THE country’s Accountant-General, Daniel Muchemwa, this week told Parliament that the time is now ripe to name and shame loss-making State Enterprises and Parastatals (SEPs) and “put them in coffins”, if need be.
BY VENERANDA LANGA
His sentiments came in the wake of massive loss-making and drainage of funds from the fiscus, which are drawn every year to bailout the SEPS, some of which are commercial entities that are supposed to be making a profit and paying dividends to the government.
Muchemwa said he was still searching for 30 SEPs whose books of accounts have never been given to Auditor-General Mildred Chiri for stocktaking.
He said the problem at SEPs is not the lack of qualified manpower and computerised equipment, but that the people running SEPs were the main problem.
“Zimbabwe has SEPs that have the best computers, and so the problem is not lack of capacity in terms of equipment, the issue is more about lack of commitment by people running the SEPs,” Muchemwa said.
The government Accountant-General said he was worried about three parastatals that were identified by Chiri as having adverse opinions when she audited their 2016 accounts.
“She qualified 10 of the 108 parastatals after she found specific issues with them, and she audited 78 out of the 108 SEPS, which means that there are 30 others that were not audited, and I am still searching for those institutions that are not accountable to Parliament,” he said.
“The President called for coffins and said the time is ripe for us to look at each SEP and say is it worth carrying forward [bailing out]. Where coffins are required for the SEPs, we will say do we need large or small coffins, but we will have coffins were appropriate because there is demand for government left, right and centre to rescue them. We will not do rescue before we have identified which parts of the whole needs to be buried.”
At a meeting with chairpersons of Parliamentary Portfolio and Thematic Committee at Parliament Building last week, Muchemwa was pressed by MPs to name and shame the loss-making parastatals and those that have dodged Chiri’s audit scrutiny.
The legislators raised concern that Muchemwa’s presentation did not name and shame the SEPs adjudged by the AG as having adverse, disclaimer and qualified opinion.
“Can he name the three parastatals that have an adverse and the three that have a disclaimer opinion,” Dextor Nduna, the chairperson of the Parliamentary Portfolio Committee on Transport pleaded.
“We are in this situation because we have a tendency of not naming and shaming the perpetrators. Let members of the public know which parastatals are not submitting their accounting reports, and those that are not doing well in this worrying state of affairs. Let them be published so that we know,” Manicaland senator and chairperson of the Parliamentary Women’s Caucus, Monica Mutsvangwa, added.
State Enterprises Restructuring Agency executive director Edgar Nyoni said they will soon make public a document on SEPs’ performance which will outline those that are making profits and those that are not. In 2014, only two out of 97 SEPs paid dividends to government.
Muchemwa promised to submit within seven days a naming and shaming report on various issues highlighted.
But, if MPs really studied the 2016 AG’s audit report on SEPs, they would have already noticed that the SEPs with adverse, disclaimer and qualified opinion were actually named and shamed.
The SEPs that were mentioned by the AG’s 2016 audit as having adverse reports are the Agricultural and Rural Development Authority (ARDA), due to its 2011 to 2013 accounts that were in serious shambles, the Zimbabwe Anti-Corruption Commission (ZACC) due to its 2011 books that were shambolic and the Zimbabwe Mining Development Corporation (ZMDC), whose 2013 and 2014 accounts were also shambolic.
The Parliament of Zimbabwe Budget Office (PBO) describes an adverse opinion as “the most serious type of modified opinion where the auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in the aggregate, are both material and pervasive to the financial statements”.
Three SEPs that received disclaimer opinions from Chiri were the Zimbabwe Youth Council, Mpilo Central Hospital, and Litefold Engineering.
The PBO describes a disclaimer opinion as where “the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be both material and pervasive. Therefore, the auditors recuse themselves”.
Parastatals such as Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz), Zimbabwe National Road Administration (Zinara), Zimbabwe National Statistics Agency (Zimstats), Zimbabwe Revenue Authority (Zimra), Grain Marketing Board (GMB), State Procurement Board (SPB), Motira Private Limited, the Zimbabwe Passenger Company (ZUPCO) and the Small and Medium Enterprises Development Corporation (SMEDCO) all received qualified opinions.
“A qualified opinion is expressed when the appointed auditor, having obtained sufficient appropriate audit evidence, concludes that misstatements, individually or in aggregate, are material, but not pervasive, to the financial statements. Pervasive misstatements are those that have a wider effect on an organisation’s financial statements,” says the PBO.
In all these, government was said to have lost several millions of dollars due to gross maladministration of SEPs.
“At Zimra, the AG identified 29 000 temporary import permits that had not been cleared with a potential duty of $42 million.
CMED procured one million litres of fuel without going to tender, while GMB procured $1,5 million goods without going to tender, and NRZ procured goods worth $1,4 million without following tender procedures and they were never delivered,” Muchemwa said.
He said it is very astonishing that boards of such loss-making SEPS always sit at meetings as if nothing was wrong and they also draw large amounts in boardroom fees.
To sort out the mess at SEPs, government will bring before Parliament a Public Entities Corporate Governance Bill which seeks to usher in good corporate governance practices.