THE National Social Security Authority (Nssa) had by June this year lost more than half of its nearly US$700 million — about US$350 million — total investment portfolio due to market volatility, bad deals and mismanagement of public funds, Zimbabwe Independent can reveal.
Nssa’s investment portfolio includes money market, investment in property, short and long term investments in associates and subsidiaries as well as land inventory and deals referred to as “other investments”.
As at June 2015 Nssa’s total investment was US$698 738 797. This is contained in a strictly private and confidential Deloitte audit report on Nssa dated October 30 2015 exclusively seen by the Independent. “Long-term investments represent long-term loans to various institutions, cumulatively other investments have lost US$12,2 million value between 2009 and 2014,” says the report.
The report also reveals that key documents were missing from individual investment files and these include copies of deed of transfers and share certificates, agreements of sale, proposal from sellers, analysis done and recommendations at various levels. It is also says that record keeping for Nssa’s properties is manual and maintained on spreadsheets. “Included in money markets investments is US$34 million invested in distressed financial institutions and closed banks of which US$11,4 million did not have adequate security,” the report says.
Nssa released unsecured public funds to several banks including Interfin (US$4 930 767), Capital (US$4 196 000), Royal (US$343 907), Genesis (US$585 855) and Tetrad Securities (US$1 353 000).
The authority also lost US$30 million in Capital Bank when its licence was cancelled last year by the Reserve Bank of Zimbabwe.
Other significant investment transactions that were subject of review on the report besides the financial sector capital losses include those involving Ballantyne Park Spar, Rainbow Tourism Group, Celestial Office Park, Joina City, Chisipite Land, Gweru land, Beitbridge Hotel, Star Africa-Plant and Equipment, Guarantees issued, vacant land purchases, St Tropez apartments as well as Ekusileni Hospital in Bulawayo.
The US$45 million Beitbridge Hotel under the Rainbow Tourism Group management was awarded a loan of US$4,4 million in 2013 to buy beds and equipment, but as at August 20 this year Nssa still did not have security over the loan.
The report also says that the Beitbridge Hotel project cost shadily escalated from US$33 million to US$44,6 million.
Nssa possesses land worth more than US$60 million throughout the country, most of which is lying idle.
According to the report, most of the land does not even have agreements of sale, yet the properties would have been transferred to Nssa’s name. Some of the land is collateral acquired by Nssa from different institutions which would have failed to service their loans. A lot of the land is also yet to be serviced and sold. For instance, Nssa has land in Borrowdale worth US$24 million repossessed from Met Bank like that.
Part of the authority’s land, the report says, was repossessed by government.
Nssa lost land in Kwekwe worth US$13 million after repossession by government. The report also adds that land worth US$11,2 million belonging to Nssa was repossessed and derecognised. Some of Nssa’s land in Harare has been invaded by squatters. Nssa also invested US$6 million in StarAfrica in 2013 for a plant upgrade which had not been commissioned by the time of the audit and was not providing any returns although interest was accruing at 10%.
According to Nssa’s investment guidelines, the pension authority is supposed to invest in areas that “generate productive employment, higher productivity and export competitiveness and residential accommodation and other social amenities as well as support empowerment initiatives.”
The report says this was, however, not the case as some of the investments did not fit the bill. The report covered all investments in listed and non-listed companies.
It also reviewed money market placements, loans advanced, efforts undertaken on recovering delinquent loans and success and verified the rates of return on investments, the receipt thereof and how the yield on investments compares to the prevailing market rates and returns.