Looting fears as ministries secretly invest in companies
GOVERNMENT ministries are under scrutiny for investing in private companies without the knowledge of Treasury and also illegally dishing out loans to struggling parastatals, raising corruption fears, given the shady nature of the transactions.
The Ministry of Justice, Parliamentary and Legal Affairs, for example, made investments in Colcom Limited before 2017, which is unusual.
“The Ministry was later issued 11 048 shares upon 100% takeover of Colcom Limited by Innscor Company in year 2017. No share certificates were availed for audit inspection and this investment was not disclosed in the Consolidated 38 Statement of Public Financial Assets for the years ended December 31, 2017, 2018 and 2019,” Chiri said.
“Government investments might not be traceable and fully accounted for. Treasury should account for the 11 048 shares invested in Colcom Limited and returns realized from this investment since year 2017.”
Authorities said the investment in Colcom Limited by the Ministry of Justice and Legal Affairs was “again not known by Treasury, neither was it disclosed in the Ministry’s Statement of Public Financial Assets.”
“We have now requested the Ministry of Justice and Legal Affairs to avail the necessary documents including Share Certificates so that we can record them and adjust our records.”
It emerged that the ministry of Justice, Legal and Parliamentary Affairs in 2007 invested in a company called Pamberi/Qhubekani (Private) Limited, but the investment was not properly disclosed, raising fears of possible corrupt intents.
“I noted that the Ministry of Justice, Legal and Parliamentary Affairs formed and registered a private company in year 2007 called Pamberi/Qhubekani Investments (Private) Limited with an initial capital of $40 000. The company focuses on farming and ranching,” Chiri said.
“However, this investment was not disclosed in the Consolidated Statement of Public Financial Assets for the year ended December 31, 2019. In addition, no Treasury Authority was availed for audit inspection to support the formation of the company.”
Chiri said the implications for such actions were that the government would fail to realise financial benefits from the invested public funds if the investment is not recorded and returns monitored.
“Treasury should account for the investment made in Pamberi/Qhubekani Investments (Private) Limited and dividends generated since year 2007. Treasury should put in place a system to monitor and account for all investments made by line Ministries, Departments and Agencies,” Chiri said.
Authorities said the investment was a private engagement by the Department of Prisons and Correctional Services had not been disclosed to Treasury.
“Treasury is now in receipt of the application for condonation from the Ministry,” Chiri’s report said.
There were also concerns over loaning by government ministries to parastatals, with Chiri flagging the state-owned Zimbabwe Broadcasting Corporation (ZBC) as a recipient of an unsanctioned loan.
“The Ministry of Information, Publicity and Broadcasting Services advanced a loan of
ZW$5 000 000 to Zimbabwe Broadcasting Corporation (ZBC) at an annual interest rate of 5% during the year ended December 31, 2019,” Chiri said.
Chiri said the ministry did not report both the principal amount and interest as a public financial asset and this loan was also not disclosed in the Consolidated Statement of Public Financial Assets for the year under review.
“This was against the requirements of Section 29 (4) (f) of the Public Finance Management (Treasury Instructions), 2019 which mandates the Director Finance to prepare accurate accounts,” he said.
“The exact amount of loans granted by the government might not be known with certainty if they are not disclosed in the financial statements. Treasury should ensure that the loan of ZW$5 000 000 advanced by the Ministry of Information, Publicity and Broadcasting Services to ZBC is properly recorded and reported in the Consolidated Statement of Public Financial Assets,” Chiri said.
In its response, the management said the loan of ZW$5 million advanced by the ministry of Information, Publicity and Broadcasting Services to one of its parastatals, Zimbabwe Broadcasting Corporation (ZBC) (Private) Limited was not disclosed to Treasury.
“This loan was not disclosed in the Ministry’s Statement of Public Financial Assets; neither did the Ministry seek clearance with Treasury. Clarifications were sought from this Ministry and Treasury is now in receipt of documents on this particular loan.”