THE Ministry of State Enterprises and Parastatals, in a joint operation with the Zimbabwe Revenue Authority (Zimra), is investigating reports that some parastatals have two payrolls which they are using to siphon public funds amid a growing furore over the staggering salaries being paid to bosses of the bankrupt state companies.
This comes in the midst of other reports that Zimra is greatly concerned about the number of state enterprises abusing duty-free certificate facilities to facilitate shady and corrupt import deals. The facilities are not available to state companies although some bosses of these companies, in collusion with senior government officials, unlawfully use them to import goods free of duty.
Duty-free certificates are issued by permanent secretaries to ensure goods imported for government consumption do not attract duty. However, some officials and their cronies have been abusing these facilities to evade tax.
Information obtained this week shows that Zimra officials are also worried about state enterprises and private companies which are not meeting their tax obligations. Zimra is also demanding that all companies and individuals must comply with tax laws, including Income Tax, Value Added Tax, Pay-As-You-Earn and Customs and Excise duties.
The issue of double payrolls and bosses of state enterprises paying themselves staggering salaries — ranging between US$11 000 to US$15 000 a month — has caused alarm in government circles where civil servants and even ministers earn paltry salaries. Civil servants earn between $US150 and US$250 a month. Ministers earn slightly above this range.
In a bid to address these issues, State Enterprises and Parastatals minister Gorden Moyo yesterday met Zimra officials.
“I had a meeting with Zimra officials to discuss these issues,” Moyo said. “It has come to our attention that there are some parastatals which have two payrolls. As government we think it is only proper for Zimra to check if these people who are being paid double salaries or are manipulating double payrolls for personal benefit are paying tax. We agree that Zimra should investigate this and ensure tax laws are applied rigorously,” Moyo said.
“We are targeting CEOs and senior management of parastatals because they are the ones who are benefiting from this system. These officials have also awarded themselves salaries that were not approved by line ministers. So we think in all these issues there could be a case for tax evasion.”
Zimra commissioner for operations Tichaona Chiradza yesterday confirmed that senior officials from the tax collecting authority had met Moyo and were probing issues raised at the meeting, including the issue of double payrolls in the context of taxation and other tax matters.
“We had a meeting with the minister this (yesterday) afternoon and we discussed the issue of compliance with tax laws. We discussed various issues and we are going to check if companies and individuals that we are looking into are paying tax to the state,” Chiradza said.
“In this regard, we appeal to anyone with information on these tax issues to come forward and help us. We can pay 10% of the monies collected to the people who give us information. So people must help us.”
Chiradza said Zimra was worried that certain people were abusing duty free certificates to import goods without paying duty. “Those certificates are issued by permanent secretaries to cover goods that are exclusively imported for government use. But there are some people taking advantage of these facilities.”
The Zimra official said the duty-free certificates were “not available to state enterprises” but to government alone. The same applies to paying tollgate fees. Chiradza said there were some people at state enterprises who evade paying toll-gate fees claiming their vehicles belonged to the government.
“Government vehicles are clearly marked and usually they have white registration numbers,” he said. “Some people who work for parastatals sometimes abuse this system and evade paying tollgate feels claiming to be driving government cars. Vehicles belonging to state enterprises and parastatals are required to pay when they pass through our road tollgate points. The exemption from paying tollgate fees only extends to vehicles belonging to government.”
Moyo also met officials from the Comptroller and Auditor-General’s office on Tuesday to deal with issues of compliance with the law in terms of financial reporting and statements, observance of government directives and the relationship between his ministry and comptroller and auditor-general’s office. The meeting also looked into the problems the comptroller and auditor-general’s office was facing.
On the same day Moyo also met Reserve Bank governor Gideon Gono to discuss the state of parastatals and turnaround strategies. He also had meetings with the ambassadors of Australia and Sweden which focused on parastatal reforms, corporate governance, legislative reviews, restructuring and the inter-parastatal debt.
Officials from the comptroller and auditor-general’s office expressed concerns about how parastatals were being run, especially with regard to compliance with auditing requirements.
They said they faced serious problems in doing their job, including corporate governance matters, delays in appointing boards of parastatals, poor composition of the boards which lack gender and professional balance, ineffective audit committees and lack of performance benchmarks for the boards.
They indicated that systems were not working properly and as a result there were situations where parastatal board members were allowed to determine their own remunerations and hence the payment of board members like employees in some cases. They recommended that clear contracts for each board member must be drawn and agreed upon.
The officials from the comptroller and auditor-general’s office also said there was a lack of rationalisation of allowances, conflict of interest among some board members and lack of independent-minded board members, as well as clashes between the boards and management of parastatals or the ministry and the boards and management.
Besides this, there were also problems of late submission of accounts and lack of audited accounts. Parastatals were also failing to table their audit reports before parliament, they said.
Due to the weakening of internal control systems, the officials further noted that here were too many leakages, including fraud and theft.
Cabinet recently approved a raft of proposals designed to pave the way for sweeping reforms at the mostly dysfunctional public entities which are either technically insolvent or facing collapse. There are 76 state enterprises in Zimbabwe.
Some of the approved issues related to the board of directors, appointment of substantive chief executive officers, board fees and sitting allowances, remuneration of CEOs, financial reporting and annual general meetings, and staff complements and restructuring. The need for state companies to adhere to procedures when entering into joint ventures and strategic partnerships was also approved.