23 March 2014

Zimbabwe: Mining Development Fund Looted - Auditor General

THE Comptroller and Auditor General's office has issued a damning report on the operations of the Mining Development Fund, alleging rampant fraud.

The audit report, now before the Parliamentary public accounts committee, covers the year 2011 when the Mines Ministry was headed by Zanu PF's Obert Mpofu.

Mildred Chiri, the comptroller and auditor general, said the Fund's cashbook had mysteriously disappeared, making it difficult to establish the validity of financial statements her office was given.

"During the course of the audit, the cashbook in which expenditure was recorded that was also serving as a ledger-book in which bank reconciliations were recorded was stolen," she said.

"The ministry was also not maintaining adequate accounting records such as ledgers and journals and financial statements were prepared using entries from the cashbook.

"I was therefore not able to substantiate the figures in the financial statements and to validate various cash withdrawals that appeared on the bank statements due to loss of audit trail.

"The expenditure of $1 634 260 in the financial statements could also not be verified due to the absence of the financial records."

Chiri recommended that an investigation be carried out and also urged the reconstruction of the cashbook using available material.

"Investigations should be carried out to establish the whereabouts of the cashbook and corrective measures should be taken to avoid a repeat of the shortcoming," she said in her report.

"The ministry should reconstruct the cashbook from the available documents so that the utilisation of the funds can be traced."

The report also noted rampant abuse of the Fund "to subsidise the operations of the Appropriation Account thereby defeating the purpose of establishing the fund".

Chiri listed items that she said incurred unnecessarily high expenditures which were not commensurate with the size and operations of the Fund.

"Rentals and hire expenses $329,968, foreign travel $220,680, food and refreshments $69,325, printing and stationery $100,038 and domestic travel $247,405. Audit was therefore not convinced that monies were being used in pursuance of the Fund objectives," said Chiri.

"The fraud was perpetrated by ministry officials who took advantage of weaknesses in the processing of payments whereby cash was being used instead of using cheques.

"The disappearance of the expenditure cashbook appears to be linked to the fraud.

"Property, plant and equipment worth $359 735 was disclosed in the financial statements at year-end. However no breakdown of the assets was provided.

"I was therefore not able to verify the physical existence of the assets and authenticate the correctness of the value disclosed."

Chiri concluded: "The correctness of the financial statements is highly questionable and also without a breakdown of the assets, effective control could be a challenge."

Copyright © 2014 New Zimbabwe. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.