ZIMBABWE continues to be prejudiced of billions of dollars through commercial crimes as shown in various audit reports of both the public and private sectors, but very little has been done to bring the culprits to book due to handwringing by government.
Kudzai Kuwaza/Hazel Ndebele
Most of the crimes which are tabulated in voluminous audit reports, with damning allegations against bosses of various parastatals and financial institutions, gather dust as there is no appetite to apprehend the culprits despite impoverishing thousands of citizens.
This has encouraged corporate malfeasance as perpetrators know they will only get a slap on the wrist and easily get off the hook. To date no major conviction has been made based on the audit reports. The few which are presented to court drag on for several months and in some cases years due to congestion in the courts.
A recent audit by Deloitte Advisory Services for the period August 1 2013 to June 30 2015 on the National Social Security Authority (Nssa) shows blatant mismanagement of funds by former executives. Nssa has, for years, been at the centre of poor corporate governance with investments in failed banks and buildings that have become white elephants. This has been at the expense of pensioners who, as a result, get paltry monthly payments which are inadequate for their survival.
Corporate negligence at Nssa has resulted in the new board, appointed by Labour minister Prisca Mupfumira last year, sacking senior management, including general manager James Matiza. However, it is a case of the government closing the stable door when the horse has well and truly bolted given the millions of dollars that have been lost through criminal irresponsibility.
The executives awarded themselves salaries of up to US$30 000 and housing loans of up to US$2 million prejudicing pensioners who earn as little as US$30 per month, according to the audit.
Although Mupfumira is more concerned that the money they took should be recovered, she remains mum on the issue of prosecution. Despite being accused of wasting and looting millions, they are, according to Nssa chairman Robin Vela, set to get retrenchment packages minus what they owe in loans instead of being hauled to the courts for alleged criminal negligence.
Government has mandated that no executive should earn more than US$6 000, but Nssa bosses, like many in other parastatals, have ignored this directive demonstrating that there is no importance attached to cutting costs for the benefit of long-suffering consumers, be they depositors or pensioners.
The country has seen a number of banks collapsing due to mismanagement and lack of corporate governance. Some of the banks that have closed since 2004, to mention but a few, include Genesis, Capital, Interfin, AfrAsia, Tetrad, Royal, Trust and Allied. These banks have prejudiced depositors of their hard-earned cash and have seriously eroded the confidence of the banking public in the financial services.
Nearly all forensic reports for the closed banks have pointed to shareholder delinquency as the catalyst to the bank failures with shockingly high non-performing loans which, in some instances like the Tetrad case, were said to be at 99%. Despite these reports showing glaring anomalies, it largely remains business as usual.
Economic analyst John Robertson said the Zimbabwean government is the pioneer of ignoring rules to do with corporate governance.
“It all starts at the top where some people think they should not be subject to audit,” said Robertson. “Those who commit commercial crimes should be punished by being taken to court, but government cultivated the wilful violation of the law which translated to a right for almost every sector to ignore the rules.
“The banking sector, for example, undermines rules such as awarding unsecured loans to bank directors who deem such actions as privileges and yet it affects the bank in the long-run resulting in closures.”
Robertson’s concerns are justified if one looks at how the Interfin case was handled. When Interfin went under curatorship in 2012, the debt gap was US$98 million, but when it was liquidated last year, the debt had increased to US$158 million, due to accrued interest.
The US$60 million increase in the debt could have been used to reimburse a significant number of affected depositors. The blame can be laid at the door of the Reserve Bank of Zimbabwe (RBZ) which was slow to liquidate the bank.
“The delays by the Reserve Bank to close distressed banks give shareholders and management time to strip assets and by the time it is liquidated, it’s a shell,” Deposit Protection Corporation chief executive John Chikura said in an interview with this paper in June last year. He said RBZ should move swiftly when closing banks to protect the interests of depositors.
However, government has drawn plans to create a commercial court to deal with white collar crime to help expedite cases of fraud and other cases of corporate malfeasance. But the plans are yet to translate into action and as the authorities hesitate, the country continues to bleed due to mismanagement and looting in both state and private entities.
For economist and former Zimbabwe National Chamber of Commerce president Oswell Binha, there is need to improve the quality of the judiciary rather than add further burden to the fiscus.
“It does not matter how many institutions we have, what we need is to have quality in the judiciary to deal with cases that come before them,” Binha said. “With a national budget that cannot meet our national requirements ,we need to have quality rather than quantity that burdens our fiscus.”
He said the failure to adequately to curb poor corporate governance practices is “a manifestation of the weaknesses of our institutions” adding that the country is enmeshed in a culture of impunity.