Utouh wants uniform allowances to directors

Monday, 16 April 2012 14:20 Controller and Auditor General (CAG), Mr Ludovick Utouh By Peter Nyanje, The Citizen Reporter Dodoma. The Controller and Auditor General (CAG), Mr Ludovick Utouh, has called for the harmonisation of allowances paid to various public firms’ members of the board of directors.His comments are contained in his report on the audited accounts of public authorities and other bodies for the financial year 2010/11. Mr Utouh said there was a need to standardise the payment of sitting allowances, directors’ fees and others since all the money paid to them comes from the public coffers. His opinion comes at a time when MPs  as well as a section of the public have been lamenting about hefty allowances paid to some public corporations’ board of  directors. Meanwhile, sustainability of social security in the near future is in doubt given the weaknesses of the funds to manage investments as well as the trend of extending loans without thorough investigation of the beneficiaries’ ability to pay. Mr Utouh has noted serious weaknesses in the management of investments in Social Security Funds which put a lot of money at risk. Billions of shillings from the social security funds have been buried in non-performing loans, a majority of which have been taken or guaranteed by the government, the Controller and Auditor General (CAG) has revealed in his recent report. CAG says in its audit report of public authorities and other bodies for the financial year which ended June 30, 2011, that though the loans have reached maturity, the government and other organs which took them have not started to pay. The most affected Fund is the National Social Security Fund (NSSF) which has dished out a lot of money compared to other funds. A bulk of the loans taken by the government from the social security funds were for construction projects, with some of the accomplished projects including the University of Dodoma (Udom) and Parliament buildings in Dodoma as well as the Police quarters in Dar es Salaam. he government also guaranteed a loan extended by NSSF to Dar es Salaam City Council for the construction of the Machinga Complex. Giving details of the Udom project, the CAG notes: “During the course of audit of NSSF, I noted some weaknesses in the ongoing monitoring of the investments since the Fund has not signed a financing agreement with the government for the construction of Phase II of the University of Dodoma.”  Mr Utouh points out in the report that NSSF spent about Sh234.054 billion in the project but has signed a contract for Phase I amounting to Sh35.218 billion.  The audit found that buildings for Phase I were completed in September 2008 but NSSF has not collected rent or loan repayment from the government which has since attracted Sh14.157 billion in interests. Another worrisome fact established by the CAG is that while the contract terms state that the project is in the form of design, build, own and transfer, Phase I of the project has been identified as a loan with an  interest portion. In another project, NSSF and Public Service Pension Fund (PSPF) extended a Sh5.33 billion loan to the government for the construction of one of the state security buildings under an agreement to build, operate and transfer under which the Fund was supposed to receive rent, but the organ is yet to start paying.  “The government institution should have started to service and make repayments since Dec 31, 2010... outstanding balance as at June 30, 2011 was Sh6.5 billion,” notes Mr Utouh in the report. In 2007, NSSF also gave the Police Force a Sh20 billion loan at 15 per cent annual interest for the construction of living quarters at Kurasini in Dar es Salaam. The Fund signed an addendum contract in 2008 to increase the loan amount. However, NSSF has yet to begin collecting rent as the tenancy agreement is yet to be signed even though the houses have already been occupied. In the case of the Machinga Complex, CAG notes that Sh12.9 billion was advanced as loan with 14.9 per cent interest in 2009. Though the project was completed, no single cent of the loan has been repaid. As of June 30, 2011, the amount stood at Sh15.4 billion. On construction of the Bunge Hall, Mr Utouh notes that the loan from the funds has not been serviced as per schedule and the outstanding amount as of June 30, 2011 was Sh8.96 billion for NSSF and Sh7.9 billion for Parastatals Pension Fund. Also, PSPF contributed Sh6.5 billion for the project. Apart from loans extended to the government, CAG also established other non-performing loans which NSSF extended to other private bodies. These include $3.5 million (about Sh5.6 billion under the current exchange rates of Sh1,600 per US dollar) extended to Continental Ventures Tanzania Limited; $1.45 million (about Sh2.32 billion) to M/s Meditech Industrial Co Ltd and $18.8 million (about Sh30.08 billion) to General Tyre. Other non-performing loans were extended to Kagera Sugar (Sh12 billion), Higher Education Students Loans Board (HESLB) (Sh78.6 billion), Dar es Salaam Cement Company Limited ($4.7 -about Sh7.52 billion) and Kiwira Power Limited (Sh13.5 billion). “Failure by the corporate entities (some of which are guaranteed by the government) to honour their obligations casts doubt as to whether thorough analysis of the borrowers’ ability to repay the loans are carried out by the pension funds,” says Mr Utouh

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