ETA’S E19M FRAUD CASE: ARREST EX-EXECS – PAC

LOBAMBA – Following allegations of fraud in the case of payments issued amounting to E19 771 409.48, the PAC has called for the arrest of two former executive members of ETA.

The alleged fraud occurred in the financial years ended March 31,  2016 to 2021. As reported two years ago, the payments could not be allocated to the correct expense accounts due to lack of supporting documents, something which resulted to unaccounted public funds. The call for arrests was made during the appearance of the Ministry of Tourism and Environmental Affairs before the Public Accounts Committee (PAC) yesterday.The issue dates back to the year 2021, when the Auditor General (AG), Timothy Matsebula, uncovered a litany of irregularities including alleged fraud in the operations of the parastatal. The AG found anomalies including that the Eswatini Tourism Authority (ETA) had not submitted audited financial statements and audit reports to management for five years for the financial years ended May 31, 2016, 2017 and 2018.

Another anomaly uncovered by the AG was that the ETA had offered its employees, especially the management, large interest free staff loans with no limit and no specified period of repayment. The staff members included the late Chief Financial Officer (CFO) Gcinithemba Fakudze who, according to the findings by the AG, loaned himself E987 126.36. By March 31, 2020, the overall balance of the loans stood at E2 216 907.16. It was also uncovered by the AG that the services of an external auditor were terminated during the second audit engagement after he (auditor) made an audit finding about the unpaid huge amounts of staff loans, including unauthorised staff advances to the then CEO, CFO and accountant.

Another anomaly uncovered by the AG was that the ETA had produced fictitious audit reports and fraudulent financial statements which were presented to the Board, Public Enterprise Unit and the ministry and that balances of staff loans were altered and significantly reduced. The AG had noted that despite the fact that the parastatal was not being audited, fees amounting to E359 126 were paid over four years as fees to fictitious auditors. As if that was not enough, the AG had also uncovered that there was a reduction of E4 million in the cash and cash equivalents in the financial statements for the year ended March 31, 2020 but that however, there was no disclosure made in the statements and no explanation from the then CEO with regards to the reduction. The AG also uncovered that significant withdrawals were noted from the call account held at Nedbank amounting to E4 658 419 in the financial year 2019 and E217 793 in the year ended 2018.

Anomalies

Still on the anomalies, the AG uncovered that the parastatal had been audited by Kobla Quashie and Associates for a consecutive period of 12 years (March 2009 to March 2020), something which was against the International Standards on Auditing and the Public Enterprise Unit requirements of a three-year period for rotation of appointment. When the anomalies were uncovered, it was recommended that the matter be reported to the Anti-Corruption Commission (ACC), Fraud Unit of the Royal Eswatini Police Service (REPS) and the Public Enterprises Disciplinary Tribunal.

During the sitting yesterday, the PAC sought an update on what had been one so far. In particular, it wanted the ministry to state the outcome of the engagement with the ACC, REPS and the tribunal. The update given was that the ETA management escalated the matter to the Board to follow up with the police and ACC. The ACC, the PAC was informed, conducted investigations and submitted a report to the Office of the Director of Public Prosecutions (DPP) who mentioned that the matter was not prosecutable and that an update on investigations from REPS had been requested. When the PAC sought more clarity, newly-appointed CEO Vusi Dlamini, made it known that since he was still new in the parastatal, there was not much he could share. He then requested the current Chief Financial Officer (CFO), Simphiwe Ngubeni to assist in providing more clarity to the PAC.

Ngubeni explained that indeed a correspondence was received from the ACC to the effect that consultations had been done and an agreement reached that since the former CFO implicated was no more, it could not be possible to prosecute the matter. Ngubeni said the ACC then recommended that for those who were implicated and were still alive, the ETA should institute a litigation process. After his submission, Deputy PAC Chairperson Manzi Zwane asked Ngubeni to be specific and state who had passed on and who was still alive. Ngubeni then explained that the former CFO, Fakudze was the one who passed on and was heavily implicated in the allegations of fraud. He said the issues that touched on the late Fakudze were the ones that were not prosecutable.

Implicated

Also, Ngubeni said the others implicated and still alive were the former Head of Marketing, who was Marketing Manager at the time, Bongani Dlamini and former Chief Executive Officer Eric Maseko. The PAC demanded answers on what exactly had been done to implement a recommendation by the ACC that a litigation process should be undertaken for the duo.
In response, Ngubeni said the recommendation only came last month and that the new CEO, Vusi Dlamini would definitely take action. “I think the action will obviously include the legal route moving forward,” said the CFO. It was at that point that the PAC members decried that a recommendation was made, but nothing was done.

Ngwempisi MP Bishop Bhekibandla Vilakati said those implicated and were still alive should be arrested. “His Majesty King Mswati III spoke about corruption and the need to make those implicated account. Here it is like the officials of the ministry are protecting each other. The ex-CFO passed away and we understand, but those who are still alive and have been implicated should face the arm of the law,” Vilakti said.Besides the ETA, the PAC also sought an update on the progress that has been made regarding queries that were raised for other parastatals including the Eswatini National trust Commission (ENTC) and the Pigg’s Peak Hotel and Casino.

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