Unmasking the deep-seated corruption at Eswatini Tourism Authority
For years, the country’s Tourism Authority has not produced audited financial statements. And, in this backdrop, corruption has continued unabated, with the current CEO pinning blame on junior staff.
“Things fall apart; the center cannot hold.”
Those who have followed the brilliant work of Nigerian novelist Chinua Achebe will surely remember how he borrowed this stanza from William Yeats's poem, The Second Coming, not just as an epigraph to his own novel but also to show the chaos that arises when a system collapses. Chinua used the words “the center cannot hold” as an ironic reference to both the imminent collapse of the African tribal system, threatened by the rise of imperialist bureaucracies, and the imminent disintegration of the colonising British Empire. Achebe might as well have added eSwatini if the criminal mess at the Tourism Authority is anything to go by. Indeed things have fallen apart and, with a government under economic and political pressure, things are no longer holding up. The consequence? Organisations like Eswatini Tourism Authority (ETA), a government parastatal, are allowed to misuse tax payers’s money with criminal impunity.
Background
The media in eSwatini has already reported in detail the Auditor General’s (AG) findings that ETA has been dishing out interest-free loans to their staff members with reckless abandon. Worse still, for almost half a decade there were no audited statements. The AG further reported to parliament that the ETA had also used the same audit company for over 12 years, much against the International Standards on Auditing and the Public Enterprise Unit policy that requires a three-year rotation.
The AG presented his findings before the Public Accounts Committee (PAC) and also gave the report to the Ministry of Tourism and Environmental Affairs. But if indeed it is true that an organisation can go up to five years without financial audited statements then what of the board and the Ministry responsible? What did they say? In fact one is left wondering why the Nomsa Mabila-led board did not demand these reports, never mind the line Ministry. The consequence of such dereliction of duty at the level of the board is that staff turned the organisation into a taxpayer-funded criminal zoo. The oversight role at ETA rested with the board and they failed the nation spectacularly.
Today, investigations by the AG, the police and the Anti-Corruption Commission estimates that up to E6 Million was siphoned from the organisation either through fraudulent misrepresentation or forging of documents and signatures. So who exactly is to blame? Where did the wheels come off? What happened?
To understand the problems at ETA one must start at the very top: the board that allowed the organisation to go for years without audited financial statements. Leading the board is, of course, Mabila who sits together with Hermon Motsa, Dr Phetsile Dlamini, Dr Cliff Dlamini, Nomphumelelo Dlamini and Dumisa Fakudze. These, ladies and gentlemen, should be the first suspects in any crime against corporate governance.
Next must be the management, at the apex of which is the CEO, that allowed such degeneration to fester either as a deliberate design or just gross incompetence.
An incompetent board
Looking back, the problems at ETA seem to have started when the contract of then CEO, Erick Maseko, ended and the board refused to renew it. But to judge the competence or otherwise of the board one needs to look at how they recruited the current CEO, Linda Nxumalo. The board commissioned KPMG to help recruit a new CEO and invited applications from within and outside the country. Even though Nxumalo was armed with a colourful CV and glorious professional history, which included a Master’s degree from Leeds Metropolitan University and having worked as Head of Business Development, Marketing and Sales for the National Contact Centre at Eswatini Post and Telecommunications, she was, however, the least qualified to be CEO at ETA. This is because some o f the people who applied were heads and shoulders above her.
Among some of the people from within ETA that applied was Bongani Dlamini, ETA Marketing Manager and Sipho Simelane, the Product Development Officer who both hold Master degrees and had the relevant organisational experience. From outside ETA, among the heavyweights that wanted to join the organisation was Nathi Dlamini, the current Business Eswatini CEO. Before KPMG could finalise their report and recommendation the board intervened and demanded to see a full list of all applicants. They then instructed the company not to shortlist the two ETA employees for reasons still unknown. Even more startling is that Nxumalo was not even in the shortlist. In fact KPMG had recommended that Nathi Dlamini should take over the CEO position but the board insisted on “gender balance” and recommended the seventh-placed Nxumalo. Even the Principal Secretary at the Ministry of Tourism rejected Nxumalo arguing that the KPMG report had been scathing on her.
However, Mabila managed to outwit him by convincing then-Minister Christopher Gamedze to sanction the appointment. Gamedze did his part and submitted her name to the Standing Committee on Public Enterprises (SCOPE) for final approval. In announcing the new CEO, Mabila was asked by local newspapers what made her stand out from other candidates. She refused to answer that question, save to say that she had experience in the corporate and tourism industry. By experience Mabila seemed to be banking on the fact that Nxumalo had served as Board Chairperson for the Eswatini National Trust Commission (ENTC), a position she had held from as far back as 2014.
And therein lies the rub. As The Bridge can today reveal, even during Nxumalo’s tenure at ENTC, where her appointment was renewed twice, audited financial statements came in short supply. As recently as last year the Auditor General singled out the ENTC as those who do not deserve government subvention.
Even though Nxumalo was hired under a cloud of controversy and through a flawed recruitment process, it would be fair to acknowledge that she inherited a struggling and troubled organisation. If Nxumalo found an organisation that had already reached rock bottom under Maseko, the ETA of today has begun digging down and everything has gone south since.
Searching for scapegoats
The mess at ETA would have probably remained hidden had it not been for the unfortunate passing away of the organisation’s Chief Financial Officer, Gcinithemba Fakudze. When it comes to financial integrity and accountability, that responsibility lies with the CFO and CEO as the two most senior staff members. Normal corporate practice demands that these two officials should have produced the audited statements the Auditor General complained about. In fact, normal corporate practice is that the CEO gets these reports from the CFO, signs them off and presents them to the board.
In the case of ETA, it is not clear why the board did not demand these reports. In turn, it remains a mystery why Nxumalo herself didn't demand the same from her CFO and staff. It took Fakudze dying and a new officer taking over for most of the rot to be unearthed. The new acting CFO discovered a slew of questionable transactions and alerted the CEO. For example, he noted that there had not been any audit reports for years and that the CEOs, both past and present, had signed off millions in staff loans. Most of them though were study loans to staff but the chunk of which went to the senior staff like CFO, CEO and others. Nxumalo claimed ignorance of all this. In fact to sanitise her role in the entire saga she quickly reported the matter to the police and Anti-Corruption Commision, something that flew against normal procedure when malfeasance has been discovered in any organisation.
One would have expected that if Nxumalo suspected any wrongdoing she should first suspend whoever she suspects of wrongdoing, institute an internal forensic audit and on the basis of the findings then approach the police. But not at ETA. Instead, in January this year, a month after the death of Fakudze, police came to investigate the Accounts department, specifically officers she claimed worked with the late Fakudze. To avoid instituting an independent forensic audit, which would have probably uncovered some of the financial mess at the organisation, Nxumalo has become comical, not only by sending police to investigate officers who are still working (assuming they had done wrong they would use the time not being suspended to tamper or hide evidence) but also by installing a camera in some department she accuses of doing wrong.
“Why are the investigating officials from the ACC having coffee with the CEO while the Acting CFO is being investigated? Why not investigate the CEO and seek answers from her as the head of the institution? Why has the Board or anyone failed to suspend the CEO pending an investigation because these are serious matters pertaining to tax payers and they touch on her as the ultimate head of the organisation,” wondered a source.
Perhaps the extent of the financial mismanagement at ETA is best captured by reading the Auditor General’s correspondence to the Principal Secretary in the Ministry of Tourism and Environmental Affairs dated 27 April 2021. Here the AG reveals, for example, that at least six employees still owed the organisation with the highest loan amounting to E1,861,084.69.
Then there is the issue of fraudulent audit fees where the AG notes with alarm that “the financial statements are showing audit fees charged for the fictitious audits and recorded as paid to KQA yet they were never received by the auditors, as illustrated in the table below.” Current investigations are seemingly pointing to the late Fakudze as having helped himself to large sums of money and questions remain whether some of the signatures of the former and current CEO were forged or they acted in common purpose. This is ignoring the E4 million that was mysteriously withdrawn from the organisation’s Nedbank account that the AG wants answers for.
By not submitting audited financial statements, ETA has gone against Section 21 (2) of the Audit Act of 2005, Section 7 of the Public Enterprises Monitoring and Control Act of 1989 as well as the Public Enterprises Unit Circular number 3 of 2008.
As it turns out, there are currently two parallel processes ongoing: the police and the ACC are all investigating junior officers, with the heat and pressure off the board and the CEO. In fact much of the blame is now placed on Maseko and the late Fakudze despite that some of the loans were sanctioned by Nxumalo herself as the head of the organisation.
PAC and Minister wants answers
The Parliamentary Accounts Committee (PAC) has already started to demand answers and officials have been summoned to answer questions in parliament. Minister Moses Vilakati has also commissioned a tribunal to look into the matter and it appears the PAC process will stop and give way to it. The AG has advised the Minister for Tourism and Environmental Affairs to refer this matter to a disciplinary tribunal as required by the Public Enterprises Monitoring and Control Act of 1989. ETA gets up to E13 Million as government subvention.
The Bridge approached ETA CEO about the financial mismanagement at ETA especially why audited financial reports were not produced. Her brief response was that the matter had been reported to the police and were now investigating.
“As I have said, this is an internal matter being dealt with through formal Government processes. I am not at liberty to further discuss it,” Nxumalo said when approached for comments.