After Pasi’s experience Government caps Zimra’s CG tenure

After Pasi’s experience Government caps Zimra’s CG tenure

HARARE – The results of the long awaited Zimbabwe Revenue Authority audit have made the headlines. And as largely expected there were a few surprises but nothing overly significant. The same happened with the NetOne report and in the private sector, though instigated by the regulator, with the Fidelity Life audit report.

But it’s the Zimra audit that will be the focus of this article. The 180+ paged document gave a good picture of how public sector companies are run in Zimbabwe. At the centre of this, is the lack of proper monitoring by both the boards that are appointed to state enterprises and the parent ministries.

According to the findings of the Zimra audit, management disregarded board and ministerial directives on several occasions yet no action was taken. The report cites:
·         Management not having loan limits for the motor vehicle scheme approved by the board or the ministry
·         Ministerial directives for the post Director of Human Resources to be filled substantively was not promptly complied with.
·         Challenges in not getting timely and relevant information in their board packs.
·         And directives over the infamous Ms CF Musemburi.

The audit says disregard of the ministerial and board directives appeared systematic and deliberate and cannot be discounted as oversight of duties by the CG. Effective governance principles state that monitoring organisational performance is an essential board function which enforces accountability.

When all other authorities like Reserve Bank of Zimbabwe, Clerk of Parliament, Auditor-General and even security forces have limited tenures, the Revenue Authority Act is silent on that. Gershem Pasi joined the then Department of Taxes in November 1982 as a Tax Assessor and rose through the ranks to become ZIMRA’s inaugural Commissioner General in 2001. In May 1996, he was appointed to act as Commissioner of Taxes, a position that was confirmed before the end of the same year. He played an instrumental role in the formation of the Zimbabwe Revenue Authority and transformed the Authority into a commercial organisation.

However, in order to deal with corporate governance issues, Finance and Economic Development Minister Patrick Chinamasa proposed that the tenure of office for the Commissioner General be fixed to a maximum of two, five year terms.  “An unfixed tenure breeds corruption due to over-familiarisation with taxpayers and does not give room for innovative ideas required for the strategic and policy leadership of Zimra’s operations.”

Chinamasa further, proposed that the board appoints to the service of the authority, such Commissioners, as maybe deemed necessary, a fixed tenure of office not exceeding three, four year terms.  In addition, the Commissioner General, with the approval of the Board, shall also appoint such Heads of Departments, as maybe required, for the efficient performance of the functions of the authority.

Overall, it is monitoring where Government lacks after having only launched a National Monitoring and Evaluation Policy last year in the hope that this will improve service delivery. According to a situation analysis of the NMEP, the weakest link in the implementation of policies, programmes and projects had been the absence of such a policy. And this in turn gave rise to pervasive corruption, fraud and weak governance in the majority of institutions.

Going forward, there is need for the country to put in place performance based contracts at state enterprises. For now, it seems that Government is more interested in marketing its anti-corruption drive than in importing the same tool to their operations. There is no clear strategy and coordination based on ad-hoc policies and decisions. Overall, anti-corruption instruments are void unless there is political will. The biggest problem that Zimbabwe faces is lack of accountability, proper corporate governance and oversight systems stemming from the fact that State institution boards are appointed by politicians who at best only reward allegiance. Under such an arrangement as long as the appointee is loyal to the master, the superior turns a blind eye. We believe most of the revelations at Zimra could have been corrected much earlier had the previous board had oversight of the operations.

An Aside: What we think was the big story

The audit also gives insight into financial prejudice to Zimra amounting to $300 million by one of the country’s largest corporates through externalisation and over-invoicing in 2013. The information was availed by a whistle blower who has since passed on but the auditors recommended that the issues raised by the whistle blower be investigated to a logical conclusion and that appropriate action be taken against four executives for not taking action. Under the rules, whistle blowers are paid 10% of the value of the prejudice. However, Zimra had said that the allegations provided by the whistle blower were not supported by any facts.

The audit notes that the matter was reported to the Reserve Bank of Zimbabwe, which on its own is grappling with the effects of rampant externalisation that has occurred since the country moved to the multi-currency system. The reason why people don’t find it patriotic to believe the RBZ reports on externalisation is that nothing has been done about it. The audit says this year; the Chief Inspector of the RBZ’s Exchange Control Inspectorate wrote a letter to the whistle blower’s lawyers advising that the information provided to the RBZ had resulted in the corporate, a telecoms company, complying with Exchange Control regulations.

According to the audit, the malpractices raised by the whistle blower against the company includes

·         Falsification and overpricing of invoicing which also includes the use of a Mauritian domiciled sister company

·         Falsification of description of imported goods to take advantage of a duty free facility

·         Claiming excessive VAT and Special Initial Allowance

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