HomeLocal NewsPsmas: Zanu PF greedy bigwigs' feeding trough

Psmas: Zanu PF greedy bigwigs’ feeding trough

WHEN news of extortionate salaries paid to Public Service Medical Aid Society (Psmas) executives despite the society’s indebtedness and poor service delivery broke, there was a public outcry from Zimbabweans most of whom subsist below the poverty datum line.

Taurai Mangudhla/Bernard Mpofu

The anger and disbelief were not only triggered by the shoddy service Psmas was rendering to its members, but also by extended period of looting underlined by former chief executive officer Cuthbert Dube’s average US$500 000 salary and allowances package a month.

Like vultures circling over a carcass and moving in, cabinet ministers and senior government officials are circling over Psmas and voraciously feeding on the country’s largest medical aid society.

While top government officials devoured Psmas, nearly one million of its beneficiaries were failing to get access to treatment and drug facilities for which medical practitioners and centres were demanding cash upfront, as the medical aid society reeled under a burdensome US$140 million debt, itself a sign of hardships or distress buffeting the entity.

Following shocking revelations of his disprportionate salary and perks which are unprecedented in local corporate history, Dube became a key figure in the institution’s hall of shame.

The irony, which would later be exposed in a forensic audit compiled by international audit firm Ernst and Young — released in February — was the lavish lifestyles and benefits bestowed to the board of directors and executives.

Looting and gross mismanagement, coupled with corruption, has led to the crumbling of the medical aid society.

The draft forensic audit report on the utilisation of Psmas funds revealed the medical aid society has made several payments amounting to tens of millions of dollars between 2009 and 2014 to top government officials under different classifications, including board fees.

To demonstrate the financial abuses, Psmas and its subsidiary Premier Service Medical Aid Investment splurged about US$9 million on luxury motor vehicles between 2009 and 2013, according to the report.

The report says Psmas board members, executives and middle managers benefitted from excessive splurging on luxury vehicles. It says Psmas even bought a second-hand Toyota Land Cruiser Prado from Oppah Muchinguri for US$60 000.
“We requested for but were not availed with the agreement of sale between Muchinguri and Psmas, according to the asset register, the vehicle was recorded as a Psmas pool vehicle,” it says.

The amount was paid as US$40 000 in cash and US$15 000 in bank transfers within 45 days.

Apart from the motor vehicle sale, Muchinguri made US$46 000 after selling a residential stand situated at Harare’s Borrowdale Estate to debt-ridden Psmas.

The report reveals that Psmas bought 3 041 hectares of land from Muchinguri, although the institution appears not to need the stand as it is still lying idle.

“Stand 18 Carrick Creagh Township 2 of Carrick Creagh of section 4 Borrowdale Estate was transferred into Psmas’ name on October 13 2010,” reads the report.

According to the report, there was no indication of a board approval for the land purchase, or evidence of a valuation of the land having been carried out.

The land purchase was approved by Dube, who was retired by the board in January last year after revelations of his obscene salary and perks amounting to about US$500 000 per month sparked public outrage and condemnation from government.

Muchinguri is but one of the politicians and government officials that benefitted from shady transactions with Psmas, as Health and Child Care minister David Parirenyatwa is also implicated in the Psmas scandal.

Parirenyatwa did not only receive US$100 000 from Psmas through his private company CHEST, but could also have benefitted in many other ways from the medical aid society.

President Robert Mugabe’s spokesperson George Charamba, a former board member of Premier Service Medical Aid Society (Psmas), received US$228 278 between 2009 and 2013 in board fees and allowances — a fortune for a civil servant.

Charamba’s allowance was part of a total US$2 438 000 spent on the Psmas board of directors’ remuneration.

Dube and Psmas Public relations executive Mavis Gumbo claimed travel and subsistence allowances from Psmas for their assignments at national football body Zimbabwe Football Association ( Zifa).

Dube, who was Zifa president, claimed and received US$290 000 during the reporting period, while Gumbo, who was heading the women’s soccer division, received US$118 500 recorded as national duty. These claims were for trips to countries like Brazil, Gabon, Algeria, New York and Morocco on Zifa business.

During the period under review, Psmas purchased vehicles worth US$6 709 973, while PSMI spent US$1 882 649. The auditors noted that all motor vehicles purchased during the period were not reflected in any of the annual budgets on file and yet they were all approved by Dube.

In 2009, a total of US$157 509 was spent on the purchase of cars for executives and in 2010, another US$2 million was spent on cars for executives, marketing department and pool vehicles.

In 2011, US$2 230 643 was used for the purchase of pool vehicles and cars for board members, executives and middle managers.

Psmas further bought cars worth US$574 973 in 2012 and US$1 735 136 in 2013. Cars purchased for executives and marketing managers include five Toyota Land Cruiser 200 Series VX, four Toyota Land Cruiser Prado VXL, eight Isuzu KB300 D-TEQ double-cab 4×2, two Toyota Hilux 3.0 litre, a single Chevrolet Cruze, two Mercedes-Benz Elegance 50, a Mercedes-Benz S600 LWB and a Mini Cooper.

The executives, who received the cars included Cuthbert Dube, Enock Chitekedza, Augustine Khoza, Nicholas Munyonga, Cosmas Mukwesha, Richard Mutasa, Anna Mutengwa, Ralphael Paradzayi and Juliana Sabarauta. For its middle managers, Psmas sourced three quotations from Toyota Motors, Croco Motors and Eftrade Ventures (Pvt) Limited.

Psmas then selected Eftrade as the preferred supplier although the company was not part of its approved suppliers. Eftrade, according to the report, altered the requisition and increased costs.

“We noted that the initial requisition from Psmas was for 61 vehicles (three Toyota Hilux 30, 4×4 Raiders, 18 Toyota Hilux 4×2 Raiders, 27 Toyota Corollas 1,33L manual, three Toyota Hilux single-cab 4×2, eight Toyota Avanzas and two Toyota Fortuners for a total price of US$1 848 400,” reads the report.

“However, Eftrade changed the vehicle models and revised prices to US$2 630 624 for the purchase of 51 vehicles (18 Toyota Hilux 25 litre, three Toyota Fortuners , 27 Chevrolet Cruzes and two Toyota Hilux 3,0 litre and a single Toyota Raider).”

According to the report, acting group finance executive, Shingi Muchinenyika told auditors that vehicles worth US$195 361 paid for by Psmas had not been delivered. The vehicles are yet to be delivered and are deemed as “work in progress”. The company’s records were also observed to be in shambles.

“At the time of our investigation, we noted that the electronic register did not have complete data for some fields, for example, information relating to asset user, asset purchase price and title deed reference for buildings and vehicle registration numbers for vehicles,” states the report.

To dramatise the looting, 11 Psmas executives, including Dube, splurged US$22,8 million in “executive allowances” outside the payroll and evaded tax, resulting in the company coughing up US$9 million to the Zimbabwe Revenue Authority (Zimra), according to the report.

In all, Psmas executives received US$86,9 million in salaries, bonuses and allowances between 2009 and 2013 at a time the company owed creditors US$119 million and was struggling to pay its workers. The report also says Dube, his driver, two secretaries, and 11 executives shared US$22 888 281,28 outside the payroll between 2012 and 2013. The executives also shared US$24 million in allowances and US$7 million in bonuses through the payroll.

Ernst and Young further noted that some travel and subsistence transactions were masked through use of an in-house cash book system that was coded and recorded in the Proteus accounting system later.

On reconciling the two, Ernst and young noted significant differences between the two systems’ claims amounting to US$56,4 million in the period under review.

Transactions in the in-house excel cashbook were kept separately on grounds they contained transactions that related mainly to Psmas executives and also in some instances senior government officials, legislators and politicians, the audit firm revealed.

Florence Tsiga, personal assistant to Psmas group finance director, is quoted by the auditors saying the cash books also contained other confidential payments.

“Tsiga informed us that she recorded all transactions she processed in the cash books, which she then submitted to the Psmas cashbook accountant at the end of each month,” reads the report.

“Due to the confidential nature of most of these transactions, the cashbook accountant confirmed that he would then mask (code) the beneficiary and description of the transaction before posting into the Proteus system.”

The audit said this created and increased opportunities for concealing fraud and or error.

Psmas employees who were interviewed for the purposes of the audit report confirmed there were a lot of confidential payments made from the group finance executive’s office, and hence the need to have a separate record-keeping system.

The employees said masking the information was meant to maintain confidentiality of the information relating to staff benefits.

The audit also showed Psmas had a compassionate fund whose purpose is to provide medical benefits support on compassionate grounds even if the member’s medical plan did not include the treatment or benefits, or where a member and beneficiaries have exhausted their plan limits.

Apart from payments to Psmas members, some fees totalling US$1,3 million or 34% of the total disbursements under the compassionate fund between 2009 and 2013 were also approved for high-profile individuals being politicians, legislators and government officials, some of whom are non-members, on the basis of corporate social responsibility.

The organisation also made questionable purchases from officials in government.

As more drama continues to unfold on the goings-on at Psmas, the fight to wrest control of the institution is intensifying.

There is a looming collision between Public Service, Labour and Social Welfare minister Prisca Mupfumira and Psmas members as the minister has shown keen interest in controlling the medical aid society.

The minister has clashed with Psmas over a number of issues, among them the reduction of government’s seats on the board of directors from six members to three.

She, together with Parirenyatwa, recently issued a directive for the re-instatement of fired managing director Henry Mandishona, which the Psmas board has rebuffed arguing the two do not have the authority to do so.

The recent hiring, firing and controversial directive to re-instate Mandishona suggests there might still be a rotting carcass as greedy vultures salivate at the continued prospect of another feeding orgy.

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