NSSA writes off US$88m . . . Poor investment, inflated costs & inefficiencies

The Chronicle

Farirai MachivenyikaHarare Bureau

The National Social Security Authority was prejudiced of US$88 million due to poor investment appraisal, inflated costs, mismanagement and inefficiencies, the forensic audit report released last week has revealed.

The report was tabled in Parliament by Public Service, Labour and Social Welfare Minister, Sekai Nzenza on Thursday.

According to the report, the Authority acknowledged in its 2016 annual report that it had erred in constructing Beitbridge Hotel without requisite management skills resulting in it spending US$49 million instead of the US$3 million which was budgeted for.

“The report highlighted the following key issues and weaknesses on the project; the proposal from Rainbow Tourism Group did not have a bill of quantities and basis of the estimated costs; there was no evidence of NSSA performing an investment appraisal for the project, no action was taken on abnormal variance between tender amount and actual cost, abnormal consultation fees which were not budgeted for were not queried,” reads part of the report.

The Hotel that was run by RTG was closed in 2016 after two and half years of operations after the hospitality group made approximately US$2 million losses.

The auditors also noted that NSSA management had not learnt anything from the weaknesses cited on the Beitbridge Hotel issue.

“Almost all the off-take housing projects in progress have similar weaknesses and challenges. These are likely to result in financial losses if corrective action is not take.

“Due to some of these weaknesses, the Authority ended up writing off US$88 million of investment properties through fair value adjustment during the period investigated.

“Based on our review, other NSSA forensic and internal audit reports, we noted that of the US$88 million, about US$79 million was established to be a result of mismanagement, inefficiencies, absence of investment appraisal and inflated costs,” reads the report.

NSSA lost about US$43 million on Beitbridge RTG Hotel, US$23 million on Metbank debt swap properties, about US$12 million on Celestial Park, about US$900 000 on Gateway Investments properties, about US$500 000 on Ballantyne Park property and US$124 000 on Nyanga Chalets.

The audit also questioned the integrity of NSSA database after noting a number of anomalies.

It noted that 371 000 records did not have contact phone numbers which are necessary for communication purposes, 989 000 records did not have contributors’ monthly salaries which are used to calculate pensions with most of them having 723 822 as a default telephone number.

A total of 880 000 records had no employee numbers which is a prerequisite when applying for and claiming a pension while 79 000 did not have national identity numbers.

More than 4 000 records had a total service period of 75 years yet NSSA has only been in existence since 1994 making 25 years the period equivalent to commencement of NSSA contributions.

At least 35 000 records did not have social security numbers.