The National Social Security Authority (NSSA) should take legal action against former board chairman Robin Vela for his role in “pressuring” the authority to make costly irregular decisions to award multi-million dollar housing deals to contractors without following due process, according to forensic audit into NSSA’s operations.
Vela has since challenged parts of the audit implicating him of impropriety at the High Court arguing the probe was “biased, incomplete and targeted” witch hunt. He wants aspects of the audit that accuse him of wrong doing during his reign declared invalid.
At a NSSA strategic session in Nyanga in August 2016, two years after his board took over, the Vela led board declared that its strategic focus was to create a “new NSSA” focusing on culture change, service delivery, cost management, revenue enhancement and robust ICT systems and updating the members’ database for efficiency.
But the audit, which reveals sickening malfeasance and decay of good corporate governance principles at NSSA, was undertaken by BDO Zimbabwe Chartered Accountants after being commissioned by Auditor General Mildred Chiri’s office.
It details a slew of allegations of corrupt and irregular conduct by NSSA’s management, Vela and embattled former Public Service, Labour and Social Welfare Minister Prisca Mupfumira.
The audit covers the period January 2015 to February 2018. It is feared NSSA may have been prejudiced of up to US$175 million through bad investments, irregular and unapproved payments as well as corporate governance breaches.
Now Environment, Tourism and Hospitality Minister, Mupfumira is already fighting for her freedom in the courts after she was arrested on allegations of corruption and abuse of office involving US$95 million. She has also been charged with money laundering.
The forensic audit by BDO Chartered Accountants says NSSA irregularly awarded four off-take housing projects under the guise that this was part of meeting Government’s target of delivering low cost housing to low income earners.
“We, however, noted that a number of key processes were not done before awarding the contracts. These included not going to tender,
non-evaluation of investment proposals,” the audit says. NSSA executives claimed they were under pressure to award the contracts in short space of time.
Interestingly, the audit says none of the housing projects have progressed as per the set timelines and the might not be recouped. The projects included 8 000 units at Caledonia (US$16 million), the 695 units Stateland housing project (US41,7 million), St-Lves 809 units (US$6,145 million) and 1000 units under Gweru housing project (US$3,5 million).
One of the contractors, Housing Corporation of Zimbabwe (HCZ) was allegedly introduced to NSSA by the social security’s former chairman, Vela, and the contract was for the construction of four-roomed houses with a unit cost of US$38 000.
To the contrary, NSSA subsidiary National Building Society (NBS) had previously delivered similar housing structures at a unit cost of US$18 000 although the design and materials used varied.
“However, considering that NSSA’s thrust was to deliver low cost housing, there was no justification for engaging a contractor whose houses were US$13 000 per unit more expensive than the NBS price.
“This exposes NSSA to a total financial prejudice of US$104 million for HCZ/HAC contract by choosing a more expensive contractor,” BDO said.
The audit recommended an appraisal of the Caledonia project to ascertain the exact extent of potential financial prejudice.
“The off-take housing projects have not been a success. This can be attributed to NSSA not following due process in awarding contracts. This was mainly as a result of interference by Former Minister (Mupfumira) and non-executive chairperson Mr Robin Vela”.
“NSSA should seek legal counsel on how to deal with involvement of the former board chairman in exposing the authority to potential financial prejudice,” BDO said.
The audit also suggested legal action against Vela for his alleged role in violating the pensions authority’s laid down rules on recruitment of human resources into the organisation.
NSSA reportedly recruited a number of executives during the reign of Vela as board chair, including the authority’s former general manager, Lizzy Chitiga. BDO said NSSA’s human resources procedures stated that jobs should be offered to interviewed candidates on merit.
In most cases, the audit says, candidates who came first were not offered jobs while those that came second and third secured employment, but this was not supported by any justifications.
However, the chairman of the authority’s human resources committee told BDO investigators that their mandate was to interview and rank candidates according to the results of interview performance.
“Interview results for the general manager and operations officer and chief financial officer were handed over to Mr Vela while the results for other executives were given to the general manager. There is no evidence how the final selection was arrived at.”
Also, while NSSA was obliged to first secure approval from the responsible minister for its executives remuneration framework, the existing framework was only approved by the permanent secretary and resulted in increased employment costs for the authority of US$306 000 for the 10 months to September 2018.
In 2017, NSSA changed the structure of its management without the minister’s approval, as per requirements of the law, and also did so after getting approvals from the permanent secretary. This was allegedly requested by Vela.
The authority also promoted six managers in 2017 with five of the individuals having been in the employ of NSSA for less than 12 months. Most of these executives moved more than one grade up, the most being five. No performance appraisals were done.
He also improperly sought permission from the permanent secretary, instead of the responsible minister, for an increase of board fees and in implementing the approvals, Vela allegedly gave management figures higher than those approved by the labour ministry’s permanent secretary.
This resulted in overpayment of board fees by US$86 000.
“NSSA should seek legal counsel on how to deal with former board chairman involvement in overpayment of board fees,” BDO said.