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Finance Ministry’s treasury breathes fire

George Guvamatanga
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The Ministry of Finance and Economic Development has launched a probe into how the Zimbabwe National Road Administration (Zinara) was muscled out of the race for a stake in Intertoll Zimbabwe despite having the first right of refusal.

A private firm, Mabentu Consortium, won the race for the stake in Intertoll which alongside Univern, are responsible for collecting toll fees.

Under the Intertoll Zimbabwe –Zinara contract, the state road administrator had the first right of refusal in the event that Group Five wanted to divest.

Business Times heard this week top executives at Zinara and officials from the transport ministry could have deliberately failed to trigger the contract clause that empowered Zinara to buy the Intertoll Zimbabwe stake.

Group Five disposed of its shares in Intertoll Zimbabwe to a consortium comprising MTC acquiring 50%; Magareng 20%; and LSNM acquiring 30% of the shares. The consortium is collectively referred to as Mabentu Consortium.

But a source said the failure by Zinara and the parent ministry to trigger the first right of refusal has baffled Treasury.

“Zinara which represents the government of Zimbabwe had the first right of refusal according to a contract signed with Intertoll Zimbabwe.

A lot of ised as to what informed that decision at a time when the Treasury has been pushing for the liquidation of Zinara,” the source said.

The latest issues raised come at a time when the government is currently working on restructuring of state enterprises with some set for an outright sale.

Finance and Economic Development Permanent Secretary George Guvamatanga told Business Times: “We are going to look at those allegations.”

Transport and Infrastructure Development Minister Biggie Matiza said he was yet to receive a report from the board.

“The transaction advisor made a report which I am yet to see its contents. But by next week I will be in a position to give correct facts,” Matiza said.

Contacted for comment on the Intertoll Zimbabwe transaction, Zinara said: “With regards to Intertoll, as an institution we do not discuss specific contracts that we have with our suppliers and partners in the media.”

Group Five Limited and Group Five Construction Proprietary Limited (Group 5), a leading African construction, concessions and manufacturing group, was placed under business rescue last year leading to the disposal of its stake in Intertoll Zimbabwe.

This is not the first time that Zinara has been flagged offside. Recently, Treasury accused the road administrator for extravagance after its spending exceeded the 2.5% threshold.

This publication is informed that Zinara has since increased their spending to 50% of revenue collected despite the Road Administration Act stating that the state-owned company should only spend 2.5%.

Treasury sees the arrangement as a clear disregard of existing laws to justify extravagant spending as Zinara is facing latest allegations of splashing cash on hiring vehicles of its top executives.

A recent audit report for Zinara exposed financial abuse where ZWL$142m was paid to illegally hire road maintenance contractors.

The audit done by Grant Thornton, covered the period between 2011 and 2016 when Zinara was being led by former chief executive Frank Chitukutuku.

The report showed that Zinara disbursed US$160m (27.3%) of the US$ US$589.2m collected between 2011 to March 2016.

Zinara of late has been subject to massive scrutiny. It is alleged that the parastatals spend about 12 months paying full salary and benefits concurrently for two chief executives – suspended Nancy MasiyiwaChamisa and acting Mathlene Mujokoro.

The audit report presented to Parliament’s Public Accounts Committee by the Auditor-General shows that Zinara spent a whooping US$60,000 on the female managers’ hairstyles, including a payment of US$25,000 to one hair salon.

A further US$4,000 was used to buy and install gym equipment at the senior executives’ houses and also paid for executives’ food hampers and entertainment.

In 2016, Grant Thornton also exposed a cocktail of irregularities such as weak internal controls on the road fund, which resulted in losses of millions of dollars involving scams where senior executives allegedly manipulated the parastatals’ more than 59 bank accounts to siphon public money for personal gain.

Another audit report for a period ending December 31, 2017 reported weak internal control systems, which resulted in Zinara disbursing millions of dollars to provinces through the parastatals employees’ personal bank accounts.

Former Zinara Boss Frank Chitukutuku, who is facing fraud allegations, has since been given an ultimatum to explain how he acquired assets worth over US$20m.

President Emmerson Mnangagwa’s administration has been a crusade to weed corruption practices in government and the public sector.

This has seen the high profile arrests of senior officials. The anti-corruption blitz has seen former ministers Prisca Mupfumira and Obadiah Moyo being arrested.

Former Midlands Provincial Affairs minister Jason Machaya was last month jailed for two and half years on abuse of office charges after an illegal allocation of commercial and residential stands on State land in Gokwe. – Business Times