By Wezzie Gausi:
A forensic investigation report has exposed abuse of public funds at the Small and Medium Enterprises Development Institute (Smedi).
The report is for the period between July 2018 and June 2023 and was conducted by the National Audit Office (Nao) to investigate the organisation in areas of financial statements, assets, human resource and procurement management and malpractices.
According to findings of the report, Smedi failed to follow procurement procedures in its dealings.
For instance, the report says the chief executive officer chaired and participated as a member of the Internal Procurement and Disposal Committee (IPDC) between August 2018 and June 2019 and that procurements worth K194,507,126.08 were approved for payment.
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It further says irregularities in the procurement of raw materials for a leather design studio were noted, singling the use of single source method in the procurement of raw materials; use of informal markets to pay the supplier of the raw materials from Zimbabwe amounting to $5,764.35, which eventually resulted into wasteful expenditure amounting to K4, 324,851.90 and delivery of shoe buckles that were not according to specifications.
“The Head Office was purchased at K320,000,000 without comprehensive assessment before purchase and later extra payment of K12, 000,000.00 was irregularly paid to the seller as a cost of the air conditioners and the genset which were part of the same house.
“Additionally, Smedi incurred extra expenditure amounting to K37, 430,789.07 without approval of the board. This expenditure was made to the house suitable for an office and could have been avoided if thorough assessment was done before the purchase of the house,” the report reads.
The report also mentions mismanagement of assets as the CEO underpaid for the purchase of personal-to-holder motor vehicle number BU7780 by K2, 524,960.02.
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According to the report, Smedi also disposed of a Mitsubishi Rosa Minibus at K5,600,000 without involvement of the department of Plant and Vehicle Hire and Engineering Services to determine its reserved price, which was set at K5,000,000.00; and proceeds of the bus were used without approval of the Board of Trustees and were not accounted for.
It further says Smedi did not update financial statements in the system after audit and this made the figures from the system and audited financial statements not to agree.
“Revenue reported to the Secretary to the Treasury was grossly under reported by K2,494,857,969 and some revenue reported in the Management Accounts did not have supporting sources,” the report has shown.
Commenting on the report, Smedi chairperson Henry Chete said when the new board came in, it noticed that some systems were not working including the finances department.
He said there was information that was either wrong and could not make sense or could not be produced at all.
“As a board, we therefore hired the National Audit Office to carry out a forensic audit at the organisation. And, indeed, when the report was presented to the board, it turned out that there were cases of financial mismanagement and violation of some laid down processes and procedures including the Terms and Conditions of Service of the Organisation.
“At the moment, the board is working on fixing these issues,” Chete said.
Meanwhile, Centre for Social Accountability and Transparency Executive Director Willy Kambwandira has said it is unfortunate that audit reports continue to be characterised by the same challenges.
“These institutions are being used as conduits for siphoning public money and we are, therefore, not surprised. Again, people are not being held accountable for their actions,” Kambwandira said.
