HomeNewsMudenda castigates bad corporate governance in parastatals

Mudenda castigates bad corporate governance in parastatals


SPEAKER of the National Assembly Jacob Mudenda yesterday castigated bad corporate governance within parastatals, where some chief executive officers gave themselves obscene salaries and allowances at a time their entities were struggling to stay afloat.


Addressing chairpersons of Parliamentary Portfolio and Thematic Committees and senior officers from the Office of the President and Cabinet at Parliament building yesterday, Mudenda said the proposed Public Entities Corporate Governance Bill was long overdue to revolutionalise corporate governance, as misgovernance at State enterprises and parastatals (SEPs) had reached alarming levels.

“Some CEOs earn five times more than the Speaker and yet their output is negative and it does not make sense,” he said.
“SEPs have been receiving recurring qualified opinion from the Auditor-General, Mildred Chiri, while others have had no audited financial reports for the past five years, and this Public Entities Corporate Governance Bill must put punitive measures for corporate failures.”

Mudenda castigated ministers in the habit of disrespecting contracts and changing boards to replace them with their cronies, saying the new Bill would curb such practices.

“Inertia is killing our SEPs. Why is it taking long to sign documents? This scares away investors. Some investors have even approached Parliament committees seeking help to speed up their papers because parastatals have inertia.”

The Speaker criticised some CEOs for clinging to posts for up to 32 years without bringing any positive changes to loss-making SEPs.

Senate President Edna Madzongwe said it was high time SEPs moved away from over-reliance on government support.

State Enterprises Regulatory Authority executive director, Edgar Nyoni said SEPs in Zimbabwe were alarmingly loss-making and continued to pose significant fiscal risk to the country, as they always asked for government bailouts.

He said, during a data collection exercise, it was found that 84 SEPs out of 97 reported their results for 2011 to 2014, adding those 84 SEPs recorded an overall loss/deficit of $260 million in 2014, and gross income of $4,2 billion using gross assets of $14,1 billion.

“Only two SEPs reported paying dividends in 2014 totalling $1,7 million. In 2014, six commercial SEPs were both illiquid and insolvent, and a further 19 were illiquid,” Nyoni said, adding the government was considering publicly naming and shaming the loss-making SEPs.

Accountant-General in the Finance ministry, Daniel Muchemwa said Chiri’s 2016 audit reports revealed that 78 out of 30 SEPs had submitted their accounts for audit.

Chairperson of the Corporate Governance unit in the Office of the President and Cabinet, Stuart Comberbach said the Public Entities Corporate Governance Bill would prescribe eight-year terms for board members and that a person cannot sit on more than two boards, among other issues.

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