THE forensic audit of Zimbabwe’s largest medical aid provider, Premier Service Medical Aid Society (Psmas) that unearthed huge expenditures on extortionate salaries, holiday allowances and other perks, and luxury vehicles for senior executives at the expense of service delivery is symptomatic of the cancer of excessive spending on opulence prevalent in government and parastatals.
Despite state and quasi-state institutions being financially hamstrung due to the current economic crisis, executives have developed a penchant for luxurious lifestyles and hefty perks that include the latest models of top-of-the-range vehicles such as the Range Rover and Mercedes-Benz.
That Psmas and its subsidiary Premier Service Medical Aid Investments (PSMI) splurged about US$9 million on luxury motor vehicles between 2009 and 2013 as revealed by the Ernst and Young audit while spending US$86,9 million in salaries, bonuses and allowances at a time when poorly paid civil servants who form the bulk of Psmas medical aid members failed to access health services, reflects mismanagement and misplaced priorities.
The misplaced priorities are, however, not limited to parastatals and quasi-state entities.
Right at the top, President Robert Mugabe has spent millions of dollars on foreign trips, with government sources saying he spent US$25 million on the first five months of the year, translating to US$5 million per month.
Expenditure on foreign trips is occurring despite Finance minister Patrick Chinamasa repeatedly expressing alarm at the state of national coffers that have been severely depleted due to liquidity constraints, which has resulted in low capacity utilisation, company closures and job losses.
The dwindling revenues have nonetheless not stopped government from spending on luxuries.
In July and August, for example, government took delivery of the 633 vehicles purchased from Indian automobile company, Ashok Leyland Ltd at a cost of US$50 million. The vehicles included all-terrain troop-carrying trucks and water cannons mostly used by the military and police.
On top of this, the Zimbabwe Defence Forces (ZDF) will soon receive an additional 240 vehicles purchased from the same company as the cash-strapped government splurges its meagre financial resources on the security establishment, in a move consistent with Mugabe’s patronage system.
Of the 240 vehicles, 90 will be allocated to lieutenant-colonels, the first line of commissioned officers who are appointed by Mugabe. All the ranks above lieutenant-colonels, that is colonels, brigadier-generals, major-generals, lieutenant-generals right up to ZDF commander Constantine Chiwenga, have luxurious vehicles. The equivalent ranks in the Airforce of Zimbabwe have also been catered for.
Not to be outdone, the Judiciary Service Commission (JSC) seems to have joined the bandwagon resulting in questions being asked by lawyers and other arms of the justice delivery system.
The JSC is retaining the money it collects as court fees and has used the money to buy luxurious vehicles for judges who, on appointment, are entitled to at least three cars, a Mercedez-Benz E Class, Land Rover Discovery and a 4×4 double-cab.
Meanwhile, officials from the National Prosecuting Authority and Attorney-General’s Office are complaining that the JSC is underfunding them while some lawyers are questioning how the judges’ opulent lifestyles aid the justice delivery system.
The lawyers feel, and rightly so, the money collected by JSC could be put to better use if it was used for basics such as stocking libraries and purchasing and maintaining recording equipment, among other things.
As if to emphasise that he has no commitment to curtail government expenditure, Mugabe last month appointed 14 new ministers and deputy ministers to his already bloated cabinet. The ministers have been allocated top-of-the-range vehicles.
This is despite the fact that the country is experiencing serious power shortages that have plunged the nation into on average 18 hours of darkness daily. The power cuts have added the woes of Zimbabwean companies most of which are already struggling.
The continued acquisition of the luxury vehicles flies in the face of cabinet circular number 16 of 2011, which states that unless otherwise cleared by cabinet, operational vehicles should come from local assemblers. It is ironic that government mandates government departments to support local assemblers and yet it fails to lead by example.
The culture of senior government officials and parastatal executives awarding themselves obscene perks in the face of grinding poverty and shoddy service delivery points to a lack of accountability, according to economist John Robertson.
“What we are witnessing is the disappearance of accountability of people who commit what should be classified as crime,” Robertson said. “It has become a mindset that accountability does not apply to them and this is a form of criminal activity that has become formalised and even sanitised.”
Robertson said the excessive spending on comforts is money that could be used to keep workers in employment or improve their service of employment.
The failure by government to curb excessive spending is made more damning coming after Mugabe told civil servants at this year’s Independence celebrations in April to tighten their belts because the government coffers had been hard hit by the economic difficulties the country is going through.
Former president of Zimbabwe National Chamber of Commerce and economist, Oswell Binha believes the huge expenditure on luxuries points to siphoning and a lack of commitment to national objective.
“Whether by chance or by omission or commission the spending (on luxuries) is divorced from national objectives,” Binha noted. “Priority is given to siphoning institutions instead of working for the good of the people.”
Binha said “lack of system oversight” in institutions has allowed for frivolous spending on unnecessary comforts at the expense of critical service delivery.
He said there is need for a deep -ooted paradigm shift of the whole system of corporate governance in institutions to address the problem of irresponsible use of resources. Binha said there is need for the country to adopt the Chinese model of accountability where such acts of abuse are seen as undermining national sovereignty and punished as such.
As long as there is no significant remedial action taken against irresponsible spending on luxuries, the country’s economic turnaround will remain a pipedream.