Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

***The views expressed in the articles published on this website DO NOT necessarily express the views of the Commercial Farmers' Union.***

How GMB was killed

How Zanu PF killed GMB

Political meddling with a public entity. Contradicting accounts on financial transactions. An attempt to bribe journalists. Government neglect of its obligations. A crude governance culture.

by Nkosana Dlamini/Malvern Mukudu

These are not notes for a mystery novel. The points actually summarise what a team of journalists supported by the Information for Development Trust (IDT) came across while investigating the alleged abuse of some $22 million at the Grain Marketing Board (GMB).

A 2014 report by the Auditor-General Mildred Chiri noted that, between 2009 and 2012, GMB used its commercial arm to generate $22 076 828 by dipping into the strategic grain reserve (SGR) to produce mealie-meal and other products, in addition to ordinary maize sales.

GMB realised $10 180 780 from maize sales and $11 896 048 from its milled products, according to the parastatal.

But “there was no evidence in the (GMB) financial statements to show that some of these funds were ploughed back towards payment of farmers”, according to the report.

The money was generated during a period when farmers who delivered grain to GMB were struggling to get paid, in some cases experiencing delays of two years.

This undermined their capacity to produce more food, partly resulting in perennial food insecurity that forced a broke Zanu PF government to turn into a net exporter of cereals at a time drought, input shortages and poor farming skills also contributed to low productivity.

During the 2009-2010, 2010-2011 and 2011-2012 periods, the physical stocks fell short of the minimum required reserves of 500 000 metric tonnes by 91,93%, 55,57% and 40,28%, respectively.

Under a 1996 agreement and the Grain Marketing Board Act (Chapter 18:14), GMB is the custodian of government cereals but can operate a commercial arm to generate revenue for itself.

Government is supposed to pay the board fees for the procurement and storage of cereals and maintenance of the grain reserve and GMB can run its own profit-making commercial division.

While GMB can draw cereals from the SGR for commercial milling, it must seek authority from and pay back to government, which, on the other side, should provide money through treasury for cereal procurement and maintenance of the grain reserves.

A probe into where the more than $22 million went to, got more than what the journalists had bargained for.

GMB admits that none of the money went to pay farmers but, according to Muriel Zemura, the parastatal’s spokesperson, met operational costs such as grain handling equipment repairs, plant maintenance, telephone bills, rates, water, electricity, security and wages because government was not honouring its financial obligations to the board.

The grain authority drew 35 465 tonnes worth $9 870 285 from the SGR to use for commercial milling purposes.

This is under a standing arrangement with treasury to take out grain from the SGR as payment for grain handling and storage fees due to it from government.

By March 2012, the fees that government owed GMB amounted to $38 million, meaning that the board could still go ahead and take more maize from the SGR.

GMB ended up regularly raiding the strategic grain reserve and diverting cereals to its commercial milling without the required approval from the ministry.

A 2015 public accounts committee report of Parliament noted that the relationship between GMB’s commercial unit and the SGR was ill-defined and obscure.

A former executive at GMB said lack of communication between the grain board and the parent ministry of agriculture regarding cereal withdrawals caused friction, with Joseph Made, the Agriculture minister, sometimes circumventing the general manager, Albert Mandizha and issuing instructions through his subordinates.

Mandizha refused to comment on this, while Made referred questions back to GMB.

The parliamentary Public Accounts Committee (PAC) noted “with concern” in its 2015 report on GMB that the parastatal “continued to receive qualified opinions” in clear evidence that “the board and management…were reluctant to act on the recommendations of the Auditor General year after year’.

The PAC report cited, among other things, flouting of tender procedures and the illegal retention of board members whose terms had expired.

The utility seems to be enjoying patronage from ruling party functionaries who are colluding to protect GMB.

Evidence of this emerged towards the end of the investigation when a ruling party legislator, Christopher Chitindi, gave an instruction over the phone to the GMB acting general manager, Lawrence Jasi, to bribe the investigating reporters to avoid bad publicity.
This occurred during an evening interview which the media crew recorded.

In the audio recording, Chitindi can be heard urging Jasi to use his authority to gag the journalists with “hampers” and expresses his willingness to be cited as the one who ordered the gifts if matters come to a crunch.

Chitindi is the chairman of the parliamentary portfolio committee on lands and agriculture which, ironically, has oversight on GMB.

Investigations show that the parastatal’s employment and administrative costs, among them salaries, spiked between 2009 and 2012 when GMB was neglecting paying farmers.

Between 2009 and 2010, records show that staff costs rose steeply from $2 784 475 to $10 542 407. They then went up to $17 493 021 in 2011 and $25 145 256 in 2012.

The increase continued into 2013, with the loss-making entity paying its workforce a total of $33 439 697.

That means a huge year-to-year hike of more than $30 million and total accrued bill close to $90 million in a space of four years for a workforce that, on the other hand, was going down through retrenchments.

Sources interviewed offered contradicting statements on these hikes at a time GMB was also struggling to pay off retrenched workers.

A former senior executive at GMB said the salary hikes were justified because the parastatal was making profits through its commercial unit, but another top ex-manager and Chitindi disputed this.

On its part, GMB acknowledged that “salaries gradually increased” following collective bargaining agreements.

Zemura said the wage bill was further stretched by hiring contract employees to man collection points during grain intake seasons and the drought mitigation programme in 2012.

Political interference worsened the GMB staff headache. By 2009, the utility had more than 2 000 employees across the country and top management agreed that the figure must be reduced to less than 1 000, both former executives said off the record.

While retrenchments were effected and the figure finally came down to slightly over 1 000 in preceding years, the process was not easy as government officials, said the executives, resisted mass layoffs.

“The bulk of the money realised by the commercial wing went towards salaries and other operational costs. It was clear that we must reduce the size of our staff as numerous depots were inactive yet authorities said we must not close them down,” a former executive said.

“For them, retrenching GMB workers would send the wrong political message and result in loss of votes for Zanu PF. There were known depots which were viewed as political assets, particularly in Mashonaland provinces and Masvingo.”

Zemura admitted that the planned retrenchment exercise was moving at a snail’s space.

A 2016 Zimbabwe Human Rights Commission report accused senior government officials and politicians of denying opposition supporters of free and loaned grain and inputs distributed through GMB.

But manipulation of free cereals and inputs in rural areas is a familiar story in Zimbabwe, with the ruling party allegedly using the handouts to buy votes.

Government authorities would just order grain from GMB to give out as free and loaned inputs and never bothered to pay for it as required.

“The thousands of tonnes that went out as free handouts to rural areas must account for part of the $22 million you are asking about.
The problem with government is that it is quick to blame GMB yet it is contributing to the shambolic books at the parastatal,” said an executive.

It also emerged during investigations that GMB was deducting money for medical aid and pension contributions from workers’ salaries but was not remitting to service providers.

Cereal products sale and distribution costs also ballooned from only $45 887 in 2009 to $7 723 953 in 2010, before dropping to $2,3 million in 2011.

Distribution costs involved transportation, whose contracts Tendai Biti, an opposition leader and finance minister during that time, said was a source of controversy as top ruling party officials were enlisted to offer transport to the board.

The two former senior managers interviewed said they were unaware of political manipulation of the transport contracts and reported creation of unnecessary transportation jobs just so that the awardees made money.

But one of the ex-managers admitted that at least one depot manager was discovered to have clandestinely used his own trucks and got paid for doing GMB distribution.

However, according to GMB, there was an increase in grain intakes and distribution activities that spiked transport costs.

Chitindi, GMB and the two former executives blamed government for failure to fund the parastatal.

Biti, on the other hand, insisted that his ministry was remitting sufficient funds to the parastatal even though he could not provide figures.

“We ended up having to dig into our pockets to meet the financial and maintenance requirements that government must take care of,” said one of the former executives.

Treasury gave GMB $195 562 711, according to Zemura, some $146 million of which she claimed went to pay farmers while the remainder was used to ensure grain storage, silo rehabilitation and equipment repairs.

That would mean GMB was paying farmers an average of around $36 million per year between 2009 and 2012.

However, PAC’s 2015 report indicates that GMB failed to pay a mere $4 534 741 owed to farmers who delivered grain in 2011 alone.

Besides, the farmers that delivered grain in 2012 were paid ahead of those that surrendered theirs in 2011.

Contrary to what Biti said, Zemura observed: “This money was inadequate to meet all SGR related costs and so [we] had to use some proceeds from maize sales”.

Government might be broke, added the former executive, but it still had the capacity to adequately fund the GMB to capacitate it to maintain sustainable grain reserves considering that it has been funding multi-million projects elsewhere.

This story was produced with support from Information for Development Trust (IDT), a local non-profit organisation promoting access to information on governance.

The final instalment will be published next week.


New Posts: