Economic Governance Watch 02-2021 - ZINARA Puts Country on the Road to Ruin

ECONOMIC GOVERNANCE WATCH 2/2021

2nd May 2021

ZINARA Puts Country on the Road to Ruin

The Zimbabwe National Roads Administration [ZINARA] is a parastatal body set up under the Roads Act to collect and distribute funds for maintaining the country’s road system.  ZINARA collects fuel levies, vehicle registration and licensing fees and road tolls, and pays them into a Road Fund which it administers under the Roads Act.  It allocates money from the Road Fund to road authorities [i.e. the government’s Roads Department and local authorities] to finance the maintenance of the roads for which the road authorities are responsible.  ZINARA is also supposed to ensure that the funds disbursed from the Road Fund are put to proper use – i.e. the maintenance of roads – and to monitor the implementation of road maintenance works by road authorities.

Last Thursday, the 22nd April, the National Assembly’s Committee on Public Accounts presented a report analysing the Auditor-General’s reports on ZINARA for 2017 and 2019 and a forensic audit which was conducted on ZINARA in 2017 at the request of the then Minister of Transport.  The Committee’s devastating report can be accessed on our website [link].  If anyone wonders why the country’s road system is in such a shocking state, and who is to blame for it, they will find the answers in the Committee’s report.

The Committee’s main findings and recommendations were as follows:

Submission of Reports to Parliament

The Committee’s findings:

The reports which the Committee were considering were not tabled in Parliament promptly, and the Minister initially refused to table the forensic report.  There were no legal timetables for the tabling of the Auditor-General’s reports.

The Committee’s recommendations:

The Committee made recommendations aimed at speeding up the process by which Auditor-General’s reports are presented to Parliament.  We shall consider them in a later Economic Governance Watch because they apply generally to all public entities, not just ZINARA.

Corporate Governance Issues

The Committee’s findings:

There was no proper corporate governance in ZINARA.  It was totally mismanaged and as a result there was gross abuse of resources.

In particular, ZINARA had no sound human resources policies and unqualified persons were recruited through nepotism.  As a result incompetent people controlled budgets running into millions of US dollars, and this led to corruption.

Some specific examples the Committee gave were:

  • Between 2011 and March 2016 Board members were paid a total of US $673 744 in fees and allowances without approval from the parent Ministry.  In 2018 each board member received Christmas hampers worth US $9 600.
  • In 2013 seven senior managers received gym equipment worth US $4 000 each.  All female employees received a hair allowance which cost a total of US $24 500 from 2011 to 2013.  These payments were not processed through ZINARA’s payroll, as they should have been.
  • ZINARA’s annual wage expenditure was on average 8,5 per cent over the limit imposed by section 15(1)(d) of the Roads Act.
  • The qualification of the Director of Administration and Human Resources consisted of a diploma in biblical studies, and he was appointed to the post without having been interviewed.  The Finance Manager was not a qualified accountant.

The Committee’s recommendations:

  • The Zimbabwe Anti-Corruption Commission [ZACC] should investigate abuse of office by all officials of ZINARA whose activities are covered in the report.  Disciplinary action and, where appropriate, criminal proceedings should be taken against them.
  • Illegal allowances paid to members of ZINARA’s board should be refunded within six months.
  • Within three months ZINARA should seek expert help to develop systems and procedures for proper corporate governance.

Structural Issues

The Committee’s findings:

The functions of ZINARA and the Road Fund overlap.

There is a disconnect between passenger safety and the vehicle licensing regime.  Issues affecting passenger safety – qualifications of drivers, vehicle safety, insurance and so on – are dealt with by different agencies without co-ordination.

The Committee’s recommendations:

The Roads Act should be amended within six months to remove the overlapping functions of ZINARA and the Road Fund, in line with best regional and international practice.  The government should consider replacing ZINARA altogether with an integrated transport management system in which a single vehicle registration authority covers all aspects of passenger safety.

We shall discuss these recommendations in a later Economic Governance Watch.

Procurement by ZINARA

The Committee’s findings in relation to procurement generally:

ZINARA failed to comply with procurement laws, losing millions of dollars through failing to go to tender for some contracts and altering other contracts after obtaining regulatory approval.  In doing this, ZINARA management and staff corruptly abused their offices and cost ZINARA and the country millions of dollars.

The Committee’s findings in relation to Univern:

ZINARA entered into contracts with a company called Univern Enterprises (Pvt) Ltd, a supplier of information technology systems, for:

  • the supply and maintenance of 80 graders, and
  • the supply of software systems for vehicle licensing and the collection of road tolls, fuel levies and transit fees.

There were two contracts for the supply of graders;  the second one was not tendered for or even reduced to writing.  To purchase the graders ZINARA paid Univern a total of US $17 305 240, an overpayment of US $1 223 640.  To maintain the graders ZINARA paid Univern US $5 218 000, an amount not tendered for – and not even due because the graders were under warranty.

For the software ZINARA paid Univern US $47 510 365 between 2012 and 2015.  The software contracts were entered into improperly through misleading the State Procurement Board and therefore, in the Committee’s view were null and void.  The fees paid to Univern crippled ZINARA.

The Committee’s recommendations:

  • The Minister should report to Parliament within two months on corrective measures taken to protect the interests of ZINARA and Zimbabwe and, within the same period, should provide Parliament with a detailed breakdown of all amounts received and expended by ZINARA in relation to the contracts.
  • The Committee’s report and the Auditor-General’s forensic audit report should be referred to ZACC, the police and the National Prosecuting Authority for criminal investigation.

Special Projects

The Committee’s findings:

ZINARA’s function under the Roads Act is to finance road maintenance by road authorities.  ZINARA went beyond this and entered into contracts with dubious contractors for special road construction projects which it had no legal power to undertake.  These contracts cost ZINARA US $71 487 896 and SA R31 452 102.  In most of the contracts there was no delivery of purchases, no performance of work and no oversight by ZINARA.  In the Committee’s opinion the contracts amounted to looting of public resources by the executive of ZINARA in connivance with corrupt contractors.

One special project, the Plumtree-Mutare Highway Project, escaped the Committee’s censure.  This project, the Committee said, was a genuine public-private partnership and should be honoured.

The Committee’s recommendations:

  • Within three months ZINARA should take disciplinary action against its officials who were involved in the improper contracts.
  • Within 12 months and with the assistance of experts, ZINARA should try to recover amounts paid to contractors who did not perform under their contracts.

Conclusion

As we indicated at the beginning of this bulletin, the Committee’s report induces a sense of shock – shock that such appalling mismanagement could have continued unchecked for so long.

The final words should be left to the Committee at the end of the report:

“The Committee trusts that the Executive shall react with urgency and panic to the findings of this Report and ensure that measures are taken to ensure that the country’s institutions are never captured and subverted in the manner that ZINARA was.”

 

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2021