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Govt departments, parastatals rotten to the core, says Veritas



GOVERNMENT departments and parastatals have come under scrutiny, with Parliament being called to action after a new report has shown that they have been repeating serious failings in public finance management since 2015 while also flouting recommendations of the Auditor-General.


Zimbabwe is wallowing in an economic crisis that has been largely attributed to bad governance and lack of transparency in public finance management.

In several instances, these departments and parastatals have failed to provide records, accounts or financial statements for audit, forcing the Office of the Auditor-General (OAG) to carry out audits a long time after the financial years have lapsed — raising questions on transparency.

According to the new report titled: Review of the Auditor-General of Zimbabwe (2015-21) by legal think-tank Veritas, while the OAG has been pointing out administration failings at all levels of the government, significant weaknesses in governance, controls and record keeping have remained effectively unresolved, leading to financial loss.

Veritas said while the evidence is overwhelming, it is for Parliament to determine a response to the findings, which OAG has been recommending over the past years.

According to the report: “On a number of occasions, OAG drew attention to its concerns about both the proportion of audit findings that related to failures in governance, as well as the serious impacts and (in some cases) systemic nature of the failings identified.”

The OAG’s findings included: “Failures by the government to appoint personnel to key posts such as Boards or executive positions, in some cases, for many years, leading to a lack of effective direction or oversight of the authorities concerned, lack of oversight and control; and financial irregularities, which arose in some cases because expenditure was incurred outside the remit of the body concerned, and in others because procurement processes were not followed, or expenditure could not be evidenced by proper records.”

Veritas said the authorities have been slacking in implementing recommendations of the OAG since 2015. For instance, in 2016, the government had failed to fulfil 40% of the OAG’s recommendations, which rose to 55% in 2018.

 In 2019, 2020 and 2021, the government failed to fulfill 40%, 55% and 49% respectively of the AG’s report recommendations, compromising public finance management. According to the report, authorities have been repeatedly procuring goods which have subsequently not been delivered in a timely manner, or at all, raising questions on accountability.

“In 2018, the OAG reported that the Zimbabwe Electrification Transmission and Distribution Company (Zetdc) has not taken delivery of transformers nine years after making a payment of US$4.9m to Pito Investments. The same contractor was also paid in advance an amount of US$561 935, by the Zimbabwe Power Company (ZPC) in 2016 and did not deliver.

“In a similar vein, the OAG identified that the ZPC paid ZW$196 000 in 2016 to York International for gas that — by the end of 2018 — had still not been received; the Grain Marketing Board (GMB) made an advance payment of maize worth ZW$1 million in 2016, which had not been delivered by 2018.”

The analysis has also shown that the government has been repeatedly losing money due to weak or non-existent financial controls, which has seen funds being spent before the requisite approvals had been obtained, payments being made without supporting documentation; and basic failures in accounting.

“This includes failures to consolidate accounts of subsidiaries and to properly record revenue and expenses, assets and liabilities. The OAG’s findings included; failures to maintain adequate accounting policies and procedures, often over a number of years (though, this may also have been indicative of poor governance; the fact that a number of parastatals may have been technically insolvent at the time of audit; and failures to segregate duties of officials charged with financial management, with the result that there may not have been appropriate oversight of their activities.

“It is highly likely that pervasive weaknesses in financial controls will have contributed significantly to exposing the authorities concerned to serious risks of fraud, mismanagement and corruption,” reads the analysis.

 Parastatals have been incurring losses due to non-existent financial controls. For instance, in 2021 the OAG found that the Zimbabwe Revenue Authority (Zimra) had not allocated US$1.6 billion to client accounts, such that some clients continued to accrue penalties after having paid their tax bills.

Weak financial control systems and record keeping has also raised the risk of fraud and corruption, according to the analysis.

“During its audits the OAG found a number of instances of fraud or potential corruption across the review period. It also identified significant weaknesses in controls in a large proportion of the authorities it reviewed that exposed the authorities concerned to substantial risks of fraud or corruption,” read the report.

“During the 2018 review of the Zimbabwe Anti-Corruption Commission the OAG noted that there were no supporting documents provided to validate expenditure and payables amounting to US$762 654 and US$254 476 presented in the financial statements; the Mining Promotion Corporation provided no supporting documentation for expenditure totalling ZIM$2.4m.

In 2019, the OAG found discrepancies in relation to Mpilo Central Hospital between the physical quantity of inventory (that is, stock) counted and the records of inventory. Quantities that were confirmed were less than what was in the records, leaving a variance of inventory worth ZIM$3.4bn which management had not investigated, and; In 2019, the OAG found that the state-run Parirenyatwa Group of Hospitals in Harare lost ZIM$878 784 due to fraudulent processing of cash for personal use.

The fraudulent scheme involved an employee making unauthorised debit card payments from the bank account to various entities for his own benefit.

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