Ministry of Finance rapped for paying creditors directly

The Ministry of Finance has been rapped for paying creditors of state enterprises and government departments directly because this results in some being paid more than they are owed and revenue from these entities cannot be properly accounted for.

Hwange East Member of Parliament Tose Sansole said the ministry’s intervention had worsened the financial management of institutions like the Grain Marketing Board which had so far had three consecutive qualified audits.

But he said it was not only the GMB that was affected.

“That is happening everywhere even in this Parliament where the budget of Parliament is actually micro managed by Treasury, which is very unfortunate when these entities should be allowed to take full charge of their finances and manage their own budgets,” Sansole said in his contribution to the debate on the GMB audits from 2011-2014.

“It is worrying that after receiving qualified audit reports for three consecutive years, the management of GMB saw it fit to take no action,” Sansole said.

“It is also equally worrying Madam Speaker, when the parent Minister, the Minister of Agriculture, Mechanisation and Irrigation Development failed to take action after receiving these qualified audit reports for three consecutive years.

“What has been presented to us shows that GMB is in a complete mess. Where we have a complete mess when we are dealing with the staple food of the country, it should worry each and every one of us.

 “We have an organisation that has been set up to ensure food security for the people of Zimbabwe and it fails dismally in its mandate. That should worry each and every individual in the country particularly where the organisation has to write-off or downgrade food enough to feed 1.5 million households of six people each. We are talking about nine million people who could have benefitted from that food. That maize was downgraded for various reasons ranging from poor storage and so forth.”

Full contribution:

HON. SANSOLE: Thank you Madam Speaker. I also want to add my voice to the report that has been presented by the Chairperson of the Public Accounts Committee. It is worrying that after receiving qualified audit reports for three consecutive years, the management of GMB saw it fit to take no action. A qualified audit report is one where the auditors have reserved their opinion or simply withheld their opinion. They were not able to express an opinion on the financial statements, then you will get that for the following year and the year that follows and you take no action.

It is also equally worrying Madam Speaker, when the parent Minister, the Minister of Agriculture, Mechanisation and Irrigation Development failed to take action after receiving these qualified audit reports for three consecutive years. What has been presented to us shows that GMB is in a complete mess. Where we have a complete mess when we are dealing with the staple food of the country, it should worry each and every one of us. We have an organisation that has been set up to ensure food security for the people of Zimbabwe and it fails dismally in its mandate. That should worry each and every individual in the country particularly where the organisation has to write-off or downgrade food enough to feed 1.5 million households of six people each. We are talking about nine million people who could have benefitted from that food. That maize was downgraded for various reasons ranging from poor storage and so forth.

We also find a situation where farmers who have worked tirelessly in their fields, have delivered maize to the GMB do not get paid promptly for that produce and they end up going to middlemen or private buyers who reap them off and pay them less than half the value of that maize. They get as little as US$180 per tonne when GMB is paying US$390. Obviously, someone who has been waiting for their money for a long time and has a lot of financial obligations, they find themselves in an inferior bargaining position when they have to dispose of their produce. GMB has been shifting blame to Treasury for lack of financial support but it is very clear from the report that GMB should accept full responsibility. The Minister of Agriculture, Mechanisation and Irrigation Development should accept full responsibility for the mess that is at GMB.

We also have a situation where the finances of GMB are not properly managed, where there are variances in the bank accounts and there are no reconciliations. Madam Speaker, bank reconciliations are a basic requirement that should be carried out every month because where differences occur, they accumulate over a period and it becomes difficult to reconcile. It is an indication of which internal controls and also lack of proper segregation of duties where you have one person who has made an error is the same person who is expected to correct the error. That person can do whatever they want to do with that particular transaction.

We have a situation where we have debit balances on creditors. So, that points out to one thing, possible overpayment of those creditors. That is why we end up with debit balances where you have creditors. We have a creditor’s schedule which is showing the creditors with a credit balance of US$4.6 million but the ledgers have a debit balance. So unlike debtors where you can carry out debtors’ verification and ask people whether they do owe that particular amount of money, it is very difficult to get someone to confirm that they are actually being owed that particular amount of money because if it is inflated, they will not tell you that it is actually higher. So, one will be tempted to go along with the creditors’ schedule rather than the ledger balances but in this case, they did not even bother to reconcile the two. We have revenue which was not properly accounted for and we also had a situation where Treasury worsened the situation by paying creditors directly on behalf of GMB. That is happening everywhere even in this Parliament where the budget of Parliament is actually micro managed by Treasury, which is very unfortunate when these entities should be allowed to take full charge of their finances and manage their own budgets.

The report also mentions stop order forms that do not indicate the amounts. A stop order form which does not tell you how much you should pay is meaningless and one wonders why these were even presented for audit. It just does not serve any useful purpose to have a stop order form that has your name and does not say how much you should pay because what it means is that it is done by people who do not know money. A stop order form is meant to extract money from people that owe money.

We also have governance issues that need urgent attention which have been mentioned in the report; the failure to terminate the board when its term of office ended, which rests squarely on the shoulders of the Minister of Agriculture, Mechanisation and Irrigation Development.   There is also the issue where an investment at IDBZ, as mentioned by the previous speaker, matured and was paid to a company which is not GMB. In actual fact, the recommendation talks about disciplinary action or rather criminal proceedings being instituted against those people responsible for that transfer. I would not call it a transfer of funds to the wrong recipient because in actual fact, it is theft and it should be treated as such where people interact with other people’s resources without their consent. They are thieves. There is no other name to describe that kind of action Madam Speaker…

HON. WADYAJENA: Can you say out their names?

THE TEMPORARY SPEAKER (HON. DZIVA): Order Hon. Members.

HON. SANSOLE: Where people transfer money to their account without the consent of the owners, those people are thieves, Madam Speaker. There are serious governance issues which I have mentioned and there are also serious accounting issues which need to be dealt with and under the circumstances, I would actually want to support all the recommendations that have been recommended by the Committee. Thank you Madam Speaker.

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