HomeLocal NewsUS$20m looted in Zimra corruption

US$20m looted in Zimra corruption

AN audit into the goings-on at the Zimbabwe Revenue Authority (Zimra) has exposed massive corruption, fraud, poor corporate governance and tax evasion scandals within the authority with shocking revelations that Treasury was prejudiced of more than US$20 million.

By Wongai Zhangazha/Bernard Mpofu

Zimra commissioner-general Gershem Pasi
Zimra commissioner-general Gershem Pasi

According to the audit report compiled by local firm HLB Chartered Accountants and released on September 26, which has become public information after Zimra annexed it to a court affidavit yesterday, the authority’s commissioner-general Gershem Pasi worked for two years, from 2011 to 2013, after his contract had lapsed, illegally drawing hundreds of thousands of dollars in salaries and allowances.

The report also shows that Zimra executives failed to investigate a whistle-blower’s report on the externalisation and over-invoicing of US$300 million by a local telecoms firm (name supplied) through its foreign sister company.

Amid dwindling revenues worsened by massive company closures and general economic underperformance, the acts of commission and omission by Zimra executives saw the tax collector losing millions of dollars to corrupt activities.

The Zimra board-sanctioned probe came after a whistle-blower’s report on irregularities in the importation of executive cars, which saw Pasi and several executives sent on forced leave. The audit began on July 3.

During the period under review, it was also revealed that Pasi allegedly directed Zimra employees to make misrepresentations that the authority had investigated tips from whistle-blowers and arrived at the conclusion that the issues they raised were baseless and that the whistle-blowers were not going to be paid anything as the information supplied was not used by the authority.

“Mr Pasi signed a contract with Dande Holdings. Pursuant to signing the agreement, Zimra paid the equivalent of US$10 million to Dande, without demanding security. Dande failed to perform, and as a result Zimra suffered financial prejudice. Management did not exercise duty of care and protection of assets,” the report reads in part.

The audit further shows that some contracts were also cancelled without the State Procurement Board’s approval, which resulted in Zimra losing US$7 million in damages.

The report also revealed gross abuse of the Zimra’s whistle-blower fund as it emerged that the authority paid nearly half of the US$3,4 million fees to only three informers through a system fraught with risk, raising suspicion that the moles were fronts for Zimra executives.

According to the audit report, Pasi awarded himself hefty perks without board approval and also approved the overpayment of contractors with questionable records.

“We noted that some of the benefits for directors included in the emoluments reported above, such as school fees allowances and holiday tickets, have no maximum limits; a situation that undermines cost containment and financial discipline,” the reports reads.

“As an example, on August 23 2016 Zimra incurred an expense of US$129 524,74 with respect to Mr G Pasi’s school fees for his daughter, Tsungai Miranda Pasi. The net after tax amount of US$62 819,50 was transferred to Mr G Pasi’s personal account at NMB. The transfer was neither approved by the board nor limited by his contract of employment.”

Pasi’s total annual employment benefits as at December 2015 stood at US$634 190,39 against an annual US$4,9 million wage bill for all Zimra executives, the report showed.

According to the report Pasi’s monthly salary from January to May was US$65 481. Zimra, the report further stated, was exposed to the now defunct Tetrad Investment Bank to the tune of nearly US$2 million after Pasi failed to disclose his interests in the bank.

“Tetrad was authorised to operate the Zimra Commissioner General account for clients on November 17 2009.

Investigations established that the Commissioner General is an interested party in Tetrad as he invested, as a shareholder, in the bank. Apparently the Commissioner General did not declare his interests when the decision was made to transact with the bank,” the audit report revealed.

Government, the report states, lost US$350 000 in income tax after the authority’s human resources director Christine Msemburi was seconded to the Kenya-based Regional Office for Capacity Building from October 2012 to September 2015. The audit also revealed that Pasi gave special treatment to “blue-eyed” personnel to the extent that convictions by the courts were ignored and such workers would remain at work.

Zimra, the report revealed, also lost US$500 000 to ZimAlloys when it entered into an agreement with the mining firm which is outside the authority’s core business.

“Mr G Pasi signed a contract with ZimAlloys. Pursuant to the agreement, Zimra paid the equivalent of US$500 000 to ZimAlloys. ZimAlloys failed to honour its obligation resulting in financial prejudice to Zimra of US$500 000. This was again unsecured noncore business transactions and nothing was recovered,” the report reads.

Meanwhile, Zimra chairperson Willia Bonyongwe has deposed an affidavit opposing an urgent chamber application at the High Court by Pasi, who is challenging his suspension and an instruction to appear before a disciplinary hearing next week. Bonyongwe said the Zimra boss had not “been honest with all the facts of the matter”.

In his urgent application, Pasi accused Bonyongwe of causing his suspension after her company allegedly lost a multi-million-dollar contract to refurbish a Zimra property, Kurima House, in Harare.

Pasi is represented by Tazorora Musarurwa and Alex Mambosasa of Mambosasa legal practitioners. On October 21, Pasi was served with a letter advising that a disciplinary hearing for him had been set, where he was expected to answer to more than 45 counts of alleged abuse of office and misconduct.

Pasi further said the Zimra board had no power or authority to request the Auditor-General, in terms of the Revenue Act and Public Finance Management Act, to institute a forensic audit other than a statutory annual audit of the affairs of Zimra by operation of law.

However, Bonyongwe in the opposing affidavit, says the matter should not be treated as urgent because Pasi was aware, for over five months, of the investigation into the operations of Zimra and his conduct.

She is represented by a team from Kantor and Immerman legal practitioners led by Addington Chinake, Simplicio Bhebhe and Tawanda Tandi.

Bonyongwe said Pasi did not co-operate with investigators during the probe on Zimra, further alleging that he wanted to appoint forensic auditors himself “even in circumstances where his conduct was part of what was being investigated”.

She said Zimra has instituted proceedings in accordance with provisions of the code of conduct. Bonyongwe said while Pasi cited her as the second respondent she was not the sole decision-maker on the Zimra board.

She dismissed allegations by Pasi that charges against him are because she “is aggrieved by the fact that a company, in which she is an owner with direct interest and control called Woodsbrand Investment (Woodsbrand), was unsuccessful in a dispute relating to the award of the tender for the renovations and improvements at Kurima House (a Zimra property).”

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