The country’s roads administrator, Zimbabwe National Road Administration (Zinara) assigned the Vehicle Inspection Department (VID) to collect transit and overload fees without a contract, a new report by auditor-general Mildred Chiri revealed on Friday.
The disclosure has raised financial mismanagement concerns stemming from the “gentlemen’s agreement.”
Transit fees are paid by foreign registered vehicles using Zimbabwe’s roads while overload fees are paid by vehicles that exceed their stipulated weight.
Zinara’s 2020 annual report shows it collected about $1,26 billon in transit fees.
In her report analysing Zinara’s financial accounts for the year ended December 31, 2021, Chiri said proper agreements must be signed on the deal.
“The VID was collecting transit and overload fees on behalf of Zinara at a commission of 20%,” Chiri said.
“However, there was no memorandum of understanding/contract between VID and Zinara to govern the principal-agent relationship.”
She said there were “inconsistencies in the remittance of revenue”.
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It is a concern that permeates through most of reviewed financial statements for the period.
Chiri said government agencies must stick to laid down procedures and laws in handling public funds.
In a response, Zinara management said they were working on addressing the issue.
“The draft contract has been done,” said Zinara.
“Engagements with the Ministry of Transport and the VID on same is now in progress and is expected to be concluded by the end of second quarter 2022.”
Zinara’s deals have come into renewed spotlight after Parliament’s public accounts committee (PAC) revealed that the administration was dealing with ‘shelf’ companies in deals involving huge amounts.
The firm’s new board and management have made undertakings to address a series of governance shortcomings reported by a forensic audit last year.
Marondera Central legislator Caston Matewu, who is a PAC member, revealed last week that Zinara paid US$70 million to a consultancy called Golden Roads, to help the administration find a suitable road contractor.
Golden Roads was paid the money between 2012 and 2015 for the deal.
The committee said it was a briefcase company.
State media reported on Wednesday that the deal had been cancelled after Parliament raised the red flag in one of the most dramatic changes by a state agency.
Chiri also raised concerns over Zinara’s special purpose vehicle, called Infralink Private Limited.
The firm was established to collect toll fees at along the Plumtree-Mutare Highway, which facelift was completed in 2014, under a contract with Group 5, the South African firm.
“Infralink (Private) Limited received a garnishee order for understated income tax and Value Added Tax (VAT) of US$46 977 476 in 2015,” she said in her report.
“The amount was provided for, however management is not in agreement with the determination by the tax authorities and contends that the tax status of the company is still to be established.
“As a result, no tax assessments and provision for tax liabilities were made for 2016, 2017, 2018 and the current financial year.
“Therefore, there is potential additional exposure of four years.
“The effect of non-accrual of these tax obligations are considered material to the financial statements.”
Chiri said Zinara had not aligned its procurement procedures with the law.
“As a result, the Administration was not complying with the requirements of the (law) in that contracts were being signed after delivery of goods and services,” she said.
“This was contrary to the Public Procurement and Disposal of Public Assets Act.”