By Byron Mutingwende

The National Code on Corporate Governance (ZimCode) which spells out expected corporate governance conduct for businesses has been criticized as mere sets of rules whose benefits can only be effective when executed and implemented by both the public and private sector players, Transparency International Zimbabwe (TIZ) has said.

ZimCode was officially launched by Vice President Emmerson Mnangagwa on April 9, 2015 to provide a framework for corporate conduct for public and private sector players. The code is meant to deal with corruption and encourage corporate disclosure and free flow of information among stakeholders in business and contains detailed provisions crafted by experts from the various sectors.

It is now nearly a year after the code was launched but events on the ground point to the need to walk the talk because of the unrelenting corruption in state-owned enterprises with NetOne hogging the limelight after its top leadership was implicated in graft and abuse of office for private gain.

As far back as 2013, NetOne was reported to have been prejudiced of millions of dollars through flouted tender procedures, fraud and misappropriation of income from the sale of airtime recharge cards.

Managing director Reward Kangai – currently on suspension, finance and administration director Godfrey Tarupuwa and marketing and sales director Memory Ndoro-Mandiya were said to be at the centre of shady business activities that prejudiced the mobile operator of more than US$5 million in unsecured debt for airtime supplies.

Firstel, owned by NetOne management, owes Netone $11 million in airtime deals and salary payments and allowances outside the payroll.

This is contrary to clauses in ZimCode which say that the leadership should lead by example in combating corruption.

“There must be a will-power to combat corruption on the part of the leadership of the country which should cascade down to ordinary men and women. The will power should filter through to directors and managers of companies, parastatals and state controlled companies,” reads a part of ZimCode.

While the government complied with the call to craft legislation that combats corruption as evidenced by the launch of ZimCode and the establishment of the national anti-corruption commission, the onus is on it to arrest perpetrators and employ other deterrent measures to rein in corruption by heads of parastatals.

TIZ produced a study “The Annual State of Corruption Report with a focus on State-Owned Enterprises (2014”which  came at a time when transparency and accountability of State Owned Enterprises (SOES) in Zimbabwe were at their lowest ebb owing to political patronage, underhand dealings, “the homeboy” mantra and the general organizational dysfunction in most SOEs.

“Where State-Owned Enterprises could have worked at an advantage to both the government and the ordinary citizens, in the process remaining economically viable; this study, which is an intensive aggregated assessment of the degree of transparency and accountability in SOEs, notes that there is no overarching legislation for the governance of SOEs in Zimbabwe. The net effect of the ad hoc nature with which SOEs are managed opens them to all ills and crimes such as manipulation, corruption, nepotism, cronyism, theft, and gross abuses of infrastructure and human capital by politicians and well-connected ordinary citizens.

“To exacerbate the situation, the study notes that various SOEs are housed by different ministries in Zimbabwe; for instance, Air Zimbabwe, National Railways of Zimbabwe, and the Zimbabwe National Road Authority (ZINARA) are housed in the Ministry of Transport and Infrastructure Development while Cold Storage Commission (CSC), Grain Marketing Board (GMB) and the Agricultural and Rural Development Authority (ARDA) are in the Ministry of Agriculture, Mechanization and Irrigation Development. The Industrial Development Corporation (IDC) and Zimbabwe Iron and Steel Company (ZISCO) work within the ambits of the Ministry of Industry and Commerce. Thus, corporate governance in SOEs falls victim to interventionism from multiple centers of control and influence ranging from Line Ministries, the Office of the President and Cabinet, Ministers in line and related Ministries and the management who, in most cases are Ex-Servicemen of the Army, Police, Veterans of the Liberation Struggle or simply relatives of influential people in Government or in ZANU PF,” reads a part of the report.

Other examples of corruption by  SOEs include the 2014 Mega Salaries saga where the Premier Service Medical Aid Society (PSMAS) was paying more than US$1,1 million per month to 14 of its Executives, a stunning figure that could pay monthly bills for ARVs for  61 111 people suffering from HIV and AIDS.

“Worse still, this happened in an ailing economy that is characterized by massive job losses, unemployment and poverty. Recent scandals such as the 2014 ZINARA Snow Graders Scandal, and Marange-Chiadzwa diamond-looting scandals remain unresolved since 2009.  The Zimbabwe Broadcasting Corporation (ZBC) “salarygate” scandal implicated the top management in mega salaries and packages while ordinary employees could go for several months without receiving any salary. The downside to all the corruption scandals and sector wide deficiency in accountability and transparency derive from the failure of the state to prosecute and incarcerate the people involved.”

TIZ said SOEs will not transform themselves to viable commercial entities in their current or present form but said rather, they will continue to run at loss and in their opaque forms, corruption, bad governance and maladministration will continue to be the norm in the unforeseeable future.

TIZ proposed a total overhaul of the regulatory framework in which State-Owned Enterprises operate. Political interventionism works against the profitable operation of SOEs.

“There is need to provide significant independence of regulators from the owner or players on the market, as well as independence from those being regulated. This contribution advises that (a) all SOEs have regulators; (b) there is a separation of regulatory functions from ownership functions. The owner of SOEs should not regulate its SOEs; (c) SOEs should not be both players and regulators in one. In other words, SOEs should not regulate themselves; and (d) regulators should not duplicate the same functions. Where such duplication exists, the functions should be fused into one regulator.

“There should be enforceable standards of accountability and transparency in SOEs activities that include recruitment procedures and practices as well as in deals and contracts. Citizens’ awareness of SOEs corruption and ways of minimizing it is possible when there is public disclosure of activities in SOEs. The same principle of “publish what you pay” for private companies should apply to SOEs for public accountability in terms of what was received and how it was spent. The study recommends the commercialization of some SOEs as an option that reforms the sector. Like in any country, the Government of Zimbabwe could from time to time commercialize certain SOEs. Whether they are regulatory, social services or commercial SOEs, creating sufficient distance between SOEs and politicians remains the only safeguard from state capture and political interference that undermine their efficiency, accountability, integrity and transparency in governance and operations.”