Mildred Chiri- Here’s why I Will Miss Her

I took my first deep dive into data from the Auditor General’s reports in 2013. I was working with a colleague on a research project to pry into the goings on at the Marange diamond fields. To say I was shocked is an understatement. Here lay before us a real treasure trove of information and data. The reports we looked at then gave an account of the poor corporate governance and downright brazen corruption at state owned enterprises such as the Zimbabwe Mining Development Corporation (ZMDC). I remember the excitement I had; I pored through those reports with disbelief.

 

AG

Here was a quasi-independent ‘government agency’ doing such a great job exposing rot in state owned enterprise. Auditor General Reports are quite voluminous but surprisingly they are part fun (and of course part infuriating and sad). In the 2014 report on State Enterprises, the auditor general noted that;

The Chairman of the Mining Development Board (Godwills Masimirembwa- former ZANU PF Harare Province Chair and CMED Chair) retired from the Mining Development Board on June 30, 2013 and was paid US$ 261 000 as gratuity for his three and half years service on the board which is in contravention of the best principles of corporate governance which state that non-executive directors shall not receive excessive payments on contract termination. The gratuity payment was also not taxed in contravention of the Income Tax Act [Chapter 23:06] 13th schedule which states that any amount paid or payable to any person by way of gratuity constitutes gross income and should be treated as gross income and taxed under the Pay As You Earn ‘PAYE’ system.

The auditor general then recommended that ZMDC should consider a remuneration policy which is in line with Corporate Governance Practices and should comply with the Income Tax Act. SOEs are given a right of response in the reply and ZMDC in its response said;

The Corporation will adhere to the best principles of Corporate Governance and comply with the Income Tax Act. The Corporation will remit the PAYE on the gratuity in July 2014.

But hold on. Mildred Chiri and team were not satisfied with the response as it meant essentially meant tax-payers would bear the burden. In other words, Godwills Masimirembwa should pay his own PAYE as we all do. ZMDC should not do that for him. The Auditor then noted that;

By paying the PAYE in 2014 the Corporation utilises its resources, of which it should have withheld the PAYE through the system.

This initial research resulted in a report we titled Tracking the Trends: An Analysis of Diamond Mining Tax Contributions’ and also led us to another research project where we were looking at current disclosure practices in Zimbabwe’s mining sector. We sought to assess the extent to which the private sector, government and quasi independent institutions proactively disclose information relating to Zimbabwe’s mining sector.

As part of that research we wrote a bunch of letters to various government departments, Zimstats, Minerals Marketing Corporation of Zimbabwe, ZMDC and others. We also wrote to the Auditor General requesting a couple of reports. We already had most of these reports but were interested in testing the institution’s responsiveness.  And this is when I got newfound respect for that office and the work that Mildred Chiri was leading.

We got a response to our letter within 2 days of having delivered it. I remember getting an email and a call from the OAG’s office acknowledging our letter and requesting that we visit the office for a short meeting and to pick up the requested reports.

To be clear, when we wrote these letters, we were working for a local NGO but we intentionally did not the institutions we were affiliated to and the reasons why we had made our request. The idea was to request for information as ordinary citizens.

When we got to the office, all the reports we had requested had been put together. The courteousness on display and to which we were treated has stuck with me, three years on. We were casually asked why we wanted those reports and we mentioned that we were just interested in the work of the OAG office as citizens and that was good enough.

I distinctly remember that Valentine’s Day (14 February 2015) was around the corner post our meeting with the OAG’s office. We mooted the idea of sending the OAG flowers to show our appreciation of her and her team’s consistently sterling work. For no reason at all, we unfortunately, we did not go ahead with that plan.

What set Mildred Chiri apart, in my eyes, was how unassuming she was. She was not loud or boisterous. I would wager that more have gone through her reports than have heard her speak. She assembled such a great team and managed to keep those ‘civil servants’ motivated. You do not produce such reports year in year out on the back of so little resources without having and leading a great team.

Through the years, I have always pondered though- why didn’t she quit? She surely must have been frustrated. You produce good and factual reports that have clear indications for action; and those that have the authority to address concerns raised equally consistently ignore them. In my imagination, I think she stayed because she felt she had a moral duty to continue exposing rot. Sometimes you just have to do the right thing because it is the right thing.

I do not know the clear circumstances surrounding her departure and even the Finance Minister seems confused and appears to have bungled the dismal or whatever they are calling it. What I am pretty certain of is that her team will miss her, I will miss her and the nation will miss her. She was one of the good ones. Working in the muck but keeping her head high and doing the best she could. People often say we should build institutions and not focus on individuals. True. But individuals are important to. You can have the best institutions and systems and still have that individual- ask the Americans. For once I choose to focus on her, the individual. I choose to celebrate her and hold her up as a hero to my kids. Maybe, soon, I will find a way to give her those flowers she so deserves.

UPDATE ON THE PARLIAMENTARY PORTFOLIO COMMITTEE ON YOUTH, INDIGENIZATION AND ECONOMIC EMPOWERMENT MEETING – 7 MAY 2015

Matter: Oral evidence from the Permanent Secretary for Mines and Mining Development and the Permanent Secretary for Youth, Indigenisation and Economic Empowerment on progress made on the follow-up to the pledges made by mining companies to Marange- Zimunya CSOT.

The Permanent Secretaries did not attend the meeting but they sent in representatives at Directorate level.  These included;

Mr Hawadi- Ministry of Mines

Mr Tizoro- Acting GM- Zimbabwe Mining Development Corporation

Mr Masanga- Ministry of Youth Indigenisation and Economic Empowerment

Mr Mashonganyika- Ministry of Youth Indigenisation and Economic Empowerment

Mr Rangu Nyamurundira- National Indigenisation and Economic Empowerment Board

Mr Ngwarati- Ministry of Youth Indigenisation and Economic Empowerment

BACKGROUND

Five mining companies operating in Marange are alleged to have pledged to donate US$50 million into the Marange Zimunya Community Share Ownership Trust with each company in-putting US$10 million. The Trust was launched on 26 July 2012 but the ‘pledges’ have not been fulfilled and some of the companies in Marange have since stated that they never agreed to the pledges.

President Mugabe launching the Marange Zimunya Trust (photo credit: ZBC)

President Mugabe launching the Marange Zimunya Trust (photo credit: ZBC)

PROCEEDINGS

The Chairperson of the Committee indicated that the Committee wrote to the Ministry of Mines and Mining Development and the Ministry of Youth Indigenisation and economic Empowerment seeking information on the progress that has been made on the ensuring that mining companies that made pledges to the Marange Zimunya Community Trust had been honoured. The Chair also noted that the letters to both Ministries had requested evidence of correspondence between the Ministries and with the mining companies involved with respect to the issue of the Marange Zimunya Community Trust.

Outcome of the Committee Meeting and Oral Evidence from the Ministries

  1. There is no official communication that shows that the companies in Marange made pledges to donate to the CSOTS
  2. The Ministry of Youth Indigenisation and Economic Empowerment states that the pledges were verbal
  3. There is however no evidence (audio/meeting minutes) that shows that the companies made the pledges
  4. There Ministry of Youth Indigenisation and Economic Empowerment argues that the companies committed to the pledges and this is evidenced by the fact that it is the companies that produced the dummy cheques for presentation and not the Ministry
  5. The Ministry of Youth Indigenisation and Economic Empowerment has since written to the mining companies (March 2015) to get their official commitment with respect to the pledges and their plans to make good on the pledges.
  6. Out of all the mining companies, only Jinan has written back. Jinan’s letter back to the Ministry of Youth Indigenisation and Economic Empowerment was just an acknowledgement of receipt of the letter from the Ministry and does not necessarily commit to the ‘ pledges’
  7. ZMDC was not involved in the issue of pledges to the CSOT and was only invited to the launch
  8. There is no evidence of correspondence between the Ministry of Mines and Mining Development and the Ministry of Youth, Indigenisation and Economic Empowerment with respect to the Marange Zimunya Community Share Ownership Trust
  9. ZMDC met with the mining companies on 20 June 2013 and directed the mining companies to make contributions to the Trust (each contributing US$200 000 immediately subsequent to this meeting of June 2013)
  10. Marange Resources remitted US$250 000 and Mbada Diamonds remitted US$200 000 to the CSOT’s bank account
  11. Given the production challenges in Marange, the Ministry of Mines and Mining Development’s position is that these pledges be renegotiated down with a view to payment being spread over a period of time

Further Reading:

President Launches Marange Zimunya Community Trust 

Scam Fears in Community Trusts

Marange Community Share Ownership Trust Under Fire 

Community Share Ownership Trusts in Zimbabwe’s Mining Sector: The Case of Mhondoro-Ngezi 

REPORT BY: PUBLISH WHAT YOU PAY ZIMBABWE

Publish What You Pay Zimbabwe is a coalition of civil society and community based organisations united in their call for a more open and transparent mining sector in Zimbabwe.

AU should take steps to adopt recommendations of the High Level Panel on Illicit Financial Flows

Africa is estimated to be losing an estimated US$50 billion every year to illicit financial flows (IFFs) and this figure has been growing. The estimated US$50 billion may indeed be a conservative figure as there is no accurate publicly available data on all transactions. The amount of money that Africa loses to IFFs is approximately double the amount of Official Development Assistance that the continent receives annually. IFFs refer to money that is illegally earned, transferred and or utilized. Much of IFFs in Africa is a result of the commercial activity of multinational corporations operating across the continent. It is without doubt mining; gas and oil companies operating in Africa are key actors in IFFs. IFFs are made possible through secrecy, tax havens; money laundering and transfer pricing among other techniques. The situation in countries like Zimbabwe and Angola is dire as there are no up to date statistics to compute the possible tax or revenue losses that the countries suffer as a result of IFFs.

African Ministers of Finance set up a High Level Panel (HLP) on Illicit Financial Flows in 2012 and it is chaired by H.E Mr Thabo Mbeki. The panel was set up having realised the negative impacts of IFFs including; reduced tax base, reducing capital available for infrastructure and social development programmes, draining foreign currency reserves; negating investment inflows and domestic resource mobilisation efforts. IFFs also contribute to continued African dependency on aid; conflict; and weakened democratic accountability institutions. The HLP on IFFs’ mandate is to investigate the nature and scale of IFFs and put forward recommendations for the continent to tackle IFFs.

The HLP will launch its final report on Sunday, February 1 2015 at the United Nations Conference Centre in Addis Ababa, Ethiopia. The launch of the Report will follow its prior submission to the Assembly of the African Union (AU) on 31 January 2015. Civil society organisations across Africa call on the AU to take the necessary steps to ensure that the recommendations of the HLP are adopted and implemented. This is critical to the future development of the continent and its ability to self-finance that development. The report and recommendations of the HLP on IFFs is coming at a time when there are reports that over 70% of the AU budget remains funded by Western donors. It is high time that Africa takes superintendence over her own development.

The call for action is not just targeted at the AU but extends to the international community as there is realisation that IFFs require a global solution. Africa alone cannot resolve this challenge given the interconnectedness of today’s global economy

Publish What You Pay has for over decade called for a more open and transparent extractive sector. Information on beneficial owners of mining companies and strong transparency and accountability principles within national legislation will go some way in ensuring that IFFs are addressed.

Illicit financial flows curtail economic growth

NewsDay

September 15, 2014 in News

https://www.newsday.co.zw/2014/09/15/illicit-financial-flows-curtail-economic-growth/

ALTHOUGH Finance minister Patrick Chinamasa’s 2014 Fiscal Policy Review statement announced last week seeks to widen government’s revenue inflows, analysts contend that there is need to seriously curb illicit financial flows (IFFs) from Zimbabwe if the economy is to experience the anticipated growth.

Veneranda Langa

Illicit financial flows through tax evasion, bribery, corruption, lack of transparency and accountability in mineral wealth and porousness at the country’s borders seem to have cost Zimbabwe a lot.

Although there are no exact and recent statistics on how much Zimbabwe is losing through IFFs, a research by Ndikumana and Boyce (2008) ranked Zimbabwe sixth in Africa on IFFs between the years 1970 to 2003.

African Development Bank statistics on Zimbabwe revealed that in the past decade Zimbabwe lost $12 billion to illicit financial flows, which made individuals and corporations richer at the expense of society.

Tafadzwa Chikumbu a policy officer on Economic Governance at the African Forum and Network on Debt and Development (AFRODAD) recently told delegates at a Transparency International-Zimbabwe workshop on curbing illicit financial flows from Zimbabwe that IFFs were money that was illegally earned, transferred or utilised in violation of laws in its country of origin.

He said IFFs were not a problem that affected Zimbabwe only, but were a global issue which had international implications and tremendously affected developing countries.

“The sources of funds may be legal, but their transfer may be illegal through tax evasion by individuals and companies. IFFs range from simple private individual transfer of funds into private accounts abroad without having paid taxes, to highly complex schemes involving criminal networks that set up multilayered, multijurisdictional structures to hide ownership,” Chikumbu said.

“Governments the world over are now joining forces to combat money laundering, tax evasion and international bribery, which makes up the bulk of IFFs. The exact scale of the problem is unknown, but IFFs have devastating effects on developing countries,” he said.

According to Baker (2005) quoted by Kar and Cartwright-Smith (2010) IFFs which happened through corruption, bribery and embezzlement of national wealth constituted 5%, those that happened through criminal activities such as the trade in drugs, weapons, and people constituted 35%, and commercial transactions through multinational companies constituted 60%.

IFFs rampant in mining, forestry, wildlife sector

Chikumbu said IFFs in Zimbabwe were more apparent in mining, forestry and wildlife-related safari activities.

“IFFs were noted in the diamond sector, where according to the Kimberly Process Certification Scheme (KPCS) Monitor, Zimbabwe sold at least $30 million worth of diamonds from Marange, which Treasury and Zimra confirmed that IFFs occur through tax evasion and tax avoidance schemes by multinational corporates, due to weaknesses in tax legislation.”

He said economic hardships and greed drove IFFs through corruption.

“Gaps in the legislative framework governing the mining sector create opportunities for corruption and rent-seeking behaviour.
Information asymmetry between government and investors in the mining sector contributes to tax avoidance through under-reporting of the quantity, quality and composition of minerals.”

In wildlife and fisheries sector, Chikumbu said IFFs happened through weak governance and corruption.

In the timber industry, he said the problem was illegal logging due to the land reform programme that resettled families in indigenous forest reserves and national parks, which have exposed indigenous forests to exploitation.

In the mineral sector, he said export over-invoicing between 2009 and 2012 totalled $2,79 billion for which South Africa contributed 97,4% of the illicit flows from Zimbabwe.

Chikumbu said illicit financial flows in the mining sector were between Zimbabwe and countries like Belgium, China, Germany, Japan, United States and South Africa, they amounted to over $3, 1 billion.

In the wildlife sector between 2011 and 2013, the country is said to have also lost $17 423 952 through poaching, illegal trade in ivory and trophy hunting fees. In fisheries during 2007 to 2013 the estimated potential revenue lost to Zambia was $11 335 964, while over-invoicing in timber exports cost the country about $17,3 million in 2009 to 2013.

Strengthen legal, institutional frameworks to curb IFFs

AFRODAD policy officer Tafadzwa Chikumbu said in Zimbabwe there was no specific legal or institutional arrangement that dealt with IFFs, adding the situation was the same with other regional countries.

He said some frameworks to curb IFFs included the Anti-Corruption Commission to combat corruption, theft, misappropriation, abuse of power and other improprieties in the conduct of affairs in both public and private sector, as well as a unit in the RBZ (Bank Use Promotion and Financial Intelligence Unit established in 2004) to suppress money laundering, receive and analyse suspicious transaction reports from financial institutions and designated non-financial businesses.

Other legal frameworks included the Mines and Minerals Act which empowered the Mining Affairs board to assess books, accounts, plans, and other documents for purposes of assessing applications for carrying out investigations.

“However, the shortfall of these provisions is that they are responsive, rather than preventive of IFFs. In the wildlife sector, the Parks and Wildlife Act is the principal law regulating and controlling the trade and harvesting of wildlife and fishery. Zimbabwe is also a signatory of CITES [Conventon on International Trade in Endangered Species] which regulated the worldwide commercial trade in wild animal and plant species to ensure that international trade does not threaten the survival of any species,” he said.

Other legal instruments that can curb IFFs in Zimbabwe include the Forest Act, the Environmental Management Act, Criminal Code, Criminal Matters (Mutual Assistance) Act, Extradition Act, Trafficking of Persons Bill, Money Laundering and Proceeds of Crime Act, as well as that Zimbabwe is a member of the Eastern and Southern African Anti-Money Laundering Group (ESAAMLG)
Although these legal instruments are available, the problem is said to be lack of enforcement.

“At global level, there is need for institutional co-ordination and information exchange to reduce the loopholes that are exploited by cross-border crime syndicates to curb IFFs. At country level, countering IFFs would require strengthening of the legal and institutional frameworks that are fit for a purpose, credible, enforceable and adaptable to the dynamic and complex illicit activities that facilitate IFFs,” he said.

On solutions to curb IFFs, Chikumbu said weaknesses in tax legislation needed to be addressed to curtail tax avoidance and aversion schemes by multinational corporates.

Government was also encouraged to carry out a comprehensive audit of the country’s minerals, and harmonise Zimbabwe’s wildlife laws with those of neighbouring countries.

It was also observed that there was need to disclose beneficial owners of shell companies.

Researcher, Farai Mutondoro from Transparency International-Zimbabwe said there was urgent need for policy dialogue to curb illicit financial flows.

“IFFs reflect the proceeds of corruption, crime and tax evasion.

Addressing IFFs will automatically increase the level of development while simultaneously reducing poverty. The money we receive in aid is less than the money we lose to IFFs, meaning that if there were no leakages Zimbabwe could be in a better economic position. The natural resources we have will not be always in abundance and the nation must benefit from them while they are still available.

“The public must therefore demand Parliamentary oversight to ensure the full enforcement of the recently gazetted Anti-Money Laundering and Proceeds of Crime Act, as well as enactment of a Whistle Blowers Protection Act to encourage both witness and victims of corruption to come forward. A mechanism for asset declaration on how individuals acquired wealth should be formulated,” Mutondoro said.

‘Politicians involved in IFFs

Chairperson of African Parliamentarians Network Against Corruption (APNAC) and MP for Kambuzuma Willias Madzimure (MDC-T) said asset declaration for legislators and other people in high positions of power had been proposed long back.

“However, the issue of asset declaration has not been taken up; obviously it is because of lack of political will.A resolution was passed in Parliament to introduce a motion on Asset declaration, but it was shot down by the Standing Rules and Orders Committee. There is need for political will and the understanding of the impact of corruption in society.

Zimbabweans are not fully aware of what corruption has done to this country. There are a lot of issues of people transferring money out of the country. There is need for awareness and understanding of how sophisticated corruption has become.”
Madzimure said it was imperative for Parliament to expose corruption during committee sittings and cause arrests of perpetrators.

“In Uganda when the Public Accounts Parliamentary Committee sits there will be members of the Criminal Investigations Department who then pick up the people implicated. In Zimbabwe, people are being exposed, but we have not seen any action being taken or arrests,” he said.

Co-ordinator with Publish What You Pay Campaign Gilbert Makore said IFFs were also a sign of capacity gaps within our institutions.

“There is need to strengthen Zimra capacity in terms of knowledge and sector specific tax issues, as well as to strengthen the oversight roles of institutions such as the Auditor-General’s Office and the Zimbabwe Anti-Corruption Commission.Legislation dealing with IFFs should be reviewed and absence of such laws makes it difficult to address it. Parliament oversight also needs to be strengthened and reports of committees of Parliament should show evidence of IFFs and corruption and action should be taken on that evidence by committees.”

Makore said the former Mines and Energy Portfolio Committee which was chaired by the late Zanu PF MP Edward Chindori Chininga once produced a damning report on the mining sector in Zimbabwe and exposed corruption, but to date no action had been taken on the report.

“We have audit reports, but beyond the noise generated on the reports, there has not been follow up. They are just debated in Parliament and nothing is done in terms of arrests. Artisinal small scale mining is a big problem and there are many unregistered gold diggers and millers in the country resulting in a lot of minerals not accounted for. There is need to improve regulation of that sector.

“There is also need for geological surveys because we do not know how much minerals are in this county. Mines might have more geological information than government. We also need transparency and accountability as well as disclosure of information of mining contracts signed. Corrupt investors are also linked to political elites and this corrupts State institutions. There is also need to do a lot of research on minerals and come up with figures that are Zimbabwe specific, as well as to capacitate the media and civic society organisations to expose corruption,” Makore said.

Mabvuku Tafara MP James Maridadi (MDC-T) said the Zimbabwe Republic Police were well-trained and the best in the region, but he had noted that there was a big loophole in terms of investigating cases of corruption.

“It is high time that Zimbabweans should react whenever any individual is fingered for corruption. We need to speak out and demand to know how that person acquired their wealth because we have seen a lot of people getting rich overnight while the country suffered,” Maridadi said.

Evelyn Masaiti Muzungu (proportional representation MP MDC-T) said there was no political will to deal with IFFs.

“People involved in IFFs are very influential people, including politicians. We need to expose those politicians,” Masaiti Muzungu said.

Fanny Chirisa Proportional Representation MP (MDC-T) said there was need for urgent crafting of the Whistle Blowers Act, as well as to ensure bodies like the Zimbabwe Anti-Corruption Commission were adequately resourced to deal with issues of corruption and IFFs).

Lorraine Marima, a projects officer with the Chiadzwa Community Development said in the mining sector she had noted that most diamond companies mining in Marange were hiding under the name of exploration to steal Zimbabwe’s minerals.

“There is need to put a statutory instrument in place to guide exploration. The Mines and Minerals Act was also crafted in 1961 and it needs an overhaul because it is an archaic law,” Marima said.

Themba Mahleka, a researcher with Transparency International-Zimbabwe (TIZ) said Zimbabwe was a signatory to the United Nations Convention Against Corruption which is a tool to curb IFFs.

“We have laws to curb IFFs in Zimbabwe, but there is lack of implementation. A TIZ study revealed that the level of prosecution for offences were limited to petty corruption and major financial corruption crimes were not enforced and perpetrators were not brought to book. Enforcement should be improved and we need a good legal system to help us recover our assets for the development of the country,” he said.