CMED Scandal Details Gross Mismanagement, Undelive...

CMED Scandal Details Gross Mismanagement, Undelivered Assets

Nyashadzashe Ndoro – Chief Reporter

A recent report by the Public Accounts Committee has brought to light significant financial irregularities, governance failures, and operational inefficiencies within CMED (Private) Limited, CMED Fuel (Private) Limited, and EasyGo Hiring and Travel (Private) Limited for the financial year ending December 31, 2021.

The PAC's inquiry, based on the Auditor General's findings, scrutinised the entities' adherence to financial regulations and corporate governance. The Committee's review—which included a workshop and oral evidence sessions with CMED officials—concluded with a series of observations and stringent recommendations aimed at ensuring accountability, transparency, and the effective utilisation of public resources.

The Auditor General initially flagged CMED (Private) Limited for failing to provide evidence of reviewing the useful lives of its assets or conducting impairment assessments, a direct violation of International Accounting Standards (IAS) 16 and IAS 36.

While the Director of Finance acknowledged the oversight and stated that the issue was rectified in 2022 to the Auditor General's satisfaction, the PAC emphasised the need for consistent adherence to international accounting standards going forward.

A particularly concerning issue was an advance payment of ZWL$31.4 million (equivalent to US$358,083 at the time) made in October 2021 for three double drum rollers. Only two rollers were delivered, leaving an outstanding balance of US$119,361.

Despite a partial refund of US$45,000 in 2023, a balance of US$49,000 remains outstanding. The PAC has recommended thorough due diligence in procurement and demanded that the remaining US$49,000 be settled by May 30, 2025.

CMED has since adopted a policy to pay suppliers only after goods are delivered.

It was also noted that CMED (Private) Limited failed to remit payroll deductions amounting to ZWL114.4 million and outstanding dividends of ZWL126.2 million during 2021, attributing delays to liquidity challenges and the discontinuation of government set-offs. While statutory deductions were cleared in 2023, the PAC supported CMED's proposal for a cash payment scheme and recommended levying interest on late payments from clients by May 31, 2025.

A significant breach of the Public Entities and Corporate Governance Act [Chapter 10:31] was also identified, with the company failing to establish standalone committees.

The Board’s misinterpretation of the Act highlighted a critical lack of understanding. The Committee has called for mandatory training for Board members and management by June 2025, and full compliance with the law.

The report further noted CMED’s delayed resolution of prior-year audit findings from 2021 and its consistent failure to meet statutory deadlines for submitting financial statements as required by the Public Finance Management Act [Chapter 22:19].

The PAC observed that this non-compliance undermines transparency and accountability.

The Committee recommended that the Accounting Officer in the Ministry of Transport invoke disciplinary action against the Managing Director of CMED (Private) Limited, with a report to Parliament within 60 days of the report's tabling.

CMED Fuel (Private) Limited also came under scrutiny over 674 litres of fuel at its Marondera station that were not captured in the Coupon Management System within the required 90-day period due to connectivity challenges. The issue was blamed on the internet service provider, prompting the company to switch providers and implement safeguards. The PAC recommended continuous internal checks to prevent similar occurrences.

“CMED Fuel (Private) Limited should continuously conduct proper internal checks for early detection of network connectivity problems and raise the issue with the relevant internet provider,” the Committee noted.

EasyGo Car Hire and Travel (Private) Limited was found to be operating without an approved debtors’ policy, resulting in ZWL$63.9 million in outstanding trade receivables.

The company has since approved a policy and introduced a pre-payment method, which the PAC commended. The Committee recommended the full implementation of the pre-payment method to improve cash flow.