The Sunday Mail
l Authority prejudiced US$5m in 2 years
l Questionable staff recruitment
l Overvalued property purchases
l Investment in moribund companies
AS forensic auditors sift through the financial details of the National Social Security Authority, it seems the pre-emptive action taken by the new board to jettison manager director Mr James Matiza and his fellow directors was driven by the rot exposed by an investigation launched by the National Economic Conduct Inspectorate with focus on the Authority’s dealings in the two-year period after the introduction of the multi-currency system.
The Mr Robin Vela-led board was appointed in July this year.
In an era where portfolio managers are investing in property, NSSA controversially demolished Ximex Mall and constructed a car park
NECI — a department under the Ministry of Finance and Economic Development — is mandated to investigate white collar crimes in both the public and private sector and it unearthed serious anomalies where NSSA was being prejudiced on an industrial scale.
In a period spanning from February 2009 to December 2010, NSSA lost an estimated US$5 million from sloppy procurement processes, inflated property purchases and investments in moribund companies.
But what seemed worrying to investigators were indications that much of the haemorrhage was mainly driven by influence-peddling board members and senior managers who seemed to shepherd the Authority into deals that were not only condemned by the market but also by internal experts in the institution.
Questionable recruitment of staff
While it was generally believed that the structure of NSSA was efficient, there were disturbing allegations that the recruitment of some of the key directors within the organisation, particularly for directors of finance (Mr Patrick Mapani), finance (Mr Tendai Mafunda), occupation health and safety (Mr Rodgers Dhliwayo) and contributions and compliance (Mr Barnabas Matongera) were done on tribal lines as they all come from Manicaland where NSSA’s ex-general manager Mr Matiza also hails from.
The four executives, who were recruited by High Post Consultants which is owned by Mr Patrick Chingoka, were part of the seven key directors that were appointed during the review period.
The other three were Mr Shadreck Vera, the director of Investments, who is from Mashonaland East; Dr Henry Chikova (benefits) from Masvingo and Mr Bright Chidyagwai (ICT) from the Midlands.
Investigations by NECI concluded that even though allegations of regionalism and tribalism could not be proved beyond reasonable doubt “the coincidence that individuals whose homes are as close to the general manager are getting higher posts raises eye brows”.
Therefore, while the allegations could not be proved, they could not be negated as well.
However, there were serious questions that arose from the manner in which the recruitment process was conducted.
There were instances where some board members who were on the recruitment panel did not score those interviewed, only to submit written recommendations later.
For example, when Mr Vera was recruited; David Govere, a board member, submitted written recommendations indicating that Mr Vera was well-groomed for the post.
During the interview, Mr Matiza had scored him at 101.
Although Mr Vera landed the post, he struggled to exorcise the bad tag that followed him from Imperial Asset Management — a company where he was a managing director and was closed in 2005 by the Reserve Bank of Zimbabwe (RBZ) after it was found to be operating outside its mandate by digressing into commercial lending.
It is believed that he was absolved of any wrong doing at the failed company as he went on to later work for the Infrastructure Development Bank (IDBZ) before joining NSSA.
But perhaps the most jaw-dropping move was the decision that was taken by NSSA to hire Mr Patrick Mupani as the director of finance, irrespective of the fact that he came in second after Mr Tendai Mafunda.
Instead, board member Mr Govere recommended that Mr Mafunda be interviewed for the director of corporate services post that he never applied for.
All these questionable decisions led observers to speculate that the whole recruitment process was to make the new appointees pliant to some of the board members.
Sloppy and criminal procurement processes
One of the sloppiest procurement processes was when the Authority set out to buy computer equipment for its head office and regional servers in order to help it better administer its pension schemes.
The tender was floated in 2004 by the State Procurement Board through tender no NSSA 03/2004.
Alpha Systems, Professional Computer Services (PCS) and Afrosoft Corporation were shortlisted for the tender, which was subsequently awarded to PCS.
An agreement between NSSA and PCS was duly signed on October 11, 2005.
Unknown to the NSSA was the fact that its ICT manager, then Mr Jonathan Rushwaya, had cobbled up a consortium made up of PCS, Integra, and Canadan-based Vision Computers.
His liaisons with Vision — which predates the award of the tender — through a director called Jean Paul, were particularly curious as he made personal requests to the extent of asking for financial assistance to enable him to buy a car. After his dealings were exposed, he was simply allowed to resign despite the corrupt and criminal connotations of his actions. It is therefore unsurprising that even though the project was supposed to have been implemented by August 3, 2005, eight months after signing the agreement, nothing had materialised. Even by the time the report was eventually published in 2011, there were no signs of movement.
An attempt by general manager Mr Matiza to cancel the contract before exhausting the dispute resolution channels stipulated by the contract, ultimately backfired as the Authority ended up spending more than US$40 000 in public funds for the arbitration process.
Also, even though the NECI recommended that the case had to be referred to the authorities for prosecution, Mr Rushwaya went scot free.
Influence-peddling board and management
The wisdom in some of NSSA’s investments, including the sincerity in some of the decisions that were being pushed by both its management and board in some, if not all of its major deals, really raised eyebrows.
One of the major projects that Government pursued before the World Cup held in neighbouring South Africa in 2010 was the construction of a hotel in the border town of Beitbridge.
Already, a feasibility study had been conducted by Rainbow Tourism Group through its project managers DMA Project Managers.
Architects Deniel Mandishona were also roped in.
When NSSA took over, it also inherited the project managers and the architects.
The State Project Board subsequently floated the tender for the project, which attracted the interest of Costain and Murray & Roberts.
An interesting process took place during the bidding process.
According to NECI, Mr Matiza recommended that Murray & Roberts be awarded the project.
But when the tenders were evaluated, Costain had quoted $17,4 million for the works, while Murray & Roberts’ tender was $19,6 million.
Had the latter been engaged as per NSSA’s recommendations, it could have potentially prejudiced the Authority of more than $2,2 million.
But that was not the only anomaly.
The SPB managed to uncover that the project manager and the architects – DMA Project Managers and Daniel Mandishona – were practically the same company that was allegedly split in order to maximise profits.
SPB effectively accused Mr Matiza and a Mr Chidhuza, who is understood to have been the NSSA project team manager, of misrepresenting facts.
It tasked NSSA through a resolution in their meeting No. 33 of 2010 through their PBR 0049B to recover the money from the companies.
Nothing was recovered, prejudicing the Authority of more than $86 000.
Inflated property prices
NSSA dealings in property investments, especially after dollarisation, raised even more stench.
Before the multi-currency system, it had always been NSSA’s long-stated commitment to establish a NSSA Park that comprised of buildings between the area bounding Samora Machel to Herbert Chitepo and between Parklane Street and Sam Nujoma.
Such pursuits led the Authrity to purchase Survey House and Chibuku House in the capital.
Both transactions raised eyebrows.
In what was predominantly a buyers’ money, where the buyer had the power to dictate the value of the property under consideration, NSSA ended up submitting to the whims of the sellers.
In some of the instances, it even paid the sellers prices that were more than the value of the properties as stated by real estate agents.
For Survey House, for example, an evaluation by Mabikacheche and Associates established a forced sale value of $450 000 and recommended the upper limit of $600 000.
Inexplicably, NSSA ended up buying the property for $650 000 and, contrary to the norm where the seller pays commission to the real estate agent, it also paid $20 000 commission, losing about $70 000 in the deal.
It was the same when Chibuku House was purchased from Total.
While Bard Real Eastate had recommended an offer price of $2 million, the investments director Mr Vera ended up offering $3 million.
More than $600 000 in potential prejudice was lost from the deal.
In all the contentious property deals, the same excuse that a competing bidder had emerged was always suspiciously raised.
But no deal raises the potential of corrupt dealings than NSSA’s controversial purchase of Ballantyine Park and Bard House, which was superintended over by the then board chairman Mr Albert Nhau.
In the first place, it was the owner of the property, Mr Dennis Green who approached NSSA in order to sell his property for $2,2 million.
His asking price was premised on rentals of $5 600 per month.
An evaluation of the property done by Iwe Neni Real Estate (INRE) priced the property between $1,4 million to $1,5 million based on average rentals of $8 300 per month.
Again, as in the case of the purchase of Survey House and Chibuku House, another “rival bidder emerged” and NSSA opted to buy the property for $2,2 million.
Unhappy with the time that NSSA was taking to consummate the deal, Mr Nhau convened a “sunset meeting” at his house at No 18 Chamberlain Road, Greendale on August 18, 2009.
Mr Matiza and Mr Vera attended at with obscene haste, the deal was concluded at $2,2 million.
But it is the trail of transactions between the property seller Mr Green and Mr Nhau after the deal was signed that is worrying.
The NECI discovered that after the sale of the property, Mr Green was paid varying amounts into his Barclays and Stanbic Borrowdale accounts.
The funds were transferred by the Greens into their offshore accounts “under unclear circumstances”.
It was established that from these accounts, NSSA’s board chairman received $29 478 and Ms Diane Nhau – his daughter – received $25 500 into their Bank of America accounts.
In total, the two received more than $103 697 directly from proceeds of the sale of the inflated property.
NECI argued that NSSA could have easily used valuation reports it got from real estate to downwardly negotiate prices in a market that was considered illiquid.
Suspicious investments
The purchase of a 23,27 percent stake in Starafrica Corporation – dubbed the biggest share purchase transaction by NSSA in the US-dollar era – also set tongues wagging.
Experts within NSSA initially claimed that the shares could have been purchased at a bargain price of 10 cents per share, which valued the whole transaction at $9,4 million.
But board chairman Mr Nhau indicated that offering 11 cents per share was ideal.
However, NSSA made an offer of 12,5 cents per share. Again, they raised the card that there was a competing bidder for the share.
Therefore, the bid was increased by $2,5 million.
All in all, NSSA paid $12,7 million; including deal costs and brokers commission.
There were more revelations of how the Authority seemingly locked investments in underperforming companies.
CFX, a listed unit Interfin Bank, embarked on a cash call in 2009 through which it wanted to meet the $10 million minimum capital requirement from the RBZ.
Interfin, the parent, asked NSSA, which held a 5,3 percent to increase its shareholding to 10 percent.
By subscribing to the rights issue, NSSA could have spent $1,5 million on the deal.
The Authority was however asked to core-sub-underwrite the rights issue together with Interfin.
Curiously, there was no limit set by management to the amount of shares to which NSSA could take up.
There were indications in the market that the shares were very unattractive.
As the rights issue was undersubscribed to the tune of 98 percent, NSSA ended up paying $2,5 million for a 17,10 percent stake in the bank.
An estimated $1 million went down the drain.
NSSA never learnt from this bad deal and this came to light in the Art Corporation deal.
By buying shares on the open market, NSSA could have achieved its intended objective of following its rights to raise its stake from 3 percent to 10 percent at a cost of $209 000.
But management decided to sub-underwrite the rights issue with Interfin at a cost of $467 000.
The Authority was prejudiced of $56 000 in the process.
It was thus inferred that Interfin Bank was using NSSA to prop up its investments.
Board members such as Mr Govere, who also sat on the board’s investment committe (BIC) also allegedly profited as he managed to source cheaper funds for his investments in Harambe and Tacoola.
All the companies that received these controversial investments went bust.
It therefore raises the spectre of the quantum of funds that NSSA was prejudiced of after dollarisation.
