Despite PF singing its own praises on AG report, misuse of public funds is far from over

The Auditor General’s Report for 2012 has been released. The PF government is singing its own praises for a reduction in the number of financial irregularities cited by the Auditor General’s Office. However, a closer look at the report shows that the misuse of public funds is far from over even under the PF government.

Listed below is a selection of audit queries cited in the report from various Government Ministries and Departments.

Ministry of Gender

Irregular Payment of Allowances

During the period under review, the Ministry paid amounts totalling K70, 500,000 to officers as staff welfare allowance. However, the payments were irregular in that the staff was not entitled to the allowance. As of November 2013, the money irregularly paid had not been recovered.

Failure to Collect Day Old Chicks for Women’s Empowerment

Although, the Ministry in November 2012 paid an amount of K99,000,000 to Hybrid Poultry Farm (Z) Ltd for the supply of 22,000 day old chicks to be collected by women’s clubs, as of December 2013, only 2,800 chicks costing K12,600,000 had been collected leaving a balance of 19,200 chicks costing K86,400,000 uncollected.

Misapplication of Funds

Amounts totalling K292, 272,650 were applied on purchase of air tickets and payment of allowances activities not related to economic empowerment of women.
During the period under review, the Ministry received amounts totalling K3,833,913,635 for child protection. However, amounts totalling K1, 379,184,838 were spent on unrelated activities such as motor vehicle repairs and intercompany relay among others.

Ministry of Home Affairs-Zambia Police Service

Installation of a Boom Barrier and Access Control System

In 2011, the Zambia Police signed a contract with DCS Holdings Ltd for the supply and installation of a boom barrier and access control system at the Zambia Police Headquarters at a contract price of K453, 223,600 and the whole amount was paid.

The scope of works involved the supply and installation of a 3 m electronic boom barrier, controller, 14 twin terminals, 28 card readers, 14 magnetic locks, 14 automatic door closers, 14 emergency break glass, 14 “3 Amp” switch power supply, 1 PC for access control and the construction of serving window/intercom system at guard house among others.

A physical inspection carried out in November 2013, revealed that the contractor had only fixed a 3m electronic boom barrier and the serving window/intercom system at the guard house. The following weaknesses were noted:

? Duration clause was not included in the contract,
? Defect liability period and after sale service were not included in the contract, and
? The project had delayed with no explanations provided to justify the delay

Ministry of Foreign Affairs

Returning Diplomats Not Yet Deployed

During the period January to October 2012, one hundred and sixty (160) diplomats were recalled.
The recalled diplomats comprised ninety five (95) civil servants and sixty five 35 (65) others who were on contracts. Out of the ninety five (95) civil servants, eighty four (84) were re-deployed to various Government departments where vacancies existed leaving a balance of nineteen (19) not deployed. As of April 2013, the officers not deployed were still awaiting re-deployment and had drawn salaries in amounts totaling K848,007,555 from the time of recall.

Salary Arrears for Newly Appointed Diplomats

Foreign Service Regulations and Conditions of Service (2007) stipulate that an officer posted into the diplomatic service shall be placed on the payroll and be entitled to the local salary at a salary scale equivalent to the position held in the foreign mission.

However, one hundred and sixty five (165) out of the one hundred and ninety seven (197) officers appointed to the Diplomatic Foreign Service during the period 2011 and 2012, had been placed on the payroll while the remaining thirty two (32) officers had not been placed on the payroll as of March 2013 due to lack of vacancies in the Civil Service.
Consequently, a total amount of K453, 661,670 had accumulated in salary arrears for the officers who were awaiting placement on the payroll. In addition, there was no budget provision to cover such costs in the 2013 Budget.

Unretired Imprest

Contrary to Financial Regulation No. 96 (1), imprest in amounts totalling K48, 668,300 issued to fourteen (14) officers had not been retired as of December 2013.

Irregular Drawings of Fuel

Contrary to the Terms and Conditions of Service which require that public officers in the ranks of Ministers be assigned with one (1) personal to holder vehicle and one (1) utility vehicle as well as 900 litres for Ministers and 800 litres for Deputy Ministers of fuel per month to cover for local travels undertaken within a radius of 30 km, the Minister and the 36 Deputy Ministers who were paid fuel allowances amounting to K71,621,800 and K62,554,333 respectively during the period under review, also drew a total of 915 litres and 225 litres of fuel costing K7,126,260 and K1,706,800 from the pool fuel account in their personal to holder vehicles.

In addition, the Minister had two (2) utility vehicles instead of one (1) allocated to him contrary to his terms and conditions of service. In this regard, 520 litres of fuel costing K4, 307,570 was irregularly drawn for the extra vehicle.

Ministry of Foreign Affairs-Missions Abroad-Cairo

Irregular Payment of Education Allowances

Contrary to Foreign Service Regulation No. 48, an officer at the Mission was irregularly paid Education Allowance in amounts totalling K52, 583,925 (US$10,208.33) for the period from April 2009 to August 2010 for a child who was at nursery school and not eligible for the allowance.

There was no evidence of recovery of the funds from the officer as of October 2013 despite the matter having been brought to the attention of the management at the Mission by the Accounting Officer.

Ministry of Foreign Affairs-Missions Abroad-Moscow

Irregular Payment of Foreign Service Allowances

The following were observed:
? Over Payment of Extra – Accreditation Allowance to the Ambassador
During the year 2011, the Ambassador was paid extra – accreditation allowance of US$800 in August and US$1,000 in December when the maximum he could be paid for the eleven (11) countries of extra accreditation under the Mission was US$550. It was noted that since he had only presented credentials to two countries, he was actually only entitled to US$100. This resulted in an overpayment of US$1,700 which had not been recovered as of December 2013.
? Payment of Medical Expenses without the Permanent Secretary’s Authority

During the year 2011, the Mission settled medical bills amounting to US$49,391.80 on behalf of the Ambassador. According to Foreign Service Regulation and Condition of Service No. 102, the Ambassador was required to contribute 40 percent of the bill which amounted to US$19,736.32. As of December 2013, there was no evidence that the amount of US$19,736.32 had been recovered from the Ambassador.

Ministry of Foreign Affairs-Missions Abroad-Beijing

Over Payment of Allowances

A scrutiny of payment of cost of living allowances revealed that although entitlements of each category of Diplomat was clearly indicated in the Foreign Service Regulations and Conditions of Service, the Minister Counsellor, was overpaid amounts totalling K13, 937,500 (US$2,787.50) in that he received cost of living, entertainment, spouse, telephone and extra-accreditation allowances at higher rates than those stipulated in the Foreign Service Regulations. No authority for him to be paid at higher rates was availed for audit.

Ministry of Finance

Questionable Payment of Allowances – Cancer Diseases Hospital Phase II

A total of K176, 720,000 was paid to various officers as project implementation unit allowances.
However, the payments for allowances were not supported by appointment letters for the committee members and neither progress reports nor minutes of meetings were availed for audit, thus rendering the payments for allowances questionable.

Misapplication of Funds – National Housing Authority (NHA)

On 1st October 2012, the Ministry released a total amount of K5, 000,000,000 to the National Housing Authority for the payment of the liabilities that were transferred to the National Housing Authority (NHA) from the Presidential Housing Initiative (PHI).

A review of expenditure details revealed that out of the total amount released, amounts totalling K3, 678,311,204 were applied on activities not related to the clearing of liabilities.

Ministry of Information

Unauthorised Workshops and Seminars

Cabinet Office Circular No. 7 of 2006 requires Controlling Officers to seek authority from the Secretary to the Cabinet prior to holding seminars, workshops and conferences outside government facilities.
It was observed however that during the period from 28th February to 1st June 2012, amounts totalling K106, 499,660 involving six (6) transactions were paid to hotels and lodges for holding meetings and workshops without obtaining authority from the Secretary to Cabinet.

Failure to Follow Procurement Procedures

According to the Zambia Public Procurement Authority Circular No. 1 of 2011, a
Permanent Secretary can authorise procurements of up to K50, 000,000. All procurements above K50, 000,000 are to be authorised by the Ministerial Procurement Committee.

Contrary to the circular, the Permanent Secretary authorised the procurements of men’s suits from BBC One Collection at a cost of K82, 890,000 and computers, printers and peripherals from DK Computer Suppliers Limited at a cost of K162, 880,000 without authority from the Ministerial Procurement Committee.

Questionable Payment of Meal Allowances

A total amount of K1, 295,000,000 involving twenty three (23) transactions was paid as meal allowance to twenty three (23) officers who had undertaken various programmes and activities such as capturing payments in IFMIS, updating the asset register, working on 4th quarter, 2012 outstanding bills, and cleanup of records and reconciliation among others.

However, an analytical review of records carried out at the Ministry revealed that the twenty three (23) officers claimed meal allowances for days ranging from 375 to 1,838 at the approved rate of K50, 000 per day. The number of days claimed by each officer was more than the three hundred and sixty five (365) days available in a year. Based on the number of days in a year, the maximum amount that could have been claimed by the officers was K419, 750,000. Therefore, the payment of the extra K875, 250,000 was irregular.

However, even with the assumption that the K419, 750,000 was correctly paid, it would be incomprehensible to imagine that the officers were claiming allowances every day of the year.

In addition, among the twenty three (23) officers who were paid the meal allowances were seven (7) officers who were on leave during the period they were paid the meal allowances.

Although in his response dated 5th November 2013, the Controlling Officer stated that Management had put in place measures to ensure that supervision is improved and that officers are correctly paid, no recoveries of the overpaid amounts had been effected as of December 2013.

Ministry of Youth and Sports

Youth Development Fund (YDF)

During the period under review, the Ministry received amounts totalling K11, 771,220,838 to cater for the Youth Development Fund (YDF) activities. As of December 2012, amounts totalling K9, 217,351,735 were paid to two hundred and seventy seven (277) Youth Associations as loans and grants (K7, 351,388,735 grants to two hundred and seventeen (217) and K1, 865,963,000 to fifty five (55) as loans) while the balance of K2, 553,869,103 was utilised on administration costs.

However, the following were observed:

i. Irregular Disbursement of Loans
On 17th December, 2012, the Ministry paid a loan of K49,969,830 to NORICH
Enterprises, a company owned by Mr Godfrey Nshimbami (beneficiary). However, a review of the application details and the payments revealed that the names of the applicants and the beneficiary were different rendering the payment questionable.

Inquiries with the purported applicants revealed that the application was made without their knowledge by the beneficiary who confirmed that the money was cleared in his account and that he had used it to meet personal bills.

Ministry of Health

As of December 2013, only K3, 120,000 had been recovered from the beneficiary.

Irregular Payment of On Call Allowances to Doctors studying abroad
During the period under review, the Ministry paid amounts totalling K94, 769,171 to six (6) doctors studying in various universities outside the Country. The payments were irregular in that On Call Allowance is not applicable to doctors studying outside the Country. As of December 2013, the amount had not been recovered.

Questionable Payment

A total amount of K277, 419,165 was paid to Shangai Liberty through a bank transfer using Ecobank during the period under review without the Controlling Officer?s authority. In his response dated 22ndAugust 2013, the Controlling Officer stated that this arose due to oversight on the part of the Ministry.
Irregular Payment of Housing Allowance

Contrary to Cabinet Circular No. B12 of 2010 and contrary to the Terms and Conditions of Service for the Public Service that entitles officers who are not accommodated in institutional houses to receive housing allowances, two (2) officers occupying houses at Chainama and University Teaching Hospitals respectively, were paid housing allowances amounting to K37, 812,283 during the period under review.
As of August 2013, no recoveries had been made from the officers.

Ministry of Defence – Zambia Army

Irregular Payment of Hotel Bills for Recalled Defence Attaché

According to Foreign Service Regulations and Conditions of Service No. 54 (ii) on return to
Zambia, an officer may be accommodated in a hotel, hostel or guest house for not more than ten (10) days and the cost of accommodation and meals shall be borne by Government, thereafter, the officer shall be required to vacate such accommodation.

Contrary to the Regulation, in June and July 2012, the Zambia Army paid amounts totalling K102,828,280 to Intercontinental Hotel for the accommodation and meals accumulated for a period of twenty eight (28) days from 12th March 2012 to 7th April 2012 instead of K27,503,100 for ten (10) days on behalf of the recalled Defence Attaché.

As of December 2013, the excess amount of K75, 325,180 paid to the hotel had not been recovered from the recalled Defence Attaché.

Excess Expenditure on the Procurement of Air Conditioners/ Lack of Disposal Details
During the period under review, the Zambia Army spent amounts totalling K683, 369,160 for the procurement of air conditioners.

However, the authorised provision for the activity was K73, 500,000 thus resulting in excess expenditure of K609, 869,160.

In addition, although the air conditioners were received, it was not possible to verify whether they were installed due to poor record keeping.

Permanent Secretary-Southern Province

Irregular Refund

In December 2012, the Permanent Secretary claimed and was paid K50, 200,000 as refund for meals and accommodation expenses incurred at Decha Lodge and Gloria?s Bed and Breakfast and Accommodation for the period of one hundred and nine days (109) days.

However, the payment was irregular in the claim was not supported by relevant documents such as invoices.

Hosting of the 20thSession of the United Nations World Tourism Organisation (UNWTO) General Assembly

The Government was to host the 20thSession of the UNWTO General Assembly which was scheduled to take place from 24thto 29thAugust, 2013. In this regard, a total provision of K59, 700,450,000 was made out of which K25, 530,000,000 was released to cater for various activities to facilitate the hosting of the General Assembly.

Failure to Produce Reports

Amounts totalling K3, 476,465,116 were spent on travel and accommodation for the UNWTO Secretariat’s activities comprising; imprest (K2, 115,878,168) to forty nine (49) officers to attend meetings abroad, hotels for hosting of meetings and travel agencies for the procurement of air tickets (K1,360,586,948). However, a review of expenditure details and retirements revealed that the expenditure was not adequately supported with reports. As a result, it was not possible to ascertain whether the officers attended the meetings and carried out the activities for which payments were made.
Lack of Expenditure Returns

Although amounts totalling K488, 394,115 were disbursed to the Copperbelt Museum in December 2012 for the facilitation of the UNWTO General Assembly, no expenditure returns had been availed for audit as of December 2013.