How Government is preying on its own companies

How Government is preying on its own companies

HARARE, June 30 (The Source) – Broke and unable to fund its operations, the government is allowing Ministries to raid parastatals under their care for money.

The case at the Ministry of ICT, Posts and Courier Services – which used money from the Posts and Telecommunications Regulation Authority of Zimbabwe (POTRAZ) and state owned mobile firm NetOne to buy condition of service vehicles for Minister Supa Mandiwanzira and his deputy Win Mlambo – reflects the extent of the crisis.

Documents seen by The Source reveal how the Office of the President and Cabinet (OPC) authorised Mandiwanzira to use POTRAZ and NetOne money, even though no subsequent approval was received from the Ministry of Finance.

Across government, parastatals last year forked out at least $12 million dollars to fund Ministries that were failing to get money from Treasury for operations. None of the payments were authorised by Treasury.

This raises questions about whether government is sincere about its promise to reform public enterprises, when it is itself leeching off the same struggling companies.

The ICT Ministry case shows the extent to which broke Ministries are increasingly relying on the state owned enterprises they are supposed to administer.

In 2015, ICT Ministry secretary Sam Kundishora wrote to Cabinet Secretary Misheck Sibanda seeking approval for the purchase of two vehicles for Mandiwanzira, a Mercedes Benz E300, a condition of service vehicle for Ministers, plus a utility vehicle.

“At present the Honourable Minister has no official vehicle since the one he had been using from the time he was Deputy Minister was involved in an accident whilst he was out of the country,” Kundishora wrote.

“Meanwhile, POTRAZ and NetOne have undertaken to provide the requisite bridging finance to fund this critical and pertinent need. We would reimburse the money advanced as soon as Treasury avails funds for the same.”

Approval was granted last July by Deputy Cabinet Secretary Ray Ndhlukula, on condition that POTRAZ and NetOne would be reimbursed. It appears the vehicles were then bought, before the required Treasury approval.

Armed with OPC approval, the Ministry on 28 July wrote to Treasury, seeking approval for the purchases.

“Please be advised that Cabinet authority for purchase of the same has since been granted by the Office of the President and Cabinet while POTRAZ has undertaken to provide funding…Given the above background, the Ministry accordingly requests for treasury to reimburse the funds when they become available.”

There was no reply from Treasury.

On 16 November, another letter was sent to the Ministry of Finance. This time, ZimAsset was invoked to persuade Treasury to authorise the deal.

“We are requesting Treasury authority to purchase project and utility vehicles amounting to embarks on the US$233 400 using bridging finance from POTRAZ. As the Ministry embarks on the accelerated implementation of ZimAsset projects under the Infrastructure and Utilities Cluster, mobility us one of the critical elements in speeding (up) the implementation of targeted projects and programmes as well as facilitating easy monitoring and evaluation of the projects.”

On November 24, a letter was sent seeking authorisation for Mlambo’s vehicle.

“The Ministry hereby requests for Treasury concurrence to go ahead and purchase the said vehicle using funds advanced by POTRAZ on the understanding that Treasury will in turn reimburse POTRAZ the sum of $95,000 as soon as funds become available.”

Still, Treasury did not respond. Aware that the car purchase, unauthorised by Treasury, would be noted by an audit, the Ministry’s Director of Finance and HR wrote a 15 December memo to the Permanent Secretary.

He wrote: “Failure to obtain Treasury concurrence would result in an audit observation and a qualified audit opinion on the Ministry. To avoid the inevitable embarrassing situation, it is requested that this issue of treasury concurrence be handled at a higher level.”

On 17 December 2015, with the audit bearing down on the Ministry, Kundishora wrote to Mandiwanzira: “We borrowed money from our state owned enterprises that must be reimbursed. Failure to get commitment letter (concurrence note) from Ministry of Finance will result in auditors making an observation and a qualified audit opinion on the Ministry. The consequences are that this observation will reach Parliament thus putting the Minister into a defence mode.”

On the same day, Mandiwanzira pleaded with Finance Minister Patrick Chinamasa to authorise the purchase.

Failure by the ICT Ministry to get Chinamasa’s approval, Mandiwanzira said, would result in the arrangement “receiving a qualified audit opinion from the Auditor General’s office, the consequence of which will receive Parliamentary scrutiny and reprimand.”

“To this end, I hereby request through your good office the facilitation of this concurrence note without further delay, to regularise the approved vehicle purchase arrangements.”

No Treasury approval was ever given, as to be later confirmed by the report tabled by the Auditor General (AG) recently.

In a response to The Source, Mandiwanzira said there was nothing untoward about the parastatal car loans to his ministry.

“Anyone suggesting that I borrowed money from POTRAZ for my personal use either does not know how government functions or they are part of a dirty political campaign against me. First the accounting officer for any Ministry is the Permanent Secretary, and he or she is the one responsible for anything and everything to do with money,” Mandiwanzira said.

“Secondly, the suggestion that borrowing of money from parastatals from the ministry, through the Permanent Secretary, is abuse of office is totally incorrect. It is now common government practice that the Office of the President and Cabinet authorises ministries to borrow from their parastatals to keep the ministries functional. In the case of my Ministry, it received written authority from the Chief Secretary to the President and Cabinet Dr Misheck Sibanda to purchase two condition of service vehicles for the Minister and another for the Deputy Minister.”

The AG’s report reveals how the case of the ICT Ministry is not unique. Treasury is not funding Ministries, which are instead looking to parastatals for cash. Ministries took $12 million from funds administered by parastatals.

“Some Ministries transferred a total amount of $12 084 785 from Fund accounts under their administration to meet expenditure of parent Ministries without the authority of Treasury as required by the constitutions of the Funds,” the report says.

“The Treasury has not been able to fund the Government activities from the already constrained budgeted provisions. To this end, the Ministry ends up requesting for assistance from the state enterprise for these activities to be carried out.”

At the Ministry of Energy, loss making parastatals were forced to give the parent Ministry some $526 000 last year. In addition, a Noczim fund was also paying $2,7 million per month to pay off a $67 million government loan.

The Ministry of Tourism used money from the Zimbabwe Tourism Authority for Ministry expenditure. “The Ministry cited liquidity challenges for failing to make payments from its own resources. There was no prior treasury authority approving the arrangement between the ministry and the ZTA”.

The Ministry tried to justify this, saying the ZTA fund was meant to develop the industry. This was rejected by the AG, who stated: “Expenditure incurred by the Ministry should be met only from its voted funds.”