The forensic audit could bring a fresh perspective to the operations of NSSA, which, despite being a public fund, had kept its operations relatively secretive
THE National Social Security Authority (NSSA) board was this week combing through an explosive forensic audit described by one insider as “shocking”, with fresh evidence of plunder of public funds and financial impropriety by its top executives.
The audit, which was presented to chairman, Robin Vela two weeks ago, is the third such investigation after a 2012 National Economic Conduct Inspectorate (NECI) audit, which exposed mismanagement of the compulsory fund’s investments through poor selection of stocks for investments.
A 2011 report by the Comptroller and Auditor General, Mildred Chiri, among other startling evidence of vice and corruption, also alleged NSSA bosses had expended heavily on girlfriends.
Results of the new audit by an international audit firm also exposed a number of investments that had been kept out of the public by NSSA, whose top management, including general manager, James Matiza, were axed last month.
“The report contains investments that the public already knows, and investments that have never been talked about,” a source said.
“It is a shocking report,” the source added.
The forensic audit could bring a fresh perspective to the operations of NSSA, which, despite being a public fund, had kept its operations relatively secretive until recently, when it started publishing its financial results in the press.
Vela, who confirmed receiving the report and said the board was still studying it, told the Financial Gazette’s Companies & Markets last week that he was not happy with the disclosure levels in previous financial reports.
He said going forward, a reformed NSSA would disclose everything, including the remuneration of directors and management.
The NECI report, which was done in 2012, exposed how NSSA was exposed to the tune of US$200 million to local banks through direct equity investments, money market investment and loans.
Some of the banks eventually closed under the weight of mostly insider loans, and millions of United States dollars belonging to pension contributors which had been invested in these institutions could not be recovered. It said in June 2012, the fund lost US$15 million deposited with Interfin Bank Corporation, and US$708 000 in Genesis Bank, which had shut down.
Despite these reports and representations by legislators demanding an overhaul of NSSA’s operations, government had not taken action.
Among the issues it raised, NECI said more than US$2 million of taxpayers’ funds could have been flushed down the drain by NSSA after it paid for a wetland with the intention of developing residential housing units in Harare’s Chisipite low density suburb.
NSSA must hold itself up to the highest standards of corporate governance, as outlined in the national governance code.
NECI said chefs at NSSA had also expended on luxury cars for themselves, while its members were struggling to make ends meet, with paltry payments.
It also said NSSA directors had purchased cars worth between US$100 000 and US$230 000, with Mercedes Benz S350 and Jeep Cherokees among the brands.
One of the top managers were said to have purchased a mansion in Borrowdale after securing loans from the fund.
But the Vela-led NSSA board has vowed to take action.
“We have moved to curb related party transactions which have prejudiced NSSA in the past,” Vela said in a statement last month.
“To win back the confidence of members and the public, NSSA must hold itself up to the highest standards of corporate governance, as outlined in the national governance code. In looking to hold investee companies’ boards fully accountable for their decisions, the board has resolved and withdrawn executives of NSSA from all boards of investee companies.
“The historic trend of investee company management teams to disregard long term, long suffering, and supportive shareholders such as NSSA, in favour of the potential promise of new capital, in the form of rights issues, at deep discounts to market value let alone net asset value will be viewed by this board with disdain.
“In such circumstances, NSSA will not hesitate to call for reconstitution of the board and management of such flat footed and failing companies,” Vela said.
NSSA, which was constituted and established in terms of the NSSA Act of 1989, is the statutory corporate body tasked by government to provide social security, defined as instituting public policy measures intended to protect an individual in life situations or conditions in which livelihood and well being may be threatened, such as those engendered by sickness, workplace injuries, unemployment, invalidity, old age, retirement and death.
It is a compulsory, contributory scheme for all employed Zimbabweans.
On its website, NSSA says it is based on the principle of social solidarity and pooling of resources and risks, involving drawing of savings from periods of employment, earnings and good health to provide for periods of unemployment, old age, invalidity and death.
“At the moment NSSA is administering two schemes: Pension and Other Benefits Scheme and Accident Prevention and Workers’ Compensation Scheme, although, in an endeavour to provide a more comprehensive social security package for the Zimbabwean society, groundwork for the introduction of more schemes is underway,” it says.
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