PSMAS AUDIT : MASSIVE LOOTING LAID BARE

ELEVEN Premier Service Medical Aid Society executives, led by former group CEO Dr Cuthbert Dube, splurged US$22,8 million in “executive allowances” outside the payroll and evaded tax, resulting in the company coughing up US$9 million to Zimra. This is contained in a draft forensic audit report signed off by Ernst and Young Advisory Services (Private) Limited director Mr David Gwande.

In all, PSMAS executives received US$86,9 million in salaries, bonuses and allowances between 2009 and 2013 at a time the company owed creditors US$119 million. According to the draft forensic audit report conducted between October 2014 and February 2015, Dr Dube, his driver, two secretaries, and 11 executives shared US$22 888 281,28 outside the payroll between 2012 and 2013.

The executives also shared US$24 million in allowances and US$7 million in bonuses through the payroll. The executive allowances paid outside the payroll were drawn from PSMAS and its subsidiary PSMI. Dr Dube and his team evaded taxes, forcing the company to part with US$9 559 293,30 to the tax authority.

Of the US$22,8 million in unofficial allowances, Dr Dube received US$6,4 million, while former PSMAS group finance executive Mr Ernest Gwinyai was paid US$3,9 million.
Other beneficiaries of the largesse were group operations executive Mr Enoch Chitekedza (US$2,3 million), group risk and audit executive Mr Richard Mutasa (US$1,1 million), group legal executive and corporate secretary Mr Cosmas Mukwesha (US$1,4 million), group marketing executive Ms Anna Mutengwa (US$951 031), and acting Managing Director Dr Nicholas Munyonga (US$1,1 million).


Also to benefit were PSMAS group national operative executive Mr Augustine Khoza (US$983 464), group human resources executive Mr Raphael Paradzayi (US$1,1 million), group CEO office manager Mrs Joyce Munyoro (US$467 109), personal assistant to group finance executive Mrs Florence Tsiga (US$290 977), personal assistant at PSMAS Ms Barbra Melusi (US$142 403) and personal assistant Ms Fungai Chisvo (US$2 324).

Middle managers and general staff were paid outside the payroll to the tune of US$866 021,50 and US$208 510 respectively. Of the allowances paid outside the PSMI payroll, US$690 000 was for Dr Dube’s PSMAS Zambia salary.

In 2013, Dr Dube and his colleagues paid themselves US$303 053,81 in executive school fees benefits. From July to October 2012, Dr Dube, his driver a Mr T Hama, and two secretaries — Mrs Munyoro and Ms Chisvo — were paid US$3 million from both PSMI and PSMAS. US$2,6 million of this went to Dr Dube.

“The above-named employees were also paid through and appeared in the PSMAS payroll for the same period, from July 2012 to October 2012, despite their salary payments having been paid through PSMI.

“We noted that PSMAS and PSMI agreed to split salaries for these employees on a 40/60 percent ratio (PSMAS/PSMI). We, however, noted that according to the PSMAS and PSMI payroll summaries for the months July and October 2012, which we received from PSMAS, these employees received 100 percent salaries from both PSMAS and PSMI,” reads the report.

Between 2009 and 2013, Dr Dube was paid a staggering US$23 153 840, 97, representing 26,61 percent of the US$86 999 265,03 shared by the executives. The report notes that several cash payments amounting to US$770 000 were transferred to Dr Dube’s bank account without any supporting documents. The transfers were effected based on verbal instructions to Ms Tsiga by Mr Gwinyai.

“We however, noted that these amounts were later classified as personal loans (of) which Dr C E Dube repaid US$35 000 to PSMAS,” reads part of draft report. “PSMAS did not have a policy or guidelines relating to salary adjustments percentages, approvals and awards to employees. All salary and allowances adjustments for executives were approved by Dr Dube.”

Dr Dube received US$931 530 in medical benefits between 2009 and 2010 and bank transfers were not supported by documentation.

The former PSMAS group CEO blew US$538 539,50 in holiday allowance. He was entitled to US$2 000 out of pocket allowances daily and US$2 000 overnight allowance per night; while his spouse/partner was paid US$1 000 for day allowance and another US$1 000 as overnight allowance per night for international and local holidays.

Dr Dube and his executive splashed US$3,1 million on travel and subsistence allowances from 2009 to 2013.

“We also noted that on May 10, 2010, PSMAS paid US$9 820 for Dr Dube’s personal trip to Nigeria to visit Prophet TB Joshua. We also noted two instances (on 16 December 2011 and on 26 July 2012), where PSMAS purchased air tickets for Dr C E Dube and his extended family for trips to Malaysia and the USA for US$33 000 and US$76 497,88 respectively.

“We noted that the additional costs of Dr Dube’s extended family, that is, daughter, son-in-law and other travel companions, were not part of his benefits as detailed in the former GCEO’s benefits.”
Dr Dube’s son-in-law, Mr Wavell Gunda, was given US$8 026, 91 in travel and subsistence allowances when he was not a PSMAS employee.


Dr Dube withdrew US$289 970 from PSMAS which he used for Zifa business, while Mr Mutasa claimed US$8 500 when he travelled with the Under-17 national soccer team.
On June 4, 2012 Mr Gwinyai approved a US$300 000 transfer from PSMAS’ NMB bank account to Dr Dube’s NMB account. On June 13, 2012, US$200 000 was transferred to his CBZ Bank account, US$150 000 to his Stanbic Bank account, and another US$120 000 was split into his NMB and Stanbic accounts on August 3, 2012 without supporting documents.


Messrs Dube, Mukwesha, Paradzayi, Gwinyai, Mutasa, Munyonga and Mrs Sabaruata, Mrs Mutengwa received US$406 767 in unjustified board fees as they were also employees.
PSMAS’ procurement procedure also came under scrutiny as Dr Dube’s daughter, Mrs Patience Gunda (PSMAS marketing manager) and her husband Mr Gunda supplied meat worth US$209 956,71 through a company called Buymore. Auditors ruled Buymore’s prices were above market averages. About 27 unapproved companies supplied PSMAS with various services and products.


The draft report recommends that: “Allowances and benefits should be processed through the payroll and tax should be deducted and remitted to Zimra. Maximum limits should be set for the GCEO’s benefits and the board should be involved in approving the GCEO’s remuneration. PSMAS should implement a comprehensive fraud risk control framework, putting in place effective fraud prevention, detection, management and investigation mechanisms.”

PSMAS board chair Mr Jeremiah Bvirindi yesterday said he was still studying the draft report and would take action against anyone named, if necessary. “We received the report recently and we haven’t discussed it yet and you should not be writing about it now; how do we work vakomana? Give us a chance to work first then we will give you a statement when appropriate,” he said.

Health and Child Care Minister Dr David Parirenyatwa said his ministry, as the regulator, had asked the PSMAS board to act on the report.

“The mandate to act lies with the board. But for now, we can’t continue having negative reports about PSMAS, we need to start seeing the positives; we want PSMAS to grow. However, that doesn’t mean the board shouldn’t act on the report.”

Public Service, Labour and Social Welfare Minister Prisca Mupfumira, whose ministry covers thousands of civil servants who subscribe to PSMAS, was not reachable for comment.

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