The Chairman of the Parliamentary Committee on Statutory Bodies and State Enterprises, Robert Masitara, has said that Parastatals are the biggest area of concern regarding corruption.
Masitara has the report in Parliament for the year ended 31st March 2011.
He said certain parastatals signed employment contracts, stating that the risk on the business is that employment contracts validate the salary that is recorded by the parastatal in the general ledger.
The absence of these contracts in the organization files leads to the risk of misstatements of the salary balance for the employees, said Masitara.
“It is also a requirement by the Employment Act to ensure that for every employee, there should be a legally binding agreement between the two parties. There is, therefore, a risk that the person being paid is not legally contracted by the organization,” said Masitara.
He also revealed that the report found that there are no records of bank accounts on books of most parastatals. He added that the risk is that the entity is open to fraud as fraudulent transfers of money may easily take place and management would not pick it up as the account will not be monitored since it is off the books of the company.
“Exposure of guarantee policy has risk to the parastatal. The organization is exposed to the extent that staff who have drawn on the guarantee scheme may leave the employment of the parastatal without settling their debts,” said Masitara. ┬á
He stated that his committee’s quest is to ensure good corporate governance in all the state corporations, and agencies, and these will continue to be a hallmark of its scrutiny to effectively and decisively combat asset mismanagement and corruption.
He also pointed out that missing revenue receipt books is an area of concern. He added that revenue receipt books were not made available to the external auditors for audit verification.
“Assets that were fully depreciated and had been boarded in the prior years were still recorded in the asset register with the wrong values,” he said.
“There are weaknesses of procedures on the procurement processes and in certain instances the requirement that proof of payment should be confirmed for the tender to qualify was flouted.”
He said the report has revealed that most parastatals do not have a procurement and contract management system in place for contracts the parastatal has entered into. He added that there is a risk that laxity with regard to the adoption of the procurement and contract management system in the parastatal is likely to lead to violation of the terms and conditions of the contract by either party.
“Corruption hurts the poor disproportionately by diverting funds intended for development, undermining a government’s ability to provide basic services, and injustice and discouraging foreign aid and investment,” said Masitara.
He pointed out that they had been hiding in the dark for too long and added that realising and accepting the fact that corruption exists will bring them one step closer to preventing it.