Zimbabwe: Mystery over $3,5bn govt funds

NDAKAZIVA MAJAKA  •  20 MAY 2015 • Daily News (Zimbabwe)

THE supervisor of government accounts and financial controls, the Comptroller and Auditor-General (CAG), has made a shocking revelation that President Robert Mugabe’s administration cannot account for $3,5 billion which was earmarked for civil servants’ salaries. In a report for the period to December 2012 that was presented to the parliamentary portfolio committee on Public Accounts on Monday, CAG Mildred Chiri, revealed that transfers to the Paymaster General’s account amounting to billions of US dollars could not be accounted for.

“Financial records for Treasury order transfers from the main exchequer account to the Paymaster General Account totaling $3 499 320 653 were not availed for audit examination,” Chiri’s said. Contacted for comment, former Finance minister in the inclusive government, Tendai Biti, told the Daily News yesterday that this was both unacceptable and “blatantly unconstitutional”.

“It simply shows how the State used the money to rig elections. It’s atrocious and typical Zanu PF because we have a criminal bandit regime running the country. “As we have always said, ghost workers were used to rig the election. From about 70 000 people, we have claims of 250 000 people materialising in the armed forces for a special vote,” Biti fumed.

Another former Finance minister, who spoke to the Daily News on condition of anonymity, said the mismanagement of government funds was not a new thing. The ex-minister said huge chunks of money were often channelled into “ghost avenues” while other funds were diverted to areas like presidential trips which were not open to scrutiny.

“There have always been issues about ghost workers. Hopefully the audit we are hearing about will address these issues,” the former minister said. Finance ministry permanent secretary Willard Manungo, who was summoned by the parliamentary committee to explain the discrepancies uncovered by the CAG agreed that there were “issues at treasury”.

However, and while the $3,5 billion that cannot be accounted for makes about 80 percent of the country’s current $4 billion national budget, Manungo shifted the blame to the previous treasury administration. “This period of the financial year did not happen solely under our watch. As such, we cannot fully account for what happened for the better part of that year as it was the year of the elections and the ministry changed hands.

“It would be more prudent to have the then secretary, Mr Desire Sibanda, answer to these anomalies,” Manungo said. “It’s also prudent to remember that this is the same period of accounting in which treasury spent $152 million on the referendum, $12,4 million on the census, $5 million on the United Nations World Tourism Organisation summit and $66,9 million on agriculture related programmes,” he added. Sibanda was not invited to appear in Parliament to address the queries raised by the CAG’s office, and the Daily News could not get hold of him before the newspaper went to Press last night.

Chiri’s report reflected various other anomalies and poor accounting practices by the ministry of Finance during the 2012/13 period. It also revealed that the country is about two years behind in submitting its audit reports. This week’s scandalous revelations also come as government last year ordered the CAG to urgently conduct a staff and wage bill audit at all parastatals and local authorities to flush out ghost workers in a bid to reduce the State’s ever-ballooning wage bill.

The audit will look at payroll pay-outs, recruitment and employee placements, remuneration policies, head counts and employee welfare benefits. State-owned enterprises and local authorities have been plagued with accusations that they are staffed with ghost workers, while top executives are accused of awarding themselves hefty salaries and perks. An unusually candid Finance minister Patrick Chinamasa has said that civil servants’ salaries gobble more than 80 percent of government’s monthly revenue inflows.

Public servants cost the government more than $465 million in the first two month of this year alone according to figures obtained from the CAG. In its Staff Monitored Programme, the International Monetary Fund (IMF) has recommended that Zimbabwe cuts its civil service significantly. The parliamentary committee also heard on Monday that the Finance ministry did not maintain a Public Financial Assets Register, containing details of loans and investments that were made to parastatals, the private sector and various other organisations since 2009.

“Treasury did not maintain a Public Assets ledger that shows the amounts disbursed from loan appropriations, net amounts outstanding, recovery of loans and adjustments made during the year. “Adjustments reflected on the statements were not supported by explanatory notes,” the CAG’s report said.  Chiri also said the ministry of Finance had made transfers from unallocated reserves amounting to $251 million from a budget allocation of $96 million, leading to an unauthorised excess transfer of $154 million. Treasury also failed to avail to the CAG’s office accounting records to support its cash-in-transit figure, contrary to good corporate governance and accounting practices.

“To top this off, there was no written disaster recovery plan and there were no back-up records for the summary of the consolidated revenue fund and financial reports from the Zimbabwe Revenue Authority monthly reports,” Chiri’s report said. The audit report also identified discrepancies between current year opening balance and prior year closing balances. “The audited closing balance for Contingent Liabilities as at December 31, 2011 was $940 995 486. However, the statement submitted for the audit reflected an opening balance of $1 453 366 028 as at January 1, 2012.

“There was no audit evidence or explanation provided for the adjusted balance,” the report said. Of concern to the legislators was the fact that the Ministry of Finance had undertaken direct payments amounting to $187 781 965 to service providers on behalf of other ministries, with the audit noting that some of the payments were not adequately supported.