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Air Zimbabwe scandal reflects parastatal rot

by Staff reporter
13 Apr 2018 at 11:49hrs | Views
THE systematic decline and near-collapse of the country's flag carrier Air Zimbabwe (AirZim), attributed to mismanagement and corruption, reflects the general decay of struggling and bankrupt state-owned enterprises which are supposed to be the locomotives of economic growth.

As AirZim totters on the brink of collapse - saddled with a huge debt overhang estimated at US$341 million - government officials - including ministers - were busy helping establish Zimbabwe Airways, a parallel airline which has controversially purchased two airplanes for US$35 million using public funds. Two more small planes will be bought for US$6 million.

Speculation whether ZimAirways is a state project or private enterprise is shrouded in mystery - prompting President Emmerson Mnangagwa to demand clarity on the murky airline and its relationship with AirZim.

A lot of stories have been peddled to explain the ownership and operations of ZimAirways, which is associated with Mugabe's former son-in-law Simba Chikore and Transport minister Joram Gumbo.

The fact that a number of versions have been cobbled up to explain the ownership and operations of ZimAirways exposes a deliberate ploy by officials to mislead citizens and taxpayers, possibly for self-serving ends.

But this is generally how government has managed the operations of a host of other state-owned enterprises.

At the inception of ZimAirways, Chikore, then AirZim chief operating officer, Gumbo negotiated for the purchase of four Boeing 777 long-haul passenger jets from Malaysia, but had paid only for two of the aircraft.

Within government circles, Gumbo has reportedly peddled the story that ZimAirways is a government project. While AirZim was supposedly purchasing planes to be used by ZimAirways, a process for government to adopt the flag carrier's debt was being steered through parliament.

In public, Gumbo has said that ZimAirways is a private entity owned by diasporan Zimbabweans, although he was assisting the airline to establish itself, raising questions of a potential conflict of interest.

There has been a version that the ZimAirways is owned by Chikore, although Gumbo has vested interests in the entity. There are fears that government officials want to deliberately collapse AirZim for the benefit of ZimAirways, in which they have vested interests.

Gumbo and Finance minister Patrick Chinamasa on Wednesday struggled to clear the air over the issue at the reception of one aircraft from Malaysia in Harare.

The opaque nature of the goings on at AirZim and ZimAirways do not bode well for the privatisation of state enterprises. The ZimAirways saga points to the possibility of ministers and executives abusing the process for financial gain.

Last year government invited bids from the private sector to buy stakes in 24 perennially loss making parastatals which have become a drain on the fiscus after decades of mismanagement and plunder largely by top government officials.

Most of the struggling state enterprises are facing collapse, mostly due to decades of mismanagement, corruption and an unforgiving economic environment. The majority are saddled with enormous debt overhangs.

Gross mismanagement, weak corporate governance systems and corruption has punctuated the operations of most of the state enterprises earmarked for privatisation.

In recent times, the collapse of Ziscosteel - once Africa's largest integrated steel maker - works as a useful case study on how once vibrant state enterprises have failed under the watch of government-largely as a result of abuse of public funds, asset stripping and gross mismanagement.

In 1980, Ziscosteel was producing 30 tonnes of steel a day, and directly employed over 5 000 people and close to 50 000 others in downstream industries.

By 1984, the plant was the country's biggest earner of foreign currency.

A probe into the operations of Ziscosteel between 1980 and 1986 revealed that poor management, corruption, nepotism and neglect of machinery were the key factors arresting the smooth running of the plant.

Efforts by government to resuscitate the plant, including investment commitments by Essar of India to pump US$750 million into the company, collapsed under unclear circumstances.

Similarly with CSC, mismanagement and alleged corruption saw the firm's cattle herd dwindling to only 6 000 cattle in 2014.CSC was once the country's largest meat processing firm in Zimbabwe.

Last year, a dossier generated by former CSC workers revealed that the meat processing firm could have been prejudiced an estimated US$12 million through murky transactions-leading to the company's collapse.

Economic analyst and president of the Zimbabwe Economics Society Lovemore Kadenge said ministers should be restricted to policy issues without involving themselves in operations of state enterprises.

"Ministers must play policy roles and not play executive functions which are the role of management," Kadenge said.

"For example, Gumbo going to Malaysia with Simba Chikore ex-AirZim chief operating officer (is unethical)."

To enhance transparency, Kadenge said, parastatal board members must be recommended by reputable institutions, rather than being hand picked by the minister.

"Board members must be recommended by professional institutions," he said.

"Board members must also go through an induction process."

Economic analyst Muchesa Chatsama said government should institute a probe into the AirZim-ZimAirways scandal, as well as other state enterprises which are tottering on the brink of collapse.

"We want answers to what happened in the AirZim-ZimAirways deal. In fact the probe is imperative if the Mnangagwa administration is to be taken seriously on dealing with corruption," he said.

"Politicians must stop meddling in the day to day running of parastatals and state enterprises. They should just be limited to demanding results," he said.

"What needs to be done going forward is to clean up parastatals."

Bindura University lecturer in the faculty of Commerce Felix Chari said most parastatals were underperforming as a result of mismanagement.

"Chief executive officers and directors are appointed on partisan grounds or that they are relatives of those in government," Chari said.

"Parastatals should be run professionally and competently. They should be appointed on merit.

"The major challenge is actually government which is draining parastatals of their resources. The reason why you find parastatals like NRZ being run down is that they are made to ferry goods without being paid.".

Source - the independent