MDC-T alleges malice in Harare audit
The Movement for Democratic Change (MDC-T) has said a proposed forensic audit of the Harare City Council (HCC) and its businesses ordered by the ZANU-PF political commissar was motivated by “political malice and utmost bad faith”.
MDC-T secretary-general, Douglas Mwonzora, said his party had carried out at investigation “into the whole forensic audit issue; its genesis, objective, focus and its intended outcomes” after a report by the Financial Gazette exposed the plot by Local Government, Public Works and National Housing Minister Saviour Kasukuwere to crack the whip on the MDC-T-run local authority through the intended audit.
Mwonzora said: “After thoroughly analysing the facts on hand, it was established that the audit called for was in fact a product of political malice and utmost bad faith (and) not an endeavour to promote transparency and good governance in council.”
He said the council official who wrote to the auditor-general (AG) at the instigation of Kasuwere, “had no council authority to engage an auditing firm to audit council and its private companies”.
Mwonzora, a practising lawyer, described the appointment of Price Waterhouse Coopers (PWC) to undertake the audit as “irregular, unprocedural and therefore a nullity at law”.
“We also established that some politically mischievous council officials may have deliberately misled the Minister of Local Government, Public Works and National Housing on the actual situation at City Parking or Easipark Harare in order to curry favour with the minister and to protect and promote their own personal and selfish interests,” he said.
He said the official description of the audit by the AG was classified as Harare City Council Comprehensive Forensic Audit (Tender OAG 08/ 2015) and was supposed to focus on the parking business but had been unilaterally widened to cover the whole council, including areas such as HCC and committees’ terms of reference; council minutes; HCC meeting attendance registers; HCC and committee members’ CVs; and HR policies and procedures, especially those relating to promotions, succession, compensation and benefits.
City Parking is a business unit wholly-owned by HCC. Easipark was disbanded after differences with a private partner.
According to documents seen by this newspaper, Kasukuwere wrote to the now-suspended mayor, Bernard Manyenyeni, on July 27, 2015 saying he was “disturbed by a number of reports emanating from various sources about issues of corruption at Easipark and City Parking”.
“It would appear that these allegations may be true due to the absence of any audit report for these entities in recent years,” said Kasukuwere in his letter to Manyenyeni.
He then ordered council to engage forensic auditors to provide a report on the operations of the two businesses within two weeks of receipt of his letter. Kasukuwere said he would want a preliminary report on the same issue within six weeks of engaging the auditors.
On September 21, 2015, Josephine Ncube, the acting town clerk, then wrote to the AG highlighting Kasukuwere’s demands. She noted that an official from her office had informally engaged the AG regarding the matter.
She said in the letter to the AG: “The minister in his wisdom has finally seen it fit that as originally intended Harare City Council should engage your office to appoint the forensic auditors following laid down procedures as prescribed by your office.”
She noted to the AG that it was Kasukuwere’s view that for purposes of clarity, the AG should “directly obtain the terms of reference from the secretary for the Ministry of Local Government, Public Works and National Housing”.
A follow-up letter on October 2, 2016 by Ncube had disclosed that the minister had authorised the appointment of the forensic auditor to undertake investigations on Easipark.
The AG was to later appoint PWC after going to tender.
But councillors were to later get the shock of their lives after Thompson Mucheki, of PWC, wrote to the HCC’s internal auditor, Joseph Danny Issa, requesting information for the “comprehensive forensic audit” that went beyond the original brief by Kasukuwere.
Mucheki said: “We would appreciate it if we can have all the information by April 11, 2016 upon commencement of the engagement. This is the initial request and we may request for additional information as work progresses, if required.”
PWC requested the historical financial information on Easipark and City Parking since dollarisation in 2009, including the profit and loss accounts, the balance sheets and the cash flow statements.
They also requested for year-to-date management accounts, budgets and forecast financial statement, board minutes for the past three years, proof of remittances of dividends, strategy documents for each arrangement, organisational strategy, structure and job descriptions, payroll extracts, salary structure and board charter.
The list had up to 39 items.
But it was the request for information on HCC and its committees that surprised councillors and turned the table, forcing HCC to turn away the auditors.
Mwonzora said council had a business ventures organ called Harare Sunshine Holdings, with a mandate to grow and manage council’s business enterprises.
“This is a private company that was established in 2013. On establishment, this company did not receive any financial assistance from council either in the form of working capital or seed capital. The company currently has only two council entities under its jurisdiction,” he said.
The entities, he said, included City Parking, which started operations in 2013.
“Its financial books are audited by a reputable international audit firm and positive audit reports for 2013 and 2014 are available. The audit for 2015 is nearing completion.
The other entity, Sunshine Meats, started operations in 2015 and its books are also being audited, he said.
The other business ventures owned by HCC remained under the control of council and its management .These, he said, were home industries (Siyaso) in all high density areas; retail and flea markets (Mupedzanhamo) in all high density areas; council houses under lease rental such as Trafalgar Court and other properties in the low density areas; council business properties in the CBD and high density areas such as Mbare, Mabvuku, Highfield and Mufakose; Hillside Nursery; the council quarry at corner Cripps Road and Joshua Mquabuko Nkomo Express Road; Rufaro Marketing properties; and halls, crèches, community centres and stadia.
He said Harare Sunshine Holdings had six joint venture agreements with private partners in the real estate development area. None of the joint venture projects had completed construction, with the majority of the projects at design stage.
“The arrangement in joint venture projects is that council offers land as its equity in the joint venture company whilst the private sector partner undertakes to construct the superstructure. Opportunities for partnership with the private sector are found on the council website, town clerk’s office, mayor’s office and at Harare Sunshine Holdings offices. The opportunities are also marketed at the ZITF (Zimbabwe International Trade Fair) and the Harare Agricultural Show events.
“All joint venture proposal reports are presented by the town clerk to council for approval. Approved proposals have joint venture agreements and shareholder agreements that are formulated by the chamber secretary and thereafter presented to council for adoption,” he said.
He said the process clearly showed that councillors were “not involved in securing, negotiating and formulating joint ventures with the private sector”.
On the audit proposal by Kasukuwere, Mwonzora insisted that City Parking had “clean external audit reports for 2013 and 2014”.
“City Parking was the only operational subsidiary company under Harare Sunshine Holdings at the time the minister wrote to council in July 2015. City Parking started operations in 2013 and did not receive any funding from the shareholder (HCC). In order to commence operations, the company secured a loan from a bank for both working capital and seed capital,” he said.
“At the time of our enquiry, the international audit firm was concluding the 2015 audit on City Parking. Accordingly, at the point the honourable minister wrote to council in July 2015, both 2013 and 2014 audit reports were available.
“It is therefore clear that the honourable minister was misled into believing that City Parking was not being audited.
“The chairman of the business committee made the copies of audit report available to the mayor in August 2015 to ensure that the honourable minister was fully briefed of the correct facts pertaining the operations of City Parking,” Mwonzora said.
He said the acting town clerk had acted without the authority of a council resolution when she wrote to the AG demanding the appointment of a forensic auditor, marking “a critical departure point in terms of corporate procedure, process and protocol and (shedding) light to the fact that there was or is a well-orchestrated strategy to carry out a sniffing and witch-hunt audit by ZANU-PF in order to do a hatchet job on councillors of Harare”.
Mwonzora said the minister should have been told clearly that City Parking was being audited by an external audit firm and that audit reports for 2013 and 2014 were available.
“That should have put the matter to rest.”
He said City Parking was a private limited company governed by the Companies Act and the auditor general had neither mandate nor jurisdiction over private companies.
“The approach which was made to the auditor general by a council official did and does not have council sanction and resolution. It is a move to invite the minister to direct operations whilst hiding behind the auditor general and the appointed audit firm.
Mwonzora said the MDC-T party did not condone corruption and would disown any official found to have acted corruptly.
“What we are against is playing political games aimed at reversing the gains of the MDC-T as the ruling party in all major cities and towns in the country. The engagement of audit firms to act as bloodhounds in strategy to unseat elected councils must be resisted.
“We are clear in our minds that ZANU-PF is the author and defender of corrupt activities in the country. President Mugabe came out in the open recently to reveal that a staggering US$15 billion vanished without trace in Chiadzwa. This amount is enough to finance the country’s annual budget for about five years.
“We want to understand from Minister Kasukuwere as to whether it is not true that council businesses such as home industries, farmers markets, and Mupedzanhamo are not viable businesses because these entities are supervised not by council but by ZANU-PF cartels.
He said the MDC-T had information about five properties owned by the City through Rufaro Marketing which were being leased to a well-connected and powerful ZANU-PF politician in Mbare. The politician, he said, was not paying lease rentals and had refused to vacate the premises.
“Is the minister unaware of this or he chooses to turn a blind eye?” he asked.
“Can the minister deny that a lot of low density area residential stands were, during the (Tendai) Mahachi era and currently, allocated to ZANU-PF elites through the influence of the Ministry and friendly council officials and that recent beneficiaries are Sarah Mahoka, Shadreck Mashayamombe, and Valeria Chizema?”
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