WEEKLY Commentary, 15th - 22nd May, 09

The recent scam unearthed by the Anti Corruption Commission in which a colossal amount of money was abused by civil servants at the Ministry of Health has undermined government’s capacity to manage public finance. The scam and many others before are a timely call for the government to institute tight risk management processes to avoid such unfortunate incidences happening again.

The existing processes in public finance management have proved inadequate as they place too much emphasis on ex-post structures of accountability and not on the ex-ante process, which are about ‘prevention is better than cure’. The offices of the Office of Director General, the Public Accounts Committee of parliament and the Anti-Corruption Commission cannot adequately combat fraud because the only come in after the event has happened. As a result, these institutions can do very little in reducing exposure to corruption and theft. It is important that emphasis should equally be placed into processes of risk management because as we have witnessed in the past few years, arrests and convictions of corrupt officials have done little to reduce incidences of corruption and fraud in public offices.

The Office of the Director General has a consolidated report on such incidences and areas of exposure to risk. However, without formal structures, processes, culture and strategies in risk management, the country will continue to lose colossal amounts of money through theft by public servant. Some sources of risk in the management of public finance have surfaced in the procurement systems, diversion of project funds as well as unretired imprest.

The internal audit departments have proved inadequate to handle this high level corruption because the current systems are not systematic and have not adequately identified new sources of financial risk. It is also a signal of failure by public officials to fully account for their actions in the management of public resources and the danger is that this potential failure to manage fraud will in the long run affect donor support for most national projects.
My advice is that public officials, controlling officers and Ministers themselves should be thoroughly oriented in risk management processes by engaging the Institute of Directors- Zambia and any other competent professional bodies to come up with broad and ministry-specific risk management and governance manuals that are aligned to new challenges of financial management and accountability.