HARARE, June 8 (The Source) – Cuthbert Dube broke no law when he took money from poor members of the Public Service Medical Aid Society (PSMAS) and paid himself millions.
That is the verdict of the Zimbabwe Anti-Corruption Commission (ZACC), according to reports this week. And, angry as that made many, ZACC is right.
No amount of moral outrage can stop Zimbabwe’s deep-seated culture of corporate greed. The lesson from the PSMAS saga is that outrage is nothing unless backed up by regulation and action.
Dube was on a $236,000 monthly salary. He also had awarded himself close to a million dollars in loans, a house on the exclusive Follyjon Crescent in Harare, and a raft of other rich pickings.
ZACC was asked to probe Dube, and this week came the verdict; Dube had done nothing illegal.
Despite the uproar Dube’s salary had caused, ZACC’s finding were inevitable. Dube’s big pay may have been immoral, but it was not illegal. He had been allowed to be greedy.
And that is just the problem; there is massive corporate greed around, but Zimbabwe’s governance structures are too weak and compromised to deal with it.
Putting Dube’s salary into context helps to see just how much greed he was allowed to get away with.
When Dube was at PSMAS, his monthly salary, before perks, put him among the top four highest earning CEOs in South Africa. He was beating the CEO of SABMiller, the world’s second biggest brewer, into fifth place. At the time, he was just $100 000 short of the basic salary of Whitey Basson, CEO of Shoprite, Africa’s biggest retailer. He was earning more than the head of Anglo American.
Around the same time Dube was at PSMAS, Wall Street salaries were averaging $404,800, according to the New York State Comptroller. Dube wasn’t too far off the wolves of Wall Street.
And this was all before we added Dube’s perks, which took his monthly earnings to just over $500 000, or a staggering $6 million per year. Around that time, the average monthly CEO salary for America’s top 350 firms was a million dollars.
With his perks added, Dube was playing in the global big money leagues. Looking at a more recent Bloomberg ranking of companies in 25 of the world’s largest economies – it includes salary, cash bonuses and other benefits – Cuthbert would have been making more money than CEOs in countries such as Singapore, Hong Kong, Australia, France and Japan, where average annual CEO earnings are below his $6 million.
Remember, Dube was head of medical aid society that was failing to pay doctors to treat members, many of them poor government workers.
Still, ZACC found that Dube had approval for his salary, the insider loans, prime properties and benefits.
“He was alleged to have unlawfully transferred a house in Glen Lorne, Harare, into his name when the said property was bought using PSMAS money,” ZACC was quoted as saying. “Investigations show that it was part of his employment contract that he would be given a house. Again this charge cannot stand.”
Dube plied himself with $796,960 in loans. All of this was done by the book. “He indeed applied and received the said loans,” ZACC said.
PSMAS board chairman Jeremiah Bvirindi had criticised Dube’s “unjust enrichment pointing to improper conduct”.
But Dube’s contract “entitled him to access personal loans twelve times his monthly salary. His salary was $236 000 per month and he could access a loan 12 times that figure,” ZACC tells us.
All this shows that outrage is nothing unless supported by strong regulation. Executives will take as much as they can, as long as they are allowed to.
The problem was not that Dube was making so much money, but that he was being authorised to do so.
That Dube, heading an inefficient medical aid fund that can’t pay for its members’ medical care, was earning five times more than Adrian Gore, head of Discovery, SA’s largest and most profitable medical aid provider, shows how poor we are at checking greed.
A third of the contributions of PSMAS members was going into paying the salaries of its top 15 executives.
It was only after public outrage that Finance Minister Patrick Chinamasa announced that state enterprises would cap CEO salaries at $6,000 per month. “We’re not going to allow them to continue a day longer (being paid that much),” Chinamasa said at the time.
Nobody knows if this was enforced. It is most likely that it was not, as many of the CEOs, it was pointed out at the time, already had contracts and had lawyers at the ready to challenge any breach.
The gulf between CEOs and their workers remains, and it continues to widen with no regulation stepping in. A recent ZCTU report, “Working Without Pay, Wage Theft in Zimbabwe”, showed private sector CEO salaries were as much as 20,577 times higher than that of the lowest paid worker.
CEOs binge on big salaries, yet, according to the Labour and Economic Development Research Institute of Zimbabwe, 120,000 workers across the country worked without pay between 2015 and 2016.
At the National Railways of Zimbabwe, a monument to Zimbabwe’s parastatal rot, senior management shared $1 million in salaries last year, while staff went a year with no pay. There are many examples of heads of loss making firms coining it; former NetOne CEO Reward Kangai was earning $43,693 per month while his company bled. Even Happison Muchechetete was taking home close to $40,000 for heading a broadcaster nobody takes seriously.
CEOs, even those of poor performing companies, will binge on big salaries and perks, even at the expense of staff, as long as they know they can get away with it.
Who is there to stop them?
As shown at PSMAS, the boards that are supposed to provide supervision are themselves compromised. They will sign off on rich perks as long as they also get their own. This is happening in private and public sectors alike. Board members are making a living from sitting allowances, so they sign off on excess spending and look the other way.
The regulators themselves are unsure. On the Zimbabwe Stock Exchange, publicly listed firms are still allowed to keep CEO salaries a secret, despite such disclosure now being standard elsewhere. Parastatal bosses are still bagging the big salaries, despite Chinamasa’s threats.
There will be occasional bursts of outrage when Dube-style perks are made public. But Dube’s perks were never illegal; they were just immoral. But we will need more than outrage to stop greed. Because we cannot appeal to executives’ morality. Many of them have none whatsoever.