Govt payments shambles exposed

Mildred Chiri

Auditor-general Mildred Chiri has raised alarm over a US$20 million direct payment by the Finance ministry to the National Oil Infrastructure Company (NOIC) that violated procedures.

The money was paid on behalf of the Energy ministry during the period under review, Chiri noted in her appropriation accounts, finance and revenue statements and funds accounts for 2021 that were tabled in Parliament last week.

Treasury said the US$20 million became part of the Energy ministry’s allocation as unallocated reserves and as expenditure at the end of the reporting period, but the AG raised a red flag about the procedure.

“The proper method of payment for goods or services was not followed in this case because neither invoices nor statements were endorsed by the Ministry of Energy before payment was made by Treasury,” Chiri’s report reads. 

“Further, no budget provision had been made for the ledger item and no confirmation was produced that the release was from unallocated reserves.

“The release can be misclassified in the absence of the communication from Treasury.”

Chiri warned that suppliers could have been paid for goods or services that were not supplied or rendered to the ministry.

She said the ministry may also face challenges trying to follow up on orders that would not have originated from their offices.

However, Treasury defended the payment saying it was necessary to secure fuel at the present time.

“The fuel sector is a competitive industry, we are informed.

“Our procurement and payment processes stand very little chance of procuring the product as the fuel gets snapped up by private sector competitors whose procurement and payment processes are less stringent,” the report said.

“The ministry thus enlisted NOIC as its procurement entity for the strategic stock.

“The ministry then requested the Treasury to make the payment of US$20 million direct to NOIC. This was done and the fuel was procured.”

The ministry  said regularisation of the transaction took too long to be effected.

Chiri also said there were no recoveries made in respect of loans due from Zesa, no evidence of follow-ups made on defaulting public entities and no register for public financial assets. 

As a result, the AG was not able to verify the correctness of public financial assets for the  Energy ministry.

During the year under review additional disbursements amounting to US$9 590 000 equivalent to ($834 330 000) were made to Zesa.

“Furthermore, there was no register for public financial assets. As a result, I was not able to verify the correctness of public financial assets for the ministry,” Chiri said.

“This was contrary to section 110 of the Public Finance Management Act (Treasury Instruction), 2019 which states that every officer responsible for the custody of securities  shall maintain a register.

“Failure to recover loans timeously may result in loss of value of public funds.”

Chiri’s reports exposed a lot of rot in government departments and parastatals and there are indications that she will be summoned by Parliament as legislators are demanding answers.

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