“The total revolving amount of US$1 million was meant to cover both housing and staff loans. however, US$1 576 303 was disbursed in the financial year ended 31 December 2010, resulting in an excess of US$576 303,” the report said.
According to the report, the failure to limit the loan amounts is tantamount to the non-adherence to functional and operating policies set by the board.
The report said there was no documented evidence showing basis or criteria of determining loan distribution and repayment periods. “Tenures ranging between 15 and 19 years were used, as well as amounts which ranged between US$52 900 and US$290 000,” the report said.
Thus, the report said, the lack of predetermined criteria on loan redistribution and repayment periods gives room for potential abuse or fraud.
It said there was no loan agreement signed by and between the directors and REA to acknowledge the debt.
In addition, the report said, there were no title deeds registered in the name of the directors to validate the correct use of the loan amounts and intended securities were not availed to REA.
“The absence of signed agreements and failure to submit title deeds as collateral security by beneficiaries is a control weakness that may result in the loan funds being misused and the recovery of the loan may end up being difficult in the event of default,” it said.
REA was set up under the 2002 Rural Electrification Fund Act to spearhead rapid and equitable electrification of rural areas in Zimbabwe but has over the years been forced to abandon projects due to financial challenges.
Report reflects ills affecting parastatals
Observers say the findings of the report reflect what is happening at state-owned institutions where corporate governance is an alien concept.
Most parastatals have no boards of directors and have a backlog in publishing annual financial results.
At the same time, they continue gobbling from the fiscus.