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.
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.
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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.
