$555 158 after workers made unauthorised cash withdrawals from the main revenue office and bank accounts; while a Norton Town Council administrator failed to account for US$28 651 collected from shop licences.
Mutare City Council, according to the report, awarded a tender to a private company for the supply of water pipes and fittings valued at US$662 466.
Despite paying 50 percent, the job was not completed on time.
Questions were raised over the council’s payroll which covered 1 865 employees when its maximum staff establishment stood at 1 250.
Further, the local authority had no supplementary budget to cater for the bloated payroll costs after figures jumped from US$7 128 899 to US$9 519 065.
Officials at Victoria Falls Municipality duplicated vouchers worth US$38 739 while Ruwa Local Board processed an annual bonus payout of US$105 504 outside the official payroll system.
The board’s management failed to explain the decision.
The audit revealed that Harare City Council operated without a land bank register that shows sold and unsold properties.
Council asset and inventory valuation is not up to date, it is reported.
It also emerged that Bulawayo City Council books were last audited in 2010 and there was no evidence that earth-moving equipment worth US$1 520 000 was registered with the Central Vehicle Registry.
The report says: “The payroll system had critical weaknesses. Salary clerks had access to the master file and were able to amend banking details. This was worsened by the fact that there were no controls in place to detect such unauthorised changes.
“Some of the councils did not have consolidated tender registers to document tenders issued during a financial period. A tender register is essential to ensure transparency in the tender process. The following were notable examples: Mutare City Council, Chitungwiza Municipality, Gokwe Town Council and Epworth Local Board.”
In their defence, the councils said they had adopted measures to reduce the plunder.
They also said delays in finalising year-end accounts were largely caused by shortage of experienced accounting personnel.
Harare City Council management said: “The receipting system has been upgraded to reduce loopholes that existed before by the introduction of pre-printed stationery with security features are in place.
“Indeed, the efficiency of the Internal Audit Division has over the years been greatly affected by the lack of requisite tools.
“The observation and recommendations are mostly acknowledged and will definitely go a long way in improving the efficiency and effectiveness of the division.”
Allegations of impropriety continue to plague councils with Harare, Chitungwiza and Chegutu among the major culprits.
In 2014, Chitungwiza Town Council employee representatives told Parliament that their bosses were siphoning funds and depositing them in secret bank accounts.
Management denied the allegations. Mr Ephraim Katsina — one of the representatives — said: “In 2013, the managers and directors were issued with payslips indicating that they were not getting any basic salary after a Government directive, but we later on discovered that they were getting outrageous allowances paid through a secret account.
“Their salaries are no longer managed by council’s salaries officer, who is in grade nine. They are now being managed by a human resources manager.”
