Government lost over US$100 million in a space of three years after various ministries disbursed loans to parastatals and local authorities without following due documentation procedures and eventually failed to recover the funds.
Other millions of dollars were also lost to Government officials who falsified claims for travel allowances, shady tender deals and wasteful expenditure, most of which was not supported by invoices and receipts.
According to a damning report by the Comptroller and Auditor-General, Mrs Mildred Chiri, which was submitted in 2012, parent ministries advanced loans to parastatals.
Executives of some State-linked firms reportedly gobbled US$600 million in salaries and allowances between 2009 and 2013 as well as US$133 million last year alone.
The money was pocketed by 3 000 individuals who sat on boards or were chief executives and senior managers of the country’s 78 parastatals and State enterprises.
Mrs Chiri noted in her report that the Ministry of Transport, Communication and Infrastructure Development disbursed loans amounting to US$45,3 million to statutory bodies such as the Zimbabwe National Road Administration (Zinara), Telone, Air Zimbabwe Holdings (Pvt) Ltd, National Railways of Zimbabwe (NRZ) and Civil Aviation Authority of Zimbabwe (Caaz) while local authorities were given US$30,7 million — all of which was not repaid.
“During the year, the Ministry (Transport, Communication and Infrastructure Development) advanced Air Zimbabwe Holdings (Pvt) Ltd a loan amounting to US$5 000 000. However, the loan agreement availed for audit was not signed by the contracting parties to confirm their obligations. . .” reads part of the report.
The audit also noted that a US$15 million loan was given to NRZ while Caaz got US$6 million, but the Ministry of Finance, then headed by Mr Tendai Biti, failed to avail loan agreements to authenticate both loans.
“I could not ascertain the terms of the loans,” noted Mrs Chiri in the report.
“The Government stake in some parastatals was not disclosed in the records of parent ministries which could result in loss of public resources.”
She recommended that loan agreements should be signed by all parties to the contract to legalise the transaction while an accurate Statement of Public Financial Assets should always be produced so that the status of Government assets is correctly stated.
Apart from the shady loans, some ministries were also caught in a messy situation where officials failed to explain variances in balance as per system (PFMS) and balance as per return.
The Ministry of Local Government, Public Works and National Housing’s Public Finance Management System had a balance of US$46,2 million while the Sub-Paymaster-General’s account had a balance of US$48,6 million, reflecting a difference of US$2,4 million.
Mrs Chiri said the ministry should investigate this US$2,4 million variance.
She added that audit tests on the Ministry of Mines and Mining Development revealed payments to the Exchequer disclosed on the return were US$162 035 019 while the bank statement reflected aggregated payments of US$164 992 170, resulting in a variance of US$2 957 151.
“The ministry failed to give a satisfactory explanation of the variance which also should have been reflected as the closing balance,” reads the report.
Mrs Chiri further condemned the Ministry of Mines and Mining Development for borrowing US$318 994 from the Mines and Mining Development Fund for travel allowances. The borrowings were ruled unconstitutional and in breach of the Mines and Mining Development Fund constitution whose core objective is to support the Mining Titles System.
The ministry only repaid US$108 283 while US$210 711 was not reimbursed.
The Comptroller and Auditor-General was worried why the ministry submitted nil returns to Government from 2009 to 2011 despite the State having investments in various entities that fall under its jurisdiction. With a Government investment portfolio of US$20,9 million in Hwange Colliery Company Limited, nil return was declared.
The Ministry of Primary and Secondary Education was also rapped for failing to avail acquittals for Per Capita Grants amounting to US$5,4 million.
“I therefore was not able to verify how the funds were utilised. In the absence of a monitoring mechanism by the ministry to ensure proper accountability of the disbursed funds, the likelihood of misuse of the same cannot be ruled out,” noted Mrs Chiri.
In yet another case from the same report, the State Pension Services overpaid eight widows by US$357 956 due to the absence of effective internal control procedures. The overpayments were only detected after one of the overpaid widows pointed out the anomaly and only US$86 811 of this amount was recovered.
Mrs Chiri said fraud was rife in Government ministries as officials were making false claims for travel and subsistence allowances while security items such as receipt books were not accounted for. This, she said, might have resulted in the books being used to defraud Government.
Furthermore, some ministries that collected revenue were not surrendering it to Treasury while foreign missions were failing to provide monthly revenue reports on how much they collected and would have utilised.
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