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Financial impropriety still rampant

PROPER financial management and accountability in Zimbabwe remains a mirage — an unrealistic hope or wish that cannot be achieved anytime soon — given that there are no strong policy, legal, institutional and economic frameworks to curb misappropriation and abuse of funds in private and public sectors.

By Fidelity Mhlanga

Finance minister Patrick Chinamasa
Finance minister Patrick Chinamasa

Even though financial crimes are punishable under Zimbabwean law, the frameworks for doing so are weak and often a lot of officials liable for such offences walk away with a slap on the wrist.

Accountability — responsibility of either an individual or department to perform a specific function in accounting — is mostly important in financial management since public sector organisations are held accountable to their constituents, electorate and citizens for collecting and distributing public funds according to budget priorities and for minimum cost.

That is why fiscal transparency is propagated as part of a larger policy goal of good economic governance and is even pursued to achieve poverty reduction and attain the Millennium Development Goals or Sustainable Development Goals by the United Nations.

At a government level, during budget preparations essential figures estimating revenues and limiting expenditure are produced.

Accounting control keeps track of financial transactions received and made payments made by all government ministries, institutions and agencies. It is critical in monitoring and reporting of receipts and expenditures against approved budgets. Accounting system is important in order to comply with international standards.

The Auditor-General’s office has repeatedly highlighted corruption and abuse of public funds, but the department’s reports are largely ignored or swept under the carpet. Millions of dollars are lost annually, with the culprits walking away with mild reprimand or punishment or scot-free despite prosecutable evidence in most cases.

Discussions centered on mismanagement of funds came to the fore when delegates from the accounting profession converged at the Public Accountants and Auditors Board (Paab) conference last week.

While making his presentation at the forum, Finance minister Patrick Chinamasa said parastatals were technically insolvent and perennially draining the fiscus purportedly due to, among other things, mismanagement, poor corporate governance and corruption.

“Our experience with public enterprises has been disheartening due to corruption, extortionate perks and poor corporate governance. Parastatals are an albatross around the neck of the fiscus,” Chinamasa said.

Parliamentary Portfolio Committee on Finance member Eddie Cross also took the opportunity to ask how US$15 billion in diamond revenues mysteriously disappeared, as publicly claimed by President Robert Mugabe, when the country boasts of having some of the sharpest accountants and auditors in the world.

“Where were you when US$15 billion disappeared in this country,” Eddie Cross also asked auditors and accountants at the Paab conference.

This comes after Mugabe last month admitted in a televised interview that the country had lost US$15 billion in Marange since formal diamond mining started in 2009.

Lack of accountability is also widespread in the financial sector where executives have caused the collapse of many banks by misusing depositors’ funds, but have largely remained unscathed despite causing serious damage and suffering.

At the conference, Depositors Protection Corporation CE John Chikura said it was worrisome that a person who steals pangolin and a cow spends 9 and 7 years in jail respectively and yet those who abused depositor’s money get away with their loot.

Currently, depositors are struggling to recover funds amounting to more than US$115 million after the collapse of Trust Banking Corporation, Genesis Investment Bank, Royal Bank, Interfin, Capital Bank, Allied Bank and Kingdom Bank.

Series of bank failures were blamed on poor corporate governance and abuse of depositors’ funds by bank executives.

Zimbabweans can be forgiven for thinking government does not mind banking executives helping themselves to millions in depositors’ funds.

“We should have a judiciary system that is blind and not choose who is who in the zoo,” said Pan-African Federation of Accountants CE Vickson Ncube.

Standards Association of Zimbabwe director-general Eve Gadzikwa said in order to minimise corporate collapses, there was need to instill discipline in the private and public sectors as patronage networks prevalent in the country was eroding accountability systems and growth.

International Federation of Accountants CE Fayez Choudhury said government should promote a legal framework for sound public finance management, adoption and implementation of International Public Sector Accounting Standards and build public sector accountancy capacity.

Vice-President Emmerson Mnangagwa, who was guest of honour at the event, said government was committed to enhancing transparency and accountability in both public and corporate sectors.

He said government was working on enhancing the corporate governance framework in Zimbabwe which was launched in April last year.

Mnangagwa said government has thus enacted legislation, providing for the implementation of robust reporting frameworks, such as the Public Finance Management Act and recently amended the Paab Act to prescribe accounting and reporting standards for use in Zimbabwe, including the application of internationally recognised reporting, auditing and accountancy education standards. He challenged Paab to facilitate the implementation of the code in both public and corporate sectors.

“Corruption continues to rear its ugly head and it can render all these strategies unsuccessful if it goes unchecked. As professional and moral obligation to contribute significantly to the fight against the scourge of corruption,” he said.

“Corruption works against the fundamentals of good governance which is clearly stipulated as one of the nine founding values and values and principles of the constitution.”

Despite the fact that government has imposed a salary cap of US$6 000 for top earners in parastatals and local authorities in March 2014, parastatals and local authorities’ executives continue to enjoy exorbitant remuneration and refuse to slash astronomical salaries and allowances when they are making perennial losses.

In 2014, official documents listing the perks of 90 parastatal heads and 91 municipal executives showed that executives at parastatals such as Zimbabwe Broadcasting Holdings, NetOne, Marange Resources, Zimbabwe Revenue Authority, Zimbabwe Electricity Supply Authority, Grain Marketing Board, Civil Aviation Authority of Zimbabwe and Allied Timbers, among many others, were still earning way above the salary cap.

With government failing to reform state enterprise, Chinamasa said he was setting up units in his office to act upon the auditor general’s report.

“Corrective measures are currently being implemented, dedicated units in the office of the auditor general in my office that will firstly analyse financial statements of all public sector institutions that is parastatals and local authorities to follow up all audit findings with a view to take corrective action,” he said.

Transparency International, which ranks countries based on how corrupt their public sector is perceived, based on the informed views of analysts, businesspeople and experts in countries around the world, last year ranked Zimbabwe 150 out of 168.

From the days of the 1988 Willowgate scandal, which rocked the nation, there has been very little effort by the government to punish the offenders.

Major corruption cases that have rocked Zimbabwe since then include the ZRP Santana scandal (1989), War Victims Compensation (1994), GMB (1995), VIP Housing (1996), Boka Banking (1998), Zesa YTL Soltran (1998), Telecel (1998), Harare City Council Refuse Tender (1998), Housing Loan (1999), Noczim (1999), DRC timber and diamond UN-reported scandals (1999), GMB (1999), VIP Land Grab (1999), Harare Airport scandal (2001) and Ziscosteel scandal, among many others.

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