THE parliamentary portfolio committee on Public Service, Labour and Social Welfare has blasted the National Social Security Authority (NSSA) board for lack of sound investment decisions after the authority lost substantial amounts when the country adopted the use of multiple currencies in 2009.
The committee chaired by Mazowe South MP Margaret Zinyemba felt that contributors (pensioners) were let down by the NSSA board due to its lack of professional investment decisions as reflected during the dollarisation process.
“The committee is concerned that NSSA did not take into account the lack of adequate liquidity and good security. Due to lack of good sound investment decisions, they allegedly lost a lot of money during dollarisation of the economy,” said Zinyemba, when she recently tabled the committee’s first report on NSSA’s activities in the House of Assembly. The committee did not reveal how much the authority lost.
Zinyemba’s committee further noted that NSSA investments were not benefiting contributors, neither were loans advanced by the scheme.
“Contributors are not benefiting from the housing schemes operated by NSSA as the houses and stands are being allocated to those on housing waiting lists from city councils,” the report noted.
Most pensioners who were on retirement by April 1 2009 receive US$25 monthly after pensions were converted to US dollars.
The committee recommended that NSSA should do an audit of its books in order to recover any residual value from beneficiaries of its loans.
“A forensic audit should be carried out in order to ascertain the benefits accrued by the borrowers and therefore determine how much should be paid back. The investment company should also institute recovery measures for monies that were lost during the dollarisation process,” the committee said.
The authority has two housing projects in Marondera and Masvingo. The Marondera project has 700 stands and 200 houses while that in Masvingo has 200 serviced stands. In Harare, NSSA in partnership with FBC Bank, is developing 600-stands at Glaudina Park.
NSSA General Manager James Matiza confirmed to the committee that the authority had lost all monetary assets and loans they had made after the conversion to multiple currencies.
“Change over from Zimbabwe dollars to multiple currencies led to some loss in investment funds. Virtually all monetary assets were lost and borrowers did not return anything after the removal of zeros initiated by the Reserve Bank of Zimbabwe,” the report quoted Matiza as having said.
The committee’s findings are buttressed by an August 2010 Comptroller and Auditor-General report that raised similar concerns on the board’s conduct of business in addition to giving loans to key management personnel.
The audit report noted that the authority had advanced a US$3 million loan to two unregistered companies in a structured deal. It also noted that senior managers had access to loans, which constituted 47% of all approved loans.
“The authority should review its investment policy such that structured deals are not used as a way of obtaining cheap funds at the expense of the contributors. I suggest that the authority makes follow up on this issue,” the audit report reads. The loan had been extended to ReNaissance Trading to purchase wheat for flour-making. ReNaissance was at that time not registered with the Registrar of Companies.
The audit report further admonished the NSSA board for lack of a proper policy with companies it has shareholding in, such as Africom, FBC and MMC. Africom was contracted to provide telecommunication services to NSSA yet the authority has over 20% shareholding in that company.
FBC, in which NSSA has 20% shareholding and is the authority’s bankers, were also contracted to sell Glaudina stands.
The authority used MMC stockbrokers to purchase Star Africa shares even though one of the brokers’ managers was related to NSSA’s Investment Settlement supervisor.MMC was also used to purchase shares in Dominion House, Delta, CBZ, Aico and Innscor. NSSA was created by an Act of parliament, National Social Security Act (chapter 17:04 of 1989) after it was noted that many Zimbabweans could not afford private pension schemes. The scheme is administered by the ministry of Labour and Social Services.