THE Ministry of Finance and Economic Development has launched a fresh probe to nail looters, following reports that some top government officials were approving multiple invoices for goods and services supplied to State agencies by powerful cartels.

In some instances,  invoices  have  been raised  and  paid,  but  no  goods  have been  delivered,  costing  the  tax  payer millions  of  United  States dollars,  according  to people  close  to  the  developments.

A new phrase — Air Supply — has since been coined to describe how Treasury has been overstretched by paying for non-existent goods.

Well-placed sources said one ministry lost US$1,5 million to the cartels —  the latest evidence of how cash-strapped Zimbabwe has been trapped under the grip of corruption and fraud.

In the past few weeks, an investigation by Al Jazeera has exposed industrial scale gold looting by mafias, who have allegedly been backed by senior public officials.

Many of those exposed in the report have denied wrongdoing.

Keep Reading

Still, there has been an explosion of public anger, with people feeling that politically-connected Zimbabweans were enjoying protection from the government.

Government was forced in August last year to impose a blanket suspension of payments to suppliers, after accusing them of firing up an inflation rage through over invoicing.

But it appeared the  cartels  had  shifted to  multiple  invoicing,  taking advantage of government’s weak accounting systems.

Questionable transactions and suspicious contracts had been fished out and submitted to auditors, one source said, noting that this could be followed by arrests of the people.

The Independent  was  informed  that George  Guvamatanga,  permanent  secretary  in  the  Ministry  of  Finance  and  Economic  Development,  recently  instructed  line  ministries  to  scale  up  due diligence  when  dealing  with  invoices.

“The government accounting systems are in shambles and a cartel of suppliers has taken advantage of the lax systems to circumvent processes and are being paid multiple times for a single invoice,” one of the sources, a senior government official, said.

“The government has been losing millions. There is a serious headache among Treasury authorities right now and Guvamatanga has since registered displeasure at the current state of affairs.”

Guvamatanga did not respond to questions from the Independent.

However, as part of efforts to deal with vice and inefficiencies, government this week directed State firms to review how they treat borrowing costs in their financial statements, following the adoption of International Public Sector Accounting Standards (Ipsas), which are meant to enhance transparency.

Ipsas came into effect in January.This date will be regarded as the date of adoption irrespective of the previous basis of accounting that the entity used.”

In its Zimbabwe Financial Reporting Manual sent to heads of State enterprises recently, Treasury said they would be required to migrate to the new framework by 2025.

Writing in the report, Guvamatanga said in coming up with ZFRM, government sought to improve transparency.

“The ongoing project for the migration to the accrual-based Ipsas framework, by December 2025, forms part of wider government’s Public Finance Management (PFM) reforms and is aimed at enhancing transparency and accountability,” he said.

Despite Treasury’s efforts to curtail financial mismanagement and theft, some officials have continued to manipulate systems for personal gain.

The suspension of payments to government service providers last year was part of efforts to curtail attacks on the free-falling local currency, which crashed by 58% during the first quarter of this year alone.

This was after the domestic unit shed over 70% of its value due to exchange rate fragilities last year.

Guvamatanga  this  week  pointed  out at  a  conference  in  Harare  that  the  government  was  dealing  with  a  lot  of  cases  of  ‘air supply’, saying  invoices  had been  issued,  but  no  good  or  services had  been  supplied  in  some  instances.

“Through the value for money exercise, we realised a disturbing trend in the public procurement system which is really what is called in the streets ‘air supply’ where orders and invoices are generated and payments are made but nothing is delivered,” he said.

According to Guvamatanga, Treasury had further engaged the Procurement Regulatory Authority of Zimbabwe to ensure processes and systems in the public procurement domain were enhanced to close loop holes.

Suppliers of undelivered goods and government officials, who authorised the contracts are now under investigation with arrests imminent.

Several suppliers according to sources had been milking the government by indexing prices based on projected foreign currency parallel market rates, which were exaggerated.

After receiving their payments, the contractors would offload the billions on the parallel market pushing up exchange rates.

The Treasury through correspondence to all government ministries then stopped government departments from buying fuel supplied by private players.

Government ministries have been directed to buy fuel from state-owned companies, namely CMED (Pvt) Ltd, Petrotrade and Genesis.

“As  part  of  the  government’s  efforts to  support  government-owned  entities, the Treasury  has engaged Petrotrade, Genesis  and  CMED  to  supply all government fuel  needs.  Ministries,  departments and agencies  are,  therefore,  directed  to  engage  these  entities  to  supply all  their  fuel  needs,”  according  to  government correspondence  dated  July  26,  2022.