Salarygate economic sabotage accomplices

By Martin Tarusenga

Quite a few commentators on the “Salarygate” scandal have truthfully submitted that the sordid malfeasance perpetrated by parastatal executives and their boards are “fake surprises”.

The “Salarygate” is a scandal about obscenely high compensation for senior management of some parastatals that broke late last year.

Huge irregular executive pay packs, in excess of the value that the executives, individually, add to their organisations, are the order of the day in Zimbabwe.

This hackneyed state of affairs in Zimbabwe, made headlines in the case of Cuthbert Dube, boss at Premier Service Medical Aid Society (PSMAS), only because journalists were very categorical about his vulgar monthly salary of US$250 000.

This categorical information was publicly brought up in circumstances when subscribers to PSMAS are dying, as they can’t benefit fully from PSMAS health insurance contracts, to which the subscribers have met their side of the bargain in full.

Such obscene pay packs were similarly flagged at ZESA Holdings, again in circumstances when its customers are subject to incessant power cuts, in circumstances when the subscribers pay their bills.

Many other executives and their boards, in many economic sectors of Zimbabwe, have pay packs way in excess of the value that they add to their organisations, in their mandate to provide public services (goods) such as health insurance.

The value that they add could not be equated to the (net) money that they generate for the organisation in providing such public goods. This state of affairs is all too apparent to the common Zimbabwean, but does not make the headlines, because journalists have not regularly made the categorical comparisons of executive pay packs on the one hand, to the value that the individual executive adds to the organisation, and consequently the quality of service (goods) the executives provide to the public (their ultimate clients), on the other.

The failure of insurance executives, and others at pension administrations, to pay and/or entitle full rightful benefits, to pensioners, to pension fund members, to insurance policyholders and to subscribers of social security services such those from the National Social Security Authority, has become something of an unimportant background public noise.

This is because journalists have not gone far enough to categorically expose pay packs for executives at First Mutual Limited (formerly Afre), at ZB Life (of ZB Holdings), at Fidelity Life (of ZimRe Holdings), at National Railways and Mining Industry Pension Fund administrations, among others.

Some of these executives have been in their roles for many years. In light of their covert refusal to pay or entitle full rightful benefits, instead paying paltry benefits, if at all, the executives at these institutions, and others at related service providers are collectively about to complete the extermination of pension and insurance service provision in Zimbabwe as a public good — they are clearly not adding any value to pension/insurance service provision.

In this latter regard, the journalists have not even begun categorically exposing the interests of executives at pension/insurance regulatory institutions such as the Insurance and Pension Commission (IPEC), those of the permanent secretary of the Finance Ministry and his team, for actively protecting the insurance company executives, by suppressing the successful resolution of the pension crisis — this in flagrant dereliction of their public duty to protect pensioners and other subscribers.

These public service executives at IPEC and in the Finance Ministry have for many years been drawing on huge salaries and benefits for destroying value in pension and social security services in general. A categorical exposition of their pay packs in these institutions, vis-à-vis the value they are destroying, vis-à-vis their disservice to pensioners would pale Cuthbert Dube’s malfeasance at PSMAS, and would certainly get the public to sit up and act.

The remuneration practice described above, manifesting itself in the “Salarygate”, a product of kinship/crony-based (neo-patrimonial) corporate governance, ignoring value added by the incumbent executive, is not just peculiar to insurance companies, to parastatals, and the Finance Ministry, — it also pervades the entire private sector.

It is more poignantly evidenced by (a) the conspicuous spending associated with the executives (who clearly can be identified in the elite class) and (b) the very wide (unwarranted) gap between the poor and the rich, this against non-performing businesses, and non- performing economic sectors that they run.

The same business executives and public officials have ostensibly lamented failure of businesses and faltering economic sectors, while they refuse to take pay cuts or quit the businesses/economic sectors altogether.

They will hang on, often for these many years, citing “the poor performing economy” as a reason for their poor business performance, quite oblivious of their debilitating part in the poor performing economy.

Some of them go to the extent of devising, proposing and baiting investor partners, to buy time in the job that they can’t do — it does not occur to them what it is they want from the investor ‘partnership’ that they failed to do by themselves, and how they would justify their role in their organisation with the partner investor if they failed in the role in the first place.

In much the same way as the Finance Ministry, its permanent secretary and pension regulators such as IPEC are about to exterminate pension and other social security services as public goods, the ministries and permanent secretaries in question, have not acted to put in place appropriate economic policies to curb business executive malfeasance, this in the face of failure of the incumbent businesses to efficiently avail public goods and services.

We must at this instance hasten to highlight, trivially, that business organisations run losses when incumbent management take more than they generate in the business. In the circumstances, the services (or product) that the business is meant to provide for public good, becomes substandard, or fails altogether. At the business level, when this happens, the executive has to leave or the business must shut down.

No amount of investor partnership can salvage such a state of affairs as the investor soon catches up with the executive’s business incapability — Nigel Chanakira’s bid for an investor partner apparently spelt out his demise at his Kingdom (now AfrAsia).

At the national scale, when executives take more than they generate, the economy slows down as it has done in Zimbabwe. No amount of taxing, to give the non-performing executives can salvage this in the final analysis, as more taxing to reward non-performance ultimately leads to unstoppable revolutions such as in Tunisia, Egypt, Yugoslavia, among other countries.

Journalists must continue with this sterling job of categorically exposing executive malfeasance in parastatals, pension/insurance service provision, social security and in private sector in general, for the public to appreciate how exactly they are being short-changed.

Martin Tarusenga is general manager of Zimbabwe Pensions & Insurance Rights. You can contact him on [email protected]. This article was first published in the Financial Gazette