TI-Z, ACTION AID “HORRIFIED” BY REVELATIONS IN AG REPORTS
Transparency International Zambia (TI-Z) and Action Aid Zambia have called for tough action following their review of four new reports by the Office of the Auditor General last week.
In a statement on the subject the pair wrote, “As TI-Z and Action Aid, we are both horrified by these revelations, which undoubtedly show a blatant disregard not just for principles of good public finance management, but also for different provisions of the law.”
The reports released covered the accounts of Parastatal Bodies and other statutory institutions for the financial year ended 31st December 2018; the accounts of water and sanitation companies for the financial year ended 31st December 2018; a performance audit on preparedness for implementation of Sustainable Development Goals (SDGs); and a performance audit on the provision of special education in public primary schools for the period 2014 to 2018.
TI-Z and Action Aid Zambia have stated that the reports are a source of “great concern”, highlighting a number of pressing anomalies.
Examples cited include non-compliance with statutory obligations. “According to our analysis, a total of 10 parastatals, representing around 60% of audited parastatals, all failed to remit statutory obligations to the Zambia Revenue Authority (ZRA), National Pensions Scheme Authority (NAPSA) and Workers Compensation Fund… Collectively, these entities failed to remit ZMW3.4 billion worth of statutory obligations, despite these deductions having been effected on employees’ emoluments,” TI-Z and Action Aid Zambia have disclosed in a statement calling for remedial action.
“TI-Z and Action Aid consider this to be not only immoral but also a damning verdict on the financial management capabilities of these parastatals,” the statement continues.
Weak governance and oversight mechanisms are identified as a second problem area. According to their analysis in 8 out of the 16 parastatals audited, the governance and oversight mechanisms were lacking in ways such as the absence of a full and/or substantive Boards of Directors. This included bodies such as the Food Reserve Agency, the University of Zambia (UNZA) and the Public Service Micro Finance Company.
“Our concern is that all these weaknesses and irregularities in the governance mechanisms of these parastatals meant there was no effective oversight provided to them, and in all likelihood contributed to the continuation of the glaring irregularities in these entities,” the statement continues.
“We are appalled by the several examples of disregard for internal controls by many of the parastatals that were audited. For example, there was failure to prepare financial statements at Zambia Forestry and Forest Industries Corporation (ZAFFICO), NCZ and UNZA; issuance of loans without security to employees at WCFCB; irregular sale of fertilizer at NCZ; delayed payment to farmers by FRA, which works against the FRA Crop Market Modality which indicates that, a farmer needs to be paid within 14 days of meeting all the conditionalities through provision of all necessary documents; unretired imprest by the ECZ; and unsupported payments at the Judiciary, UNZA, and at Mansa Trades Training Institute.”
“TI-Z and Action Aid’s concern is that in the absence of internal controls, or where these are disregarded at will as the case appears to have been, opportunities for misuse of public funds will not only exist but also be perpetuated, and the fact that well over ZMW40,000,000 was lost as a result of weak internal controls attests to this.”
The statement goes on to detail several more concerns and calls for action in order to stem the loss of billions of kwacha.
“It is also not lost on us that there have long been suspicions of high levels of political influence in the running of most of these parastatal institutions, and this coupled with poor involvement of oversight bodies such as Parliament in the operations of these parastatals has created a fertile breeding ground for such irregularities to not only occur but to also take root,” they write.
TI-Z and Action Aid conclude by call for specific action following the release of the reports, “It is our considered view as TI-Z and Action Aid that the time has come for us as a country to put a stop to the recurring irregularities revealed in the Auditor General’s reports. We would therefore like to demand that the respective Line Ministries under which the different parastatals whose irregularities have been highlighted fall, take immediate action to investigate the circumstances under which the anomalies occurred, and that the culprits be made to account for their actions. In this vein, we demand that all chief executive officers of erring parastatals be relieved of their responsibilities in order to send a strong signal that such blatant disregard of principles of sound financial management will not be tolerated in any way, shape or form. We are convinced that it is only by taking such punitive visible actions against the culprits that such irregularities will start to reduce. As it is now, culprits repeatedly commit these offences and see no action taken against them, so they continue with impunity and the cycle goes on, making a mockery of the work of the Auditor General in highlighting all these anomalies. We further call for all the culprits to be prosecuted for abuse of office and resources in line with the provisions of the Public Finance Management Act of 2018.”