White-collar crime ails economy
http://www.theindependent.co.zw/
October 12, 2012 in Opinion
AS often stated in this column, there are many causes of Zimbabwe’s severe
economic problems.
Eric Bloch Column
Most of the economic morass stems from the ruling politicians’ penchant for
pursuing destructive policies. These range from deterring much-needed
foreign direct investment (FDI) and domestic investment, to gross fiscal
mismanagement and abuse.
We also have counterproductive taxation measures, recurrent confrontations
with other countries (most of which could provide developmental aid),
negative policies in assuring enterprises, residents and tourists of
security. There is also failure to resuscitate fiscus-bleeding parastatals
plus destruction of the agricultural foundation of the economy. These are a
few of the contributors to the decimation of the economy, and the
concomitant misery for the Zimbabwean majority.
Another economic affliction is the growth of corruption and white-collar
crime in Zimbabwe. (I recall travelling from Bulawayo to Harare on a then
operational Air Zimbabwe flight, sitting next to a leading Zimbabwean
politician.
He asked why I was travelling to Harare, to which I replied that I was going
to attend a conference on corruption at which I would make a presentation.
The politician replied: “That’s a very good thing, for by now there are
only two honest people left in Zimbabwe.” My response was, “Really? Me and
who else?”
Not all Zimbabweans are dishonest and corrupt, but the number guilty of such
practices is increasing all the time.
Most Zimbabweans are inherently honest and seek to avoid corrupt practices,
but tragically this is progressively changing. There is no greater trigger
to the abandonment of honesty and of recourse to crime than when one’s
children are often crying from hunger. Many children suffer from
malnutrition, and cannot access healthcare and decent education due to their
parents’ plight.
In desperation, the poverty-stricken turn to crime and corrupt practices. At
the same time, there are many who are increasingly determined not to join
the ranks of the impoverished, thus they resort to accumulating great
wealth. These are mostly politicians, corporate executives, managerial
personnel, and others who have found opportunities of circumventing
provisions of law.
Aiding and abetting the growing tendency to corruption is that to an
increasing extent, the principles of good governance are being disregarded
by government, its parastatals and other business enterprises. There is
mere lip service to governance principles as less and less are observing the
principles. In part this is attributable to the brain drain suffered by
Zimbabwe over the past 15 years, motivated by the declining economic
environment, and the deterioration in central and local government services.
Consequently, senior and management personnel were replaced by inexperienced
personnel with limited knowledge of the fundamentals of good governance and
management. Due to cost containment necessitated by distressed economic
circumstances, many enterprises could not afford the services of external
auditors, whilst others cut the operations of internal audit departments.
This created an enabling environment for white-collar crime.
Within the public sector, highlights of corrupt practices include the
disclosure that government had about 40 000 “ghost workers”.
These were alleged, non-existent persons in the employ of various
ministries, whose salaries are enjoyed by those who created the fictitious
workers. This major white collar crime was exposed only after external
auditors had been engaged by the Ministry of Finance.
If the amount allegedly paid to each such imaginary public servant was a
basic salary of US$150 per month, this would mean the perpetrators were
stealing US$6 million a month (equating to US$72 million dollars per annum),
a significant contributor to government’s fiscal deficits.
Other white collar crimes include those by many in government, parastatals,
and those private sector enterprises who evade prescribed purchasing
procedures. They ensure supplies and services are sourced from suppliers who
secretly pay the perpetrators of the procedural evasions secret, undisclosed
commissions; such amounts are concealed in the prices charged.
Even when prima facie tender procedures are applied, the culprits often
manage to circumvent or distort those procedures, ensuring tenders are
awarded to pre-selected suppliers who pay them hidden “gratuities”.
Often, those who resort to such white collar crimes are of high social
standing, intelligence and authority, both in the public and private
sectors. They find ways of committing undetected fraud, embezzlement and
insider trading. In so doing they exploit state-of-the-art technologies
(especially computer systems), falsify paperwork and abuse positions of
authority.
Consequences of corruption include inflated fiscal deficits, greater losses
for parastatals and many private sector enterprises, often resulting in
their liquidation. This also has the effect of increased prices to
consumers, thus stimulating inflation.
The magnitude of white-collar crimes and their consequences are yet another
deterrent to investors, and a major contributor to continuing economic
decline.